Prepaid changes signal provider awareness of increased regulation

by. Konrad Christensen

Recently, there have been a number of announcements regarding issuer upgrades to their prepaid product offerings.

It’s likely these changes are connected to an increase in regulation as agencies like the Consumer Financial Protection Bureau (CFPB) look at consumer protections. There’s no doubt the CFPB is taking a closer look at prepaid cards. Card issuers are realizing this, and are working to make their prepaid offerings even more fair, simple and consumer-friendly.

Visa is busy promoting several upgrades. The network recently distributed a press release announcing a new designation for its reloadable prepaid products. Visa collaborated with both The Pew Charitable Trusts and the Center for Financial Services Innovation (CFSI) to establish the new guidelines. To qualify for the new Visa prepaid designation, prepaid programs must meet a specific set of standards. Visa’s new requirements are designed to simplify fees, improve consumer protections and create opportunities for cardholders to improve their financial health. Prepaid cards that meet these requirements will receive a seal visible on card packaging and materials.

Amex is also offering new features that point toward providers being more aware of the specific needs and wants of prepaid users (namely that they can fall outside the financial mainstream and may need additional education or tools, like personal financial management (PFM), to help them budget). In a press release, Amex revealed the network’s Serve and Bluebird prepaid cards will feature PFM options. These will allow their prepaid cardholders to utilize online budgeting tools, draw-up a financial plan, track spending and designate spending limits and alerts. Amex is also increasing the breadth of its cash reload network for Serve cardholders. Amex added 4,100 Walmart stores to its cash-reload network in April and announced the addition of Family Dollar stores in June.

continue reading »