Prepaid cards: how do they function? how are they regulated?
This conference, sponsored by the Payment Cards Center, brought together prepaid card industry leaders and regulators to discuss how various prepaid-card systems work and the ways in which different state and federal laws can affect them. The conference featured sessions on bank- and merchant-issued gift cards, payroll cards, and flexible spending account cards. It also featured presentations by experts on Regulation E, the Federal Deposit Insurance Act, state money transmitter laws, and state abandoned property laws.
Prepaid card markets and regulation
Prepaid cards, also commonly referred to as stored-value cards, are typically credit card-sized pieces of plastic that contain or represent an amount of pre-loaded value. They include a wide range of payment products, such as gift cards, payroll cards, teen cards, and travel cards. Despite significant product innovations, it is unclear whether and how existing federal and state laws that apply to other financial products (e.g., checks, credit cards, deposit accounts) apply to the different varieties of prepaid cards. Overall, the law in this area is very much unsettled. In an effort to ...
The laws, regulations, and industry practices that protect consumers who use electronic payment systems: ACH E-checks & prepaid cards
This is the second in a series of three papers that examines the protections available to users of various electronic payment vehicles who fall victim to fraud, discover an error on their statement, or have a dispute with a merchant after making a purchase. Specifically, it examines the federal and state laws that protect consumers in the three situations described above as well as the relevant association, network, and bank policies that may apply. The protection information included in this paper is derived from a wide range of public and non-public sources, including federal and state ...
The cost effectiveness of stored-value products for unbanked customers
On March 30, 2005, the Payment Cards Center hosted a workshop led by Sherrie L.W. Rhine and Sabrina Su of the Federal Reserve Bank of New York?s Office of Regional and Community Affairs to discuss the relevance of stored-value cards to ?unbanked? or underserved consumers. The authors framed the issue by first examining the characteristics of the unbanked before describing the particular card products that may be the most relevant for providing financial services to such consumers. While limitations remain, including an unsettled legal and regulatory landscape and the challenges associated ...
Prepaid card models: a study in diversity
Summary: On January 13, 2005, the Payment Cards Center of the Federal Reserve Bank of Philadelphia sponsored a workshop led by Gary Palmer, chief operating officer and co-founder of WildCard Systems, to examine the developing market for prepaid card products. Palmer described several distinct types of prepaid card value propositions, each with its own set of operational needs and customer servicing requirements. In addition, Palmer described new roles that exist in prepaid card programs that are not present in traditional credit and debit card programs. He emphasized that the variety of these ...
Prepaid cards: lots of flavors, not all delicious
Some consumers use prepaid cards like cash?others, in place of a bank account.
Card carrying consumers: stored-value cards go beyond the mall
Stored-value cards: a card for every reason
This article discusses the various uses of stored-value cards and the different degrees of their use and acceptance four years after their introduction.