Are prepaid charge cards assisting or harming customers?

Are prepaid charge cards assisting or harming customers?

The middle for Responsible Lending is a research that is non-profit policy company specialized in protecting home-ownership and family members wide range.

Let us start with the after premise: when it comes to technology and therefore fundamental item expenses, basic function reloadable prepaid cards are indistinguishable from debit cards related to checkless checking accounts.

Both prepaid and debit cards must keep a database of individual account documents; both access the payments that are same by way of a bank person in a funds transfer community such as for instance Visa or MasterCard.

Both prepaid and debit cards have actually a necessity to “know your client” because the reports must move across a bank to get into the re re payments system.

Thus, the largest differences when considering prepaid cards and debit cards are distinctions perhaps maybe maybe not in technology however in regulation, or what exactly is usually called “regulatory arbitrage” and only the providers that are unregulated.

A few examples of regulatory arbitrage between bank providers of checkless debit card reports and presently unregulated prepaid credit card providers consist of:

  • Debit cards have periodic written statements of account under Regulation E;
  • Regulated debit card providers have actually mandated capital that is minimum;
  • Debit cards have actually customer protections for lost cards or card that is unauthorized; and
  • Prepaid cards are exempt through the Durbin interchange demands, at the very least when it comes to smaller, rent-a-charter banks. Continue reading “Are prepaid charge cards assisting or harming customers?”