Prepaid Card Availability
Issue
Widespread access to prepaid cards for all consumers, especially the unbanked and underbanked.
NBPCA Position
The NBPCA encourages prepaid card laws and regulations which preserve consumers’ access to prepaid cards online, in retail locations, from employers, and through other non-bank distribution channels.
Explanation
Prepaid cards have revolutionized the way consumers, merchants and banks interact. Although many people naturally think of bank issuers when they think of prepaid cards featuring network brands like American Express, Discover, Visa or MasterCard, today there are approximately 200,000 non-bank locations across the United States where consumers can either purchase a prepaid card or load funds to a prepaid card.
These non-bank locations provide crucial access to prepaid products for unbanked and underbanked consumers. A recent FDIC survey found that 9 million U.S. households are unbanked, and an additional 21 million households are underbanked. In all, according to the survey, about 43 million U.S. adults do not have adequate access to financial services. Through the use of prepaid cards, unbanked and underbanked consumers are provided access to an economy that increasingly relies upon electronic payments.
Currently, numerous proposals under consideration may deprive households of access to prepaid products. For example, proposals that would treat the loading of value on prepaid cards as “deposit-taking” would dramatically curb consumer access to prepaid cards. Such a proposal, if enacted, would require retailers that issue gift cards—as well as nonbank issuers like American Express—to obtain banking licenses (a costly, time-consuming endeavor) or to stop issuing prepaid cards. Similarly, supermarkets and other retail locations that sell or reload funds on prepaid cards would be unable to do so because they could be considered bank branches and consequently would be subjected to state licensing requirements.
Additionally, some state laws prevent employers and their unbanked employees from utilizing payroll cards. With payroll cards, wages are deposited by an employer to a payroll card account via direct deposit, and the employee can use the card to withdraw cash at an ATM or make purchases and receive cash back from merchants, much like a traditional debit card. In addition, many payroll card programs provide access to online bill pay services, which, when combined with the other attributes described above, effectively provide a consumer with access to the full suite of financial services that would traditionally be accessed through bank accounts. For employees, such cards are safer than cash and provide a lower-cost option for unbanked employees to access their wages and utilize modern financial services. Yet, where state payroll laws are outdated or otherwise lack appropriate provisions for prepaid solutions, many employers and their unbanked employees are deprived of access to an affordable payroll card solution.
Consumers, employers, employees and other payroll card users and distributors understand the profound value that prepaid cards deliver. To ensure that these users can realize the benefits of prepaid cards, the NBPCA supports prepaid card legislation that maintains the availability of prepaid cards online, in retail locations, from employers, and through other distribution channels.
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