Visa Raising Standards on Prepaid Debit Cards

Visa’s Response to Consumer Concerns

According to a recent NY Times article, Visa is responding to consumer concerns that prepaid cards are often trickier to use — or to give — than they should be, since fees and terms often differ, leaving users confused, or simply with less of a balance than they imagined they are raising standards.

Introducing a Special Designation

Features of the New Emblem

Now, the article states, “Visa plans to offer a special designation — it hasn’t decided yet what to call it — for its cards that meet (new) standards, said Cecilia Frew, head of United States prepaid products for Visa. The cards’ packaging will carry an emblem so consumers can quickly tell if the card meets the criteria.”

Collaboration with Consumer Groups

The article notes that Visa is creating this new designation after consulting with nonprofit consumer groups like the Center for Financial Services Innovation.

Qualifiers for the New Designation

Standardized Fees and Features

“To qualify” for that designation, the article continues, “cards must cover all basic activities, like purchases and in-network A.T.M. withdrawals, with a flat monthly fee, although that fee will vary by card.”

Additional Key Features

The cards must also forgo overdraft coverage and fees; provide a simple, easy-to-find disclosure of terms and fees; and carry federal deposit insurance.

The Future of Federal Regulations on Prepaid Cards

Considering the potential introduction of Federal regulations to prepaid cards, the article indicates that the Consumer Financial Protection Bureau actively studies these cards. They anticipate proposing new rules soon, which might impact Visa’s plans. Additionally, the agency is currently testing straightforward disclosure boxes to better highlight the fees associated with prepaid cards for consumers.

The Rise in Popularity of Prepaid Debit Cards

Importantly, while some customers use prepaid debit due to limited access to traditional bank accounts, a growing number of consumers favor these cards. Firstly, they serve as valuable budgeting tools. Secondly, they offer enhanced security during hacks or security breaches because they don’t link back to standard account details.

Weekly Security Updates

(In this week’s hacking news, by the way — and distressing that this has become a weekly occurrence — some malware has been detected in mobile banking apps, which has the potential to compromise a wide range of banking data. We’ll be following up on this in subsequent posts.)

Expanding Your Business with Prepaid Cards

This means that even customers you might not expect to use prepaid debit cards might want to have that option. If you’re not offering prepaid or gift card options yet to your regular shoppers and clients, contact AVPS to find out about the programs we offer.