VirtualWorks Settles for $52,000 with the FTC

According to this post on creditcards.com, VirtualWorks, A California-based credit card company has settled with the FTC for a sum of $52,000 for tricking customers into buying prepaid cards. Joshua Finer, the owner of VirtualWorks misrepresented his product to consumers by having them apply for a payday loan in which was disguised as "free", but then charged consumers a $54.95 prepaid card enrollment fee.

What are some other examples of deceptive marketing prepaid card schemes like this one that you've come across in through your endeavors?

Fees remain high for prepaid cards

According to Consumer Loan Wire, in 2007, $4 billion was loaded onto prepaid cards. The number of fees associated with prepaid cards is high. According to the article, some cards cost up to $99 to activate and users are also faced with charges to call customer service. Read the full article here.

As Reloadable Cards Increase, Concerns Grow About Fees, Protection

Concerns are rising about the potential dangers of prepaid cards by individuals. A recent report by Jun,“Prepaid Cards: Second-Tier Bank Account Substitutes,” faults the cards for poorly disclosed, high, and widely varying fees, arguing the total monthly cost for usage should be capped. Among 18 reloadable cards examined, the report found activation fees ranging from $3 to $99.95; monthly fees from $2.95 to $10; and dormancy fees (levied by eight of the 18) from $1.95 to $9.95 per month. These and other fees, it says, should be laid out on card carriers in a standardized fashion not unlike the so-called Schumer boxes used by credit card issuers. The report further argues that charges for overdrafts should be eliminated. The report found 10 cards charging overdraft fees ranging from $24.90 to $29.

Should prepaid companies work with consumer advocacy groups to enhance the benefits of prepaid cards?

As Reloadable Cards Increase, Concerns Grow About Fees, Protection

Prepaid Cards Might not be best for College Students

This post on the Baltimore Sun mentions that prepaid cards might not be the best option for college students trying to step away from owning credit cards. The reasoning behind this is because some prepaid cards carry "hidden" fees. Eileen Ambrose recently wrote in the Sun that perhaps another alternative would be to tie a debit card to a checking account, and once students can successfully manage that responsibility, to gradually move them into credit cards. Do you agree that prepaid cards are not the best option for college students?

MasterCard Prepaid Cards

At Consumer Loanwire, they have a breakdown of the current prepaid cards available from MasterCard: The Everyday Prepaid Card, The MasterCard Prepaid Gift Card, and The MasterCard Travel Card. Read more about these three cards here.

Same window pane, different view

Viewing the world through the same window pane doesn’t necessarily mean we’ll see the same things. Gray clouds could mean cool, relaxing weather to one person and to another, the end of the world. I’ve recently been involved in long discussions about what ‘Card Management’ is and what a Prepaid Card Management System (‘CMS’) is supposed to do. After a series of intense discussions with my colleagues (I could very well be the only one that saw the discussions as ‘intense’) I realized at many different levels, we were not only saying the same things, we were framing ideas based on our experiences in different verticals of the prepaid issuing space including issuing bank, acquirer and the prepaid third party processor.

This post will cover what I believe to be essential, high-level attributes of a solid Card Management System for prepaid issuance.

What is Card Management? The phrase ‘Card Management’ is actually an inaccurate use of words for someone that comes from the area of the prepaid space that requires the CMS to not only manage the life cycle of cards, but programs, products and business entities such as program managers and other sales channels associated with issued cards. I guess a more accurate phrase could be “Everything you need to run a prepaid business as a service provider or third party processor system.” That would make the acronym – EYNTRAPBAASPOTPPS. Thank goodness CMS is in play here!

Robust APIs CMS needs to interact with the authorization host to retrieve transaction data for business use. CMS will also need to communicate with external systems for supporting services such as ID verification, OFAC, card fulfillment, IVR and others. (may vary depending on program type i.e. payroll, gift, general purpose)

Hierarchy Management Being able to create an account, mail a card out, authorize a transaction and settle is as important as oxygen but is not all there is to the business of prepaid. Associating business entities at different levels enables business owners to analyze, measure and report on important portfolio data.

Program & Product Management Assigning hierarchy levels and product attributes from a single UI is important in my opinion. Think about how the business comes together starting at member sponsorship on through card issuance. Program and product configuration within CMS should be representative of this process.

Card Life Cycle Management Card issuance, account creation, account activation, self-service cardholder support, CSR support and alike. Everything that happens after all the business relationships and entities are in place.

Reporting and Billing In most cases this will happen in separate system but should be configured and delivered either through CMS or in partnership with CMS. Establishing fees, reporting revenue based on business entities is what brings it all together. Keep in mind that the reports I'm referring to are outside of what the authorization host typically delivers to the issuing bank as part of the third party processor's responsibility.

So there you have it. The world through my CMS window pane. What's your view?

Randy San Nicolas is the author of Prepaid Enterprise Blog.

Great Online Exchange Rates Through Prepaid Cards

This article on Birghingham Post discusses that online exchange rates for 'Brits' might be at an all time best especially if they are thinking about traveling. Brits that are coming to America should take advantage of great rates which can approach $1.80 to the pound by Christmas. FairFx, a prepaid MasterCard that is available in euros and dollars currently has an exchange rate of $1.67 to the pound. Consumers should be able to lock a great rate through prepaid cards when exchange rates are to their favor. We should be seeing a lot more people taking advantage of these rates by the end of the year.

Chicago changing payment methods for public transportation

According to Chicago Now, the Chicago Transit Authority will stop issuing their current fare cards. Instead, they're looking to take up a partnership with a credit card company and the cost of producing the payment cards will fall upon the provider. According to the article, New York City's MTA has already done this with Citi Bank, who provided cards in 2007 on the Lexington Line. Read the full article here.

Emida Announces New Prepaid Products and Upgraded Services

According to a press release, Emida customers across the U.S. will soon have three new and two enhanced products and services include Verifone POSA microbrowser access, enhanced PC terminal access, Prepaid Prepaid, money transfer and M-MONI™, Emida’s mobile wallet solution. Each of the new and enhanced services is designed to give Emida’s clients more flexibility, more value add and better customer retention. The new microbrowser application for Verifone POSA terminals allows merchants to run faster transactions, improving productivity and efficiency.

For more information about Emida, please click the company's website here.

Emida Announces New Prepaid Products and Upgraded Services

Netspend Becomes Check City's Exclusive Debit Card Provider

According to latest release on Business Wire NetSpend and Check City has entered into an agreement in which NetSpend will be the chain's exclusive debit card provider. Both companies will also work together in converting customers that were previously served by using Check City's in house prepaid product to the new NetSpend card.

Dan Henry, CEO of Netspend has mentioned that “Our mission at NetSpend is to bring an unmatched set of financial services products to the tens of millions of consumers who are overlooked and underserved by traditional banks. By partnering with Check City—a company whose passion for top-quality customer service and exceptional products is as strong as ours—we are better able to deliver on that mission in the West and Mid-Atlantic regions.”

Southeastern Baptist Theological Seminary's new ID cards include prepaid card

According to CR80News, Southeastern Baptist Theological Seminary of Wake Forest, North Carolina, will have new student IDs will now incorporate a prepaid card. The Southeastern iCash Card will allow students to purchase food and clothing on campus, use the card at the library and at other off campus stores having the function of a prepaid card. This card will be easily reloadable by both the students and their parents. Read the full article here.

Prepaid Cards & High Fees

Mainstreet.com reports that prepaid card consumers should be careful, according to a new report conducted by Consumer Union, the nonprofit publisher of Consumer Reports. Here's a break down of the fees that can be associated with prepaid cards.

Activation Fees. 17 of the 18 prepaid cards charged a fee for getting started. The Millenium Advantage Card, for example, charges $99.95 in application and initiation fees.

Monthly Fees. Although sometimes this fee can be waved (if, for instance, direct deposit is established), 15 of the 18 prepaid cards charged a monthly fee, some as high as $10. ATM or Cash Withdrawing Fees. All cards charge some fee for ATM use, sometimes as much as $2.50. 17 of the prepaid cards will also charge you up to $1 for balance inquiries, and these charges do not factor in the ATM owner's own fees.

Inactivity Fees. Eight of the pre-paid cards charge a fee when you don't use your card for a period of time. Not using your Exact card this month? That will be $9.95, please.

The Fees add up: According to the report, a new Rush Card user whose first month card use included three ATM withdrawals, two deposits, three bill payments and eight regular purchases would pay $43.75 in fees.

Prepaid Cards: Beware of High Fees

Prepaid Credit Cards as an Alternative to Online Casinos

This article in USA Players discusses how many credit cards have the right to decline transactions as they see fit, for instance online gambling. Online casinos have noticed this, and as an alternative most do accept prepaid credit cards. The difference between the two is that with the prepaid credit card the funds have already been collected and so what you do with the money is at your discretion, unlike regular credit cards. This is why prepaid credit cards have been heavily favored by the Las Vegas Group, Cherry Red Casino, and many more online casinos.

Consumers Gain Control of Finances with Prepaid Cards

According to this latest post on PRNewswire more and more consumers are turning over to using prepaid cards instead of credit cards in order to regain control of their finances once again. John Chaney, CEO of PreCash mentioned "Prepaid debit cards combine the best features of cash and credit cards. For consumers who are watching their budgets, the newest generation of prepaid cards are better than a credit card."

A recent study by Mercator shows that prepaid usage has nearly doubled from $4.2 billion to $7.2 million this year. With the economy at a low, the future seems bright for prepaid.

Prepaid Currency Cards Offer Security

British citizens looking to lock in the the pound's 10 month high against the dollar now have an option with a prepaid currency card. According to MoneyHighStreet.com, with growing popularity, more currency card providers are now in the market, including Lloyds TSB, the Post Office, and specialist companies such as CaxtonFX or FairFX. Because the cards will hold their value, some British citizens can use them to protect themselves when the dollar matches or usurps the pound.

Will we see the popularity of prepaid currency cards spread?

Lock in great rates with a prepaid currency card

Heartland Payment Systems Offers New Prepaid Services

According to this article in BusinessWire Heartland Payment Systems, which is one the the biggest payment processors, will now include a prepaid calling service offering wireless and long-distance minutes.

Customers will be able to use the ePIN It! program to quickly and conveniently access their minutes by using the same POS terminals that they already use for credit/debit transactions. It will be interesting to see if other payment processors will go this route as well.

Prosa Tackles Mexican Prepaid Card Market

The Wall Street Journal reports that prepaid card issuer, Prosa is about to take hold of the Mexican prepaid card market. Prosa's shareholders include some of the country's largest banks. HSBC Mexico, Grupo Financiero Banorte SAB (GFNORTE.MX), Banco Invex, Grupo Financiero Santander SAB (SANMEX.MX) and Grupo Scotiabank each own 19.7% of the firm, with state-run bank Banjercito holding the rest. Prosa Chief Executive Jose Molina sees untapped potential for prepaid products like store gift cards, prepaid debit cards and payroll cards that businesses can use to pay employees.

Mexican Electronic Payments Co Prosa Sees Growth In Card Mkt

Phones4u Releases MasterCard Prepaid Cards

According to this article in mad.co.uk the mobile retailer Phones4u will be launching two MasterCard prepaid cards to target ethnic minorities and lower socio-economic communities with the Escape Card, and 13-18 year old consumers with the Neon Card.

The prepaid cards are expected to be launched across its 450 stores in the UK and Phones4u is aiming to sell roughly 10,000-12,000 prepaid cards every month. The mobile retailer is offering an incentive for signing up. The loyalty rewards program features shopping rewards for iTunes, Next, Curry, Look and Lovefilm. The Neon Card will prevent young consumers from purchasing alcohol, gaming, and adult content while the Escape Card will be able to send friends and families money overseas without paying a transfer fee.

San Francisco Transit links up through prepaid card

According to the San Francisco Chronicle, the new TransLink Fare Card, which is now being used on many of the major forms of public transportation in San Francisco. The prepaid fare card was able to begin being use don Sunday, which makes the four major transportation hubs using this prepaid card the BART, the San Francisco Municipal Railway, AC Transit and the Golden Gate Ferry. The transit cards are prepaid, then the fares are deducted as used by the traveler. Read more here.

InComm and Cartoon Network Partner on New Gaming Card

According to a press release, InComm has partnered with Cartoon Network to distribute prepaid cards for their AAA, browser-based massively multiplayer online game (MMOG), FusionFall. Cards are now available for purchase at select locations of major InComm retail partners including WalMart, Toys"R"Us, FYE, Suncoast, and will be rolling out to GameStop locations next week. FusionFall prepaid cards will be available in more than 17,000 retail locations nationwide this summer.

InComm and Cartoon Network Partner on New Gaming Card