In an article at the New York Times recently, Andrew Martin looks at the current effects prepaid cards are having on the banking industry. The industry has really expanded over the past decade, and is a way for those who can't bank in the United States, which may be up to 80 million Americans. The article points out that once many customer easily obtain these cards, they are faced with many fees that may have been written in the small print. The fees begin at activation, and continue often through every deposit and withdraw, to every customer service call and monthly feeds from the card.
Congress has yet to examine the rules and regulations with these cards, and many consumer advocate groups are calling out against the numerous fees that often go unnoticed by the consumers until they add up to great amounts of the original deposit. Many companies are beginning to pay their consumers with prepaid cards if they don't have direct deposit, which also brings up some questions as to whether this is fair for consumers. With the introduction of WalMart's MoneyCard, which follows through on low fees for the consumer, fees are falling throughout the industry.
Prepaid cards may be the only choice for some of the users, as they have no real way to open a bank account and receive their income other than to preload it on this card. It can also be used as an option for money management. But now that consumers are calling for protection from the industry, how do you think this will evolve and change the industry? I think WalMart's new card, which does reduce the number of fees, will have an effect on the industry, but it is only a matter of time before Congress looks at the cards and begins to regulate them.
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