News from the Frontlines: Prepaid Cards in Times of Crisis

AT&T Inc. is distributing 10,000 prepaid cards to U.S. military supporting efforts in Japan.

Visa Expands Personal Payment to the World: Read more at Mybanktracker and Techcrunch.

Ohio State gives $25,000 for Flood Relief

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Can Obama Force Credit Card Industry Change or Should You Burn Your Cards?

Ran across this interesting article by William Reed, contributing writer for the Washington Informer. Reed said that the stakes (for credit cards and prepaid) couldn’t be higher and the purveyors of plastic don’t intend to be forced into financial submission. The industry annually collects an estimated $3 trillion in annual credit and debit card transactions, plus billions more in late fees and other charges. America is a nation propped up on credit card debt.

According to Reed's article,

In 2001, 59 percent of African American families had credit cards, compared to 82 percent of White families. Although African American households have lower rates of credit card ownership, African American cardholders are more likely than Whites to have credit card debt. Credit card debt has caused African American families to use critical financial resources to pay mounting monthly interest payments instead of saving or acquiring assets.



Unfortunately, most of the debt African Americans have accumulated is used for items that depreciate in value, such as cars, furniture, electronics, and appliances. This is an indication that Blacks use credit inappropriately - to stretch their incomes. Historic redlining by traditional banks has left high-interest credit cards as one of the few easily accessible sources of loans for minorities.The high levels of un-banked and under-banked Blacks have spawn affinity and co-branded prepaid cards marketed primarily to them. One example is record industry mogul Russell Simmons’ Visa RushCard.



Though Simmons wasn’t in the White House meeting on credit cards, his company is a symptom of the problem. He claims to be solving problems for under-banked communities, which often lack access top a bank account, but complaints are mounting about the fee structure of his prepaid Visa RushCard. To utilize Simmons’ RushCard and “live the American Dream” requires an activation fee of $19.95, a daily convenience fee of $1 (capped at $10 a month) and a $1.95 ATM cash withdrawal fee.



Read Can Obama Force Credit Card Industry Change or Should You Burn Your Cards?

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Visa’s ReadyLink Prepaid Card Network: An Opportunity for Financial Institutions

Recently, we’ve posted about how Visa is looking to expand its Visa ReadyLink prepaid card reload network to ATMs that accepts deposits without envelopes. Currently, prepaid cards are generally reloaded through direct deposit programs or through merchants that accept cash and then credit the amount to the prepaid card.

This program is particularly interesting because of the amount of unbanked people that financial institutions can attract. Cardholders would simply swipe their card, and then the cash that they want upload. After a few simple prompts, consumers would receive a receipt stating the updating value on the card. As with regular ATMs, consumers would pay an interchange fee in which Visa would get its standard network fee from. ATM owners would also set their own pricing for the consumer. It will be interesting to see the amount of customers banks will be able to convert from Visa’s reload network.

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New Bank Freedom Prepaid Visa Card

Bank Freedom got the approval needed from MetaBank and Visa, to “market the Bank Freedom Prepaid Visa Card. Bank Freedom”, as Trading Markets.com reports. The card will available in 10 days for use. Robert Christiansen, the COO of Bank Freedom, had this to say:

"We at Bank Freedom strive to be the prepaid card industry's leading example at how to best serve America's unbanked and underbanked individuals. Our business model is to provide a wide range of much needed financial products that improve the quality of life for our cardholders, saves them time and money, and eliminates their dependence on check cashing centers and money orders."

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