Prepaid Debit Cards Set to Face Rules on Overdrafts and Disclosure

Via Bloomberg

The U.S. Consumer Financial Protection Bureau will propose to limit overdraft charges on prepaid debit cards and require more disclosure from issuers about all fees they charge, a person familiar with the matter said.

The market size for prepaid debit cards has nearly doubled to an estimated $80 billion since the CFPB began reviewing the products after the initial criticism that transaction fees on some products were too high.

The competition in the prepaid marketplace has driven lower fees over the past four years. The person familiar with the proposal told Bloomberg that it could come in early November and won’t include broad restrictions on transaction fees.

CFPB officials have been studying the prepaid market since 2010, when cards including one issued by reality TV stars the Kardashian sisters were charging as much as $1.50 for withdrawals or for speaking with a customer service. Such fees became rarer after increased competition from new market entrants.

According to Madeline Aufseeser, senior analyst with the Aite Group, a Boston-based consultancy, these cards have risen in popularity. In 2010, consumers had about $37 billion loaded onto prepaid cards, a number that is expected to rise to nearly $80 billion by the end of this year.

To read the complete story from Bloomberg, click here.

With more consolidation and saturation in key niches of the marketplace, it's never been more important for prepaid to continue to drive new growth and unearth new business opportunities. To support prepaid players, that is why at All Payments Expo 2015, we've created the Prepaid Forum, a dedicated forum focused on relevant and important content for the prepaid industry.

Click here to view the updated event brochure. 

Make sure you join us this February 23-25 at the Caesars Palace in Las Vegas - As a blog reader, use the code XU2848BLOG when you register and save $100 off the current rate | Register Here.

See you in Las Vegas!

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Save the Date: Maximize the Profitability of Your Prepaid Programme 17 & 18 April, Prepaid Expo Europe

As new verticals and consumer segments emerge, the kaleidoscopic options for prepaid players– from paper vouchers to mobile wallets – are seeing a flood of new entrants and innovation.

How will you continue to engage consumers among the swarm of new payment schemes?
Are you evolving your products and maximizing the profitability of your programme?

Prepaid Expo Europe, 17-18 April, 2013 is the largest gathering of retail, B2B, & open-loop executives focused on prepaid in the UK and continental Europe. You’ll network and exchange best practices with a robust group of peers, including:

• 350+ Like-Minded Attendees – Ensuring healthy business development and networking

• 25% Retailer Participation – The ONLY event built in partnership with the UKGCVA

• 20+ Hours of Content & Networking – Covering the biggest opportunities and challenges across the UK and Europe, including technological innovations, regulatory actions and new prepaid verticals and channels

• 6+ hours of UKGCVA-Led Content – Designed just for retailers’ unique marketing, digital, B2B and B2C opportunities

During two days of workshops and sessions, you’ll hear about the latest innovations in prepaid for both closed and open-loop players, as well as the regulatory challenges in the pipeline. Download agenda highlights here.

You must register by 14 December for the best possible rates, so don’t delay.*

Get Involved

Why not consider sponsoring a luncheon, cocktail party or refreshment break, or an Exhibit Booth?

For more information on sponsorship or exhibition opportunities, please contact Terri Sobol at +1 646-895-7473 or email tsobol@iirusa.com.

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25 Intriguing Things About Prepaid You Should Know

The Prepaid space is rapidly evolving and transforming, more than ever before. Here are 25 things of note, we thought you might find interesting:


Outlook


1. $82 billion. That's the amount expected to be loaded onto Prepaid cards in 2012. (Tweet this)

2. The amount loaded on prepaid cards in the U.S. is growing by 42% per year, will hit $167 billion in 2014. (Tweet this)

3. Mobile POS payments is expected to grow from $362.6 million in 2011 to $1.4 billion in 2017. (Tweet this)

4. The use of cash is predicted to decline 3% a year until 2015, (Tweet this) through 2015, the use of cash will decline by nearly $200 billion. (Tweet this)

5. Cash point-of-sale purchases is expected to drop to 23% by 2017. (Tweet this)

6. Prepaid cards are to overtake gift cards in terms of sales by 2014, reach $139.4 billion by 2017 (Tweet this)

Usage


7. Where prepaid cards are purchased makes a big difference in how they are likely to be used (Tweet this)


8. Consumers are using prepaid cards as a way to access wages, direct deposits increased by nearly 70% in 2011. (Tweet this)

9. An estimated $57 billion was loaded onto prepaid cards in 2011. (Tweet this)  

10. 22.1% of consumers likely to use prepaid cards earn between $66,000 and $100,000 a year. (Tweet this)

11. 56 percent of underbanked consumers in this recent study used their prepaid card for online purchases (Tweet this)


Mobile


12. About 15% of the U.S. population is underbanked. They are more likely to use their mobile device for banking. (Tweet this)

13. Mobile payments is said to overtake credit card payments by 2020. (Tweet this)


14. NFC-enabled mobile payments and contactless credit cards are positioned to rival cash by 2016. (Tweet this)


15. 1 in 3 underbanked consumers are likely to conduct international mobile money person-to-person (P2P) transfers. (Tweet this) 


15. More than 10 percent of mobile phone owners have already made payments using their phones. (Tweet this)

Unbanked/Underbanked


16. The share of households with checking declined four percentage points from 2010 to 2011. (Tweet this) 


17. 53% of Gen Y and 47% of underbanked consumers report that rewards would encourage their adoption and use of prepaid cards.  (Tweet this)

18. An estimated 35 million US adults (or 15% of the U.S. population) is underbanked. (Tweet this)

Cashless Society

19. By 2014, transactions conducted via wireless connections from phones world-wide are expected to total $1.13 trillion. (Tweet this)

20. Only 27% of all point-of-sale purchases in 2011 were made with cash (Tweet this)

21. Fifty-three percent of all person-to-person payments are in cash  (Tweet this)

22. In the UK, cash accounts for less than 3% of the “money" in use. (Tweet this)

Global Lens/Emerging Markets

23. The Chinese prepaid cards market valued over US$160 billion in 2011. (Tweet this)

24. Global mobile transactions grew to $241 billion in 2011, and are expected to reach $1 trillion by 2015. (Tweet this)

25. Growth rates in excess of 50% a year annually are expected in China and Poland on cards or through alternative payments channels. Japan has expected growth of 20% a year. (Tweet this)


About the Author

Valerie M. Russo is a Senior Social Media Strategist at IIR USA with a technology, anthropology, marketing and publishing business acumen.  She will be attending Prepaid Expo 2013 and covering the event live via Twitter and the Prepaid Expo Blog. She is a published poet and also maintains a literary blog. She may be reached atvrusso@iirusa.com. Follow her @Literanista.

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