Consumers Union Says Municipal Cards Should Be Mostly Free

by Mercator Advisory Group 0

In a letter to the International City/County Management Association, the Consumers Union expressed concern that prepaid cards offered by cities are too expensive and should instead offer a low –cost way for people to access financial services.

Consumers Union, the policy and advocacy of arm of Consumer Reports, has been following with great interest the development and implementation of hybrid municipal identification prepaid cards and transit prepaid cards. We are concerned that some prepaid cards issued recently by cities do not provide consumers with the kind of fair deal consumers deserve. As an organization of many city and county leaders, we would like this opportunity to better inform ICMA of our concern regarding such products and services.

In the letter, the Consumers Union calls for free ATM access at all times, free point of sale and balance inquiries, and low monthly and upfront usage fees for any municipally sponsored card. While all of this sounds good on the face of it, the problem becomes sustaining the card program. Offering prepaid cards, connecting to a payments network, and paying the people who provide customer service are just three of the areas where operating a prepaid card program can be expensive. No reputable operator believes that fees should be excessive, but neither do they expect their employees to work without pay.

The years of free checking have falsely conditioned people to think that all financial services can be provided at no cost. But just as people need to pay taxes for roads and sewer, or pay fares to ride buses and subways, they also need to help sustain the infrastructure that allows for electronic transactions.

Click here to read the letter.