Prepaid Cards Have Wide Range of Fees, but More Popular Among Millennials

by Ben Jackson 0

A new survey from Bankrate.com finds that the number of open-loop prepaid card programs that have no fees or will waive them has increased from last year. Another survey from TD Bank finds that prepaid cards are more popular among 18-to-34-year olds, Digital Transactions reports.

Prepaid cards may find favor among younger consumers, one survey finds, while another reports prepaid card programs sport a wide range of fees. Also, armored-car company Brink’s has jumped into the prepaid card mix.

While prepaid cards are reducing monthly fees, finding favor among young adults, and drawing interest from new companies, the industry still faces reputational and regulatory battles. The coverage of prepaid cards still has a tendency to make comparisons, whether implicit or explicit, with free checking accounts. These comparisons fail to take into account that so-called ‘free’ checking accounts are paid for with revenue streams that aren’t available to most prepaid program managers, since they are not lenders.

Additionally, the prepaid industry is still waiting to see what the results of the Consumer Financial Protection Bureau’s rulemaking process will be. A comment period on proposed rules ended in late March. The roughly 900 pages of rules seemed to be scattershot approach of trying to regulate anything associated with open-loop, non-gift prepaid card

Despite these two problems, the article reports the launch of a card by Brink’s, which is a sign that the industry does not think it is time to close up shop. The industry has a lot to offer financial services customers, but those tools may be destroyed if regulations make it impossible to offer cards at an affordable level.

Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group

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