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Home > Consumer Credit & Payments > Payment Cards Center > Payment Cards Center Publications > Update Newsletter > Spring 2010

Update Newsletter: Spring 2010

Federal Regulation of the Prepaid Card Industry: Costs, Benefits, and Changing Industry Dynamics

On April 8-9, 2010, the Payment Cards Center hosted a conference titled “Federal Regulation of the Prepaid Card Industry: Costs, Benefits, and Changing Industry Dynamics,” which brought together approximately 100 representatives from the prepaid card industry, consumers, regulators, and law enforcement personnel. At the conference, five panels examined the economics of prepaid cards and the benefits and costs of their regulation from the standpoint of several different product categories. The objective was to better understand the changing dynamics of the industry, anticipate what these markets will look like in the future, establish an appreciation of the variation in prepaid models, and begin a discussion of how existing and possible future regulation will affect the development of these products.

An excerpt from the conference agenda is provided below:

By many accounts, prepaid cards are entering a major period of growth and refinement. The economic downturn and new regulations affecting competing products (such as credit cards and deposit accounts) could further stimulate this development. However, the prepaid card market also faces significant challenges. In the past year and a half, several federal agencies have proposed or issued regulations that affect prepaid cards. More regulation could be coming.

Several factors explain this level of regulatory scrutiny, including (1) consumers’ increased exposure to prepaid products; (2) concerns about gaps in the existing protections afforded to consumers using electronic forms of payment; and (3) concerns about the use of prepaid cards to facilitate illegal activity.

The full agenda with details about each of the five sessions is available. PDF

A conference summary is forthcoming.

Left to right: Andrew Kese, Citi; Gary Lott, ADP; Nora Arpin, Comerica; Stephen Middlebrook, U.S. Department of the Treasury; Christopher Paton, J.P. Morgan Chase.Left to right: Andrew Kese, Citi; Gary Lott, ADP; Nora Arpin, Comerica; Stephen Middlebrook, U.S. Department of the Treasury; Christopher Paton, J.P. Morgan Chase.