Prepaid Pays Dividends

The U.S. Consumer Financial Protection Bureau has again delayed implementation of a rule that puts restrictions on prepaid cards, including greater disclosures and overdraft limits. The rule was delayed from April 2018 to April 2019, citing the industry needs more time to comply.

One proposed change would require customers to register accounts in order to receive fraud and error protection benefits.

C. Sue Brown, director, prepaid advisory service for Mercator Advisory Group Inc., said that hopefully the delay will bring closure.

“The industry has been in limbo on these (rules) for several years. The first challenge will be getting all of the disclosures ready, followed by repackaging for cards sold in retail locations. The new regulations now also cover mobile payments and person-person payments (like Venmo and Zelle), and this will be new for them.”

In 2018, Brown expects growth will slow in many categories of prepaid debit cards, such general purpose reloadable (GPR), as this segment is maturing.

Mercator Advisory Group recorded growth of 6% in the closed-loop in-store gift cards segment in 2016, to $91.1 billion, and forecasts a 2% compound annual growth rate through 2020, when loads will reach $99.6 billion.

Brown advised retailers to consider adding open-loop cards (Visa, Mastercard, etc.) as well. If stores are already offering limited financial services, such as check cashing, money orders and bill pay, they should consider adding GPR with a processor in order to add loads to cards or join a load network.

Recently Casey’s General Stores partnered with Blackhawk Network Holdings Inc., to offer Amazon Cash to customers. Amazon Cash allows consumers to load between $15 and $500 in cash to their Amazon Balance without fees. They just show the Casey’s cashier a personalized Amazon barcode, along with the money they wish to load. The amount is then applied to the customer’s existing Amazon account and available to use for online shopping on

“We are constantly looking for ways to leverage different platforms that provide for our customers. In some cases we are the only opportunity in our communities to provide these types of services,” said Michael Richardson, vice president, marketing for Casey’s, which operates more than 2,000 stores in 15 Midwestern states. “We feel that it is another reason for customers to stop at our stores and to get what they need. That is a benefit to both our customers and to us.”

In addition to offering the standard prepaid options, Casey’s also offers bill pay solutions through PayNearMe. Its prepaid card options span open loop (Visa MasterCard), closed loop (iTunes, Google, eBay), prepaid wireless (Verizon, Boost, Tracfone) and financial service cards (Net Spend and Green Dot reloadable Debit cards).

“We also offer real time reloads at the register for no contract phones. Each store has a dedicated prepaid fixture,” Richardson said.


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