New York’s new prepaid card laws protect employees

By September 12, 2016Bitcoin Business

This story was delivered to BI Intelligence " Payments Briefing " subscribers. To learn more and subscribe, please click here . Employees in New York that receive their salary on reloadable prepaid cards will gain new consumer protections next year, according to The New York Times . The new guidelines prohibit a variety of card-related fees, including monthly maintenance, inactivity, and balance checking, and mandate that consumers can make unlimited, free withdrawals at at least one ATM within “reasonable travel distance” from home or work. The new guidelines could be beneficial as prepaid becomes more popular and fee structures spiral. BI Intelligence forecasts that prepaid volume hit $317 billion last year, up 44% from 2012, and will continue to grow. And last year, around $12 billion of wages flowed through prepaid cards. But as they become more popular, prepaid card companies are piling on the fees: In 2013, 68% of prepaid card users paid some sort of fee. They could also help prepaid card usage rise. Fees might deter consumers from using their cards regularly. But the “reasonable distance” clause and elimination of many fees might lower some of the barriers to frequent usage and push customers to be more engaged with their cards, which in turn could increase usage and contribute to volume growth, particularly as more consumers begin receiving wages on prepaid cards. And they could serve as a preview of sorts for national regulations. The CFPB is finalizing regulations for prepaid cards nationwide. New York’s regulations, which are considered to be some of the strongest, according to The New York Times, could serve as a guideline for what firms might expect when these regulations are issued. Prepaid cards are one small portion of the larger payments ecosystem, which includes card issuers, merchants, processors, gateways, and more. […]

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