Visa® Aims to Make Prepaid Cards Safer and Consumer-Friendly
Recent data breaches have made consumers think twice before using credit and debit cards. In particular, prepaid cards have created some confusion because many people do not clearly understand whether they are offered the same fraud protections as credit or debit cards. Moreover, it is often hard to figure out which prepaid card is best for you.
More people are turning to prepaid cards as a way to manage money, but these cards should be more consumer-friendly. Prepaid cards often come with a host of fees, rules and restrictions that can be difficult to comprehend and compare.
To make it easier for consumers to choose among prepaid cards, Visa designed a new set of standards. Issuers won’t be required to follow those standards though. However, those cards that meet the requirements will receive a Visa’s seal that will be visible on card packaging and materials.
New Visa standards for consumer reloadable prepaid cards are designed to simplify fees, improve consumer protections, and create opportunities for cardholders to improve their financial health. The standards were developed in conjunction with the Center for Financial Services Innovation (CFSI) and The Pew Charitable Trusts.
The most important standards were designed for fees. Visa wants banks to set flat monthly fees that include everything that cardholders would generally want to do with a prepaid card. Specifically, Visa wants prepaid card issuers not to charge separate fees for declined transactions, general customer service, in-network ATM transactions, PIN or signature purchase transactions, and getting cash back at the point of sale.
In addition, Visa wants cards not to charge overdraft fees or provide overdraft coverage. From prepaid card issuers Visa wants to communicate their fee structures clearly and consumer-friendly, for example, using fee boxes and simple disclosures. A quick-use guide for consumers is recommended as a way to minimize the costs of using particular cards.
As for consumer protection, Visa included several important provisions. The first requires that balances be protected by insurance from the Federal Deposit Insurance Corp. or National Credit Union Administration, ensuring if a prepaid card issuer goes under, cardholders won’t lose unused balances.
Visa will also require cards to provide fraud protection. By running cards through Visa’s Zero Liability policy, cardholders should be entirely protected in many cases of fraud.
The goal of all these standards and designations is to make prepaid cards more consumer-friendly. Although Visa’s standards won’t be mandatory, it is believed that regulators like the Consumer Financial Protection Bureau might eventually use them as guidelines for future regulation.
Visa’s moves won’t make prepaid cards perfect, but it’ll be potentially easier for consumers to compare cards and get the best deal.