Types of prepaid: Who needs an actual debit card when there are hordes of prepaid debit cards on the market? That’s a question you might have to ask yourself with more retailers (and at least one wireless provider) launching their own cards. But while the branding on the front of the card might be for a store, it’s the bank or processor behind that card that is cashing in.
Every prepaid debit card is required to be backed by a bank. The banks act as a conduit to route transactions and hold deposits in exchange for fee income. And business is booming for these banks, thanks to an exemption on capping fees for prepaid cards in Dodd-Frank,
the Washington Post reports.
Prepaid products cover a spectrum of uses including for general purchases, payroll, and government tax refunds, allowing banks plenty of opportunity to cash in.
Banks sponsoring prepaid cards make money from deposits, fees incurred by customers using the card and the fees merchants pay when people purchase goods using the cards. With more than $99.2 billion in prepaid transactions taking place in 2012, banks and processors aren’t exactly hurting.
Becoming a prepaid card sponsor isn’t easy, though. Banks are required to comply with federal and state regulatory guidelines and must be able to provide a large investment to manage the programs.
Banks aren’t just sponsoring prepaid cards for retailers, many offer their own cards. So how much are banks making off their own cards? That’s not so cut and dry, since most banks don’t break down the revenue in their earnings.
Since prepaid cards don’t seem to be going away anytime soon, at least take a look at
https://idtfinance.com/typesofprepaid.html