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Education

Of course, there are other questions is expected to reach $121 billion by 2018. These GPR cards also play to a wide
and concerns for providers. For ex- demographic of users. Some are "banked," or are established with a bank and
ample, it is unclear how the CFPB have a checking account, and others are "unbanked," consumers who do not
would treat "force pay" transactions, have a traditional bank account and many rely exclusively on GPRs for their
such as when a gas station pre-autho- currency needs.
rizes a minimal amount on a card at
the pump to confirm its validity. Research done by the Federal Reserve Bank of Boston shows that 45 percent of
unbanked individuals own a prepaid card. How many people are unbanked?
Once the transaction is complete, the According to American Banker, there are nearly 68 million unbanked or
purchase amount could overdraw the underbanked Americans. Regardless of their banking status, however, the
account. Some uncertainties in these appeal of prepaid cards is easily understandable in today's society.
new rules may place such transac-
tions in violation of regulations. Be- They are ideal for those with credit issues, convenient, often safer than carrying
cause, indeed, the CFPB may also be cash, and many people use them as a measure to help control their spending.
altering the way overdrafts are han- A recent Pew Research Center survey found that approximately 10 percent of
dled. Instead of allowing overdrafts all U.S. consumers reported spending with a GPR card at least once a month.
for a fee as they do at banks, prepaid
card providers may have to begin This is a vital industry that needs to remain secure and accessible to consumers.
limiting overdrafts like credit cards. It is also an area in which providers need to expand to meet growing needs and
not be restricted into obscurity. Let's hope Cousin Eddie doesn't appear again
Before that rule is enacted, the CFPB for a while.
is looking into mandating banks to
perform credit checks on their cus- Brett Husak is Director of High Risk Merchant Services National Bank Services. Contact him at
tomers to ensure they can afford an bhusak@nationalbankservices.com.
account overdraft feature. If that is
successful, they may enact the same
plans for prepaid cards. As with any
new regulations, consumer safety is
always a priority, but we do not wish
for changes that restrict people from
using their prepaid cards or that cre-
ate such hurdles for providers that
they are driven from the market.

Ascending digital payments

The term "cash is king" is slowly mov-
ing into retirement along with the
generation of baby boomers. Over
the past 10 to 15 years, we have
evolved into a payment technology-
dependent society. With millennials
taking the wheel, digital payments
and cards have taken front and cen-
ter as payment methods. Credit and
debit cards have long been the staple
in card usage, but over the past five
years the industry has experienced a
surge in the growth of general-pur-
pose reloadable (GPR) cards as well.

Just how important is this industry?
The numbers are pretty impressive.
According to the CFPB, the amount
of money that consumers put on GPR
prepaid cards in 2003 was less than
$1 billion. By 2012, that amount had
ballooned to almost $65 billion and it

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