ales of value-added services such as loyalty programs and pre-paid and stored-value products are highly touted by just about everyone in the financial services industry.

Any way you look at them, they can't be beat as revenue generators, considering the advantages they provide in upselling, distribution, inventory control and employee shrinkage.

Stored-value cards are now issued by malls, chain and individual merchants including retailers, restaurants and coffee shops, and often by banks with Visa- and MasterCard-branded logos.

A National Retail Federation (NRF) survey estimated that holiday shoppers would spend $17.24 billion on pre-loaded plastic cards in 2003; that would account for 8% of all holiday sales, according to the survey. The NRF also found that 69% of consumers planned to buy one-size-fits-all gift cards.

Payment service providers and retailers aren't the only ones talking about gift cards these days. As they become more popular with merchants and consumers (Starbucks has issued 18 million gift cards since 2001), some lawmakers are calling for tighter regulations on hidden fees often attached to stored-value cards.

Consumers are usually not aware that the cards can be assessed per-transaction fees and additional service fees of up to $2.50 a month beginning as early as six months after purchase.

Legislators, including Sen. Charles Schumer, D-N.Y., are hoping to put an end to this; Schumer has promised federal legislation in early 2004 to crack down on fees that diminish the value of the cards without recipients' knowledge.

Schumer will base his legislation on California and Massachusetts state laws that prohibit monthly fees, allowing the cards to retain their full value no matter when they're used.

In December 2003, the Massachusetts Attorney General's office issued a warning expressing strong concerns about what it calls the "worst consumer deals out there: the so-called debit card gift card," to which the state laws don't apply.

These bank-issued gift cards can be used like a Visa or MasterCard-branded debit card-even at ATMs-but they also come with fees not typically associated with debit cards. Several major retail chains offer gift cards that don't come with monthly fees but may have expiration dates, including Sears, Macy's, Home Deport, The Limited Brand stores, Blockbuster and Starbucks.