CFPB Regulation Could Have Major Implications for #Prepaid Industry

With the increase in available prepaid solutions, such as FSA/HSA and Campus prepaid cards, this payments vehicle is creating new ways for unbanked consumers to pay and save. From a consumer perspective, prepaid will continue to become more popular. However, the soon-to-be released CFPB changes could create some prepaid strategy modifications for FIs.

With the convenience and flexibility of prepaid cards, it makes sense they’re becoming increasingly popular among financial institutions (FIs) and consumers.

According to a recent Mercator Advisory Group report, open-loop prepaid cards – or general-purpose reloadable cards – will have a compound average annual growth rate of 7 percent through 2018, eventually totaling $343 billion in loads.

As growth rates for prepaid cards continue to increase, it’s important to remember these are only projected numbers. Upcoming changes from the CFPB, and the outcome of the pending presidential election, could have a big impact on the prepaid card industry.

According to Ben Jackson, director of Mercator’s Prepaid Advisory Service, when the new CFPB rules are released, which could be at any time, “The prepaid card industry may completely change, or, if the CFPB relents some, it may continue on close to its current growth model.”

Some of the major provisions to the new rules are as follows:

  • Issuers would be required to send free periodic statements to prepaid cardholders or provide Internet access to account information.
  • Providers must implement error-resolution processes. If an alleged error could not be resolved within a specified period, the disputed amount would be temporarily credited to the consumer during the issuer’s investigation.
  • Consumers’ losses would be limited when registered prepaid cards are lost or stolen. As long as the cardholder notified the issuer in a timely manner of a lost or stolen card, his or her responsibility for unauthorized charges would not exceed $50.

TMG’s Visa- and MasterCard-branded ATIRA prepaid card solutions already meet the provisions described above. For more information, email

With a strong focus on “Know Before You Owe” disclosures, the CFPB’s new rules are aimed to improve consumers’ access to account information. Ultimately, these changes would end up benefiting cardholders in a number of ways and potentially create more leg work for issuers.