Banks Should Stop Issuing Prepaid Cards
Banks and Credit Unions are great at creating financial products for customers. Checking accounts, savings accounts, mortgages, loans, credit cards and debit cards are the mainstays of the banking industry and you can find a solution to meet your needs at any local branch.
But prepaid is different. The consumer that is attracted to a general purpose reloadable card or a payroll card has different needs than the average DDA account holder. And the regulations for prepaid cards are in constant flux with new rules for Reg E and Reg Z being proposed and questioned with regularity. The CFPB has finalized new prepaid rules that are scheduled to be implemented in October. But the bureau may never have the chance to finalize the rules. GOP members of Congress have introduced resolutions that would prohibit the CFPB from issuing the rules.
Prepaid cards are essential for a competitive product portfolio. So what should community banks and credit unions do to meet their customer needs? They need to ensure they have established relationships with prepaid experts to navigate these complicated and ever-changing regulations. That means looking to banks the specialize in prepaid issuing and identifying program managers that understand how prepaid cards complement traditional bank products and services.
The Outsourcing Solution
When a community bank or credit union turns to a qualified program manager to deliver tailored prepaid solutions, they benefit from a partner that has experience managing programs for hundreds of banks and businesses. Prepaid program managers establish issuing relationships with banks that have a wealth of highly-specialized staff members focused on the industry. By working closely with prepaid issuing banks, the program manager can deliver turnkey programs where the compliance, operations, due diligence and product delivery solutions are handled for you.
By outsourcing prepaid, a Bank/CU can improve margins, limit risk, increase profitability, and increase product offerings. In addition, partnering with a program manager will expand their geographic reach by enabling customers to sign up for accounts anywhere, without having to come into the branch.
Ready to enjoy the benefits for a prepaid program without the hassle of issuing or managing the program? Let us help you find the right strategic partner. Set up time for a discussion today at https://www.paymentexecutive.com/book-online