The middle for Responsible Lending is a research that is non-profit policy organization focused on protecting home-ownership and family members wide range.
Let us start with the premise that is following with regards to technology and therefore fundamental item expenses, basic function reloadable prepaid cards are indistinguishable from debit cards connected with checkless checking records.
Both prepaid and debit cards must keep a database of specific account documents; both access the payments that are same by way of a bank person in a funds transfer system such as for example Visa or MasterCard.
Both prepaid and debit cards have actually a necessity to “know your client” considering that the records must move across a bank to get into the re re re payments system.
Hence, the greatest differences when considering prepaid cards and debit cards are distinctions maybe maybe not in technology but in legislation, or what exactly is usually called “regulatory arbitrage” and only the providers that are unregulated.
A few examples of regulatory arbitrage between bank providers of checkless debit card reports and presently unregulated prepaid card providers consist of:
- Debit cards have periodic written statements of account under Regulation E;
- Regulated debit card providers have actually mandated capital that is minimum;
- Debit cards have actually customer protections for lost cards or unauthorized card use; and
- Prepaid cards are exempt through the Durbin interchange demands, at the least for the smaller, rent-a-charter banking institutions.
Prepaid cards needs to be needed to meet with the after three guidelines: