Prepaid card are a great stand-in for cash. Annual payroll card loads alone are expected to reach $68.9 billion by 2017, according to a new report from Aite Group. That’s more than twice the total loaded onto payroll cards last year ($34.1 billion, by Aite’s reckoning).
Typically branded with a Visa or MasterCard logo, payroll cards are used as alternatives to cash payments for unbanked and underbanked workers.
Payroll cards are just one 18 different types of reloadable prepaid debit cards identified by the consultancy Mercator Advisory Group which follows the prepaid card space. The Federal Reserve Bank of Atlanta estimates $202 billion will be loaded onto government benefits, payroll and other categories of prepaid cards this year, up from $28 billion in 2009.
That’s a lot of cash, and now the federal regulators want to be sure criminals aren’t using the cards to smuggle ill-gotten monies out of the country.
According to an article appearing last week in The Hill, a daily covering Congress, the White House is now reviewing regulations developed by the Financial Crimes Enforcement Network (FinCEN) that would require travelers to inform U.S. Customs officials if they’re carrying prepaid cards with more than $10,000 in value.
Not surprisingly, the planned regs have drawn opposition from banks and prepaid card companies. Some have suggested they discriminate against the unbanked and underbanked.
The Network Branded Prepaid Card Association (NBPCA) said in a comment letter that the plan creates numerous problems; that a case can be made even that it violates state and federal financial privacy statutes.
“In addition,” NBPCA wrote, “prepaid access devices are not at all similar to currency, monetary or other bearer payment instruments and indeed are distinct as payments methods in that their use requires pre-authorization, similar to debit or credit cards.”
“In addition,” NBPCA wrote, “prepaid access devices are not at all similar to currency, monetary or other bearer payment instruments and indeed are distinct as payments methods in that their use requires pre-authorization, similar to debit or credit cards.”
Some opponents have met with Administration officials, The Hill reports. But it’s unclear if that’s going to make a difference, as at least one Senate aide told the daily that getting the new regs in place is a to-do item for Democrats in that chamber.