The middle for Responsible Lending is a non-profit research and policy company aimed at protecting home-ownership and household wide range.
Let us start out with the following premise: with regards to technology and therefore core item expenses, general function reloadable prepaid cards are indistinguishable from debit cards connected with checkless checking reports.
Both prepaid 100 dollar loan and debit cards must keep a database of individual account records; both access the exact same repayments system via a bank person in a funds transfer network 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 gain access to the re re payments system.
Ergo, the greatest differences when considering prepaid cards and debit cards are distinctions maybe not in technology however in legislation, or what’s usually called “regulatory arbitrage” and only the unregulated providers.
Some situations of regulatory arbitrage between bank providers of checkless debit card reports and presently unregulated prepaid credit card providers consist of:
- Debit cards have periodic written statements of account under Regulation E;
- Regulated debit card providers have actually mandated minimal money demands;
- Debit cards have actually customer protections for missing 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.Continue Reading