An article relating to this blog post on Finextra:
Alliance and Leicester establishes pre-paid card unit
UK banking group Alliance and Leicester (A&L) is establishing a new business unit focused on developing pre-paid card products and services.
If a bank like A & L offers on one hand deposit accounts and on the other hand prepaid accounts - where does the regulator draw the line between the two fundamentally different services?
How does the bank know who holds the prepaid account it the card and account is handed over as a gift to somebody else than the original purscaser? Are the prepaid funds covered by the EU deposit protection order in case of bankrupcy of the institution?
And if not, why - if the institution is a bank that takes deposits as well? After all the prepaid accounts contain funds accepted from the public and are to be kept separate from anybody else's funds and are to be paid out on demand to the account holder.
In what material sense do prepaid and deposit funds then differ from each other?
Is this the reason for A & L to set up a special company outside the bank for the purpose?