Visa Inc. (NYSE:V), the leader in global payments, today announced a new designation for consumer reloadable prepaid products in the US, aimed at simplifying fees, improving consumer protections and creating opportunities for cardholders to improve their financial health.
The designation was developed in conjunction with industry thought leaders the Center for Financial Services Innovation (CFSI) and The Pew Charitable Trusts.
"Consumers have been confused by an often complex prepaid landscape," said Ryan McInerney, president, Visa Inc. "As a prepaid leader, we felt it was important to go beyond current requirements in the marketplace and bring transparency to this growing product area. This Visa designation will signify a new level of simplicity, protection and opportunity, enabling cardholders to confidently manage their spending every day."
To qualify for the new Visa prepaid designation, prepaid programs must meet a set of standards. Cards that meet these requirements will receive a seal that will be visible on card packaging and materials. Features of Visa's new prepaid designation include:
Simplified fees and transparent disclosures
A flat monthly fee that includes all basic day to day activities1. Consumers will not be charged:
Transaction decline fees
Customer service fees
In-network ATM withdrawal or balance inquiry fees
PIN or signature transaction fees
Cash back at point of sale (POS) fees
No overdraft coverage or fees
Consumer-friendly communication of fees (e.g., fee box and disclosures)
Quick-use guide for consumers to find the best ways to use the product for the lowest cost
Superior consumer protections
Individual FDIC / NCUA insurance required
Dispute resolution rights under Reg. E
All cards are covered under Visa's Zero Liability2 policy
Access to Visa's Prepaid Clearinghouse Service (PCS) for better fraud protection
"At Visa, we believe prepaid cards can play an integral role in a consumer's day-to-day financial matters," said Cecilia Frew, head of US prepaid products, Visa Inc. "Whether a consumer wants to use their prepaid card as an account to direct deposit their paycheck and pay bills, or as a companion card to help control spending, this derd to help control spending, this designation will clear the way for consumers to pick the prepaid product that is right for them," said Frew.
"We applaud Visa's efforts to raise the bar on quality in the prepaid industry by building on our Compass Principles," said Jennifer Tescher, president & CEO of CFSI. "Their efforts are vital because millions of Americans are searching for tools to help them reduce financial friction, and prepaid cards can be a valuable option. We look forward to continuing to work with Visa to design and test new prepaid features and options that enable consumers to spend, save, borrow and plan effectively."
"More Americans are turning to prepaid cards as a way to manage money, but Pew's research shows that these cards should be made more consumer friendly," said Susan Weinstock, who directs consumer banking research at The Pew Charitable Trusts. "Visa is taking an important step forward by acknowledging the importance of clear disclosures and consumer protections. It's particularly encouraging that Visa is not allowing overdrafts on these cards, in light of our research on consumer prepaid card use."
Visa also aims to keep prepaid at the forefront of financial services innovation. Thus, Visa will continue to work with industry thought leaders on finding opportunities for consumers to improve their financial health, whether through creative approaches to financial education, new products to help consumers save, or ways for consumers to safely build credit. As regulations, consumer needs and technology evolve, Visa will revisit these standards with a commitment to delivering more simplicity, protection and opportunity to consumers.
"We created this designation to help people easily choose a Visa prepaid card that gives them more control over their money - anywhere, anytime - without surprises," said McInerney. "Through close partnership with our clients, Visa will help lead the way on promoting these new standards, while continuing to advance the prepaid industry."
The new designation is the latest example of Visa's leadership in payment industry standards. Earlier this year Visa announced the Prepaid Clearinghouse Service, a new industry solution to identify and mitigate prepaid card fraud. Visa is also working with other card networks to introduce a global tokenization standard to enhance the security of digital payments and simplify the purchasing experience when shopping on a mobile phone, tablet, personal computer or other smart device. Visa is also a founding member of the EMV coalition that seeks to ensure the security and global interoperability of chip-based payment cards.