The middle for Responsible Lending is a research that is non-profit policy company aimed at protecting home-ownership and household wide range.
Let us start out with the after premise: with regards to technology and therefore main product expenses, basic purpose reloadable prepaid cards are indistinguishable from debit cards related to checkless checking reports.
Both prepaid and debit cards must maintain a database of specific account documents; both access the payments that are same through a bank person in a funds transfer community 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 go through a bank to get into the re payments system.
Thus, the greatest differences when considering prepaid cards and debit cards are differences perhaps perhaps perhaps not in technology however in regulation, or what exactly is frequently referred to as « regulatory arbitrage » and only the providers that are unregulated.
Some situations of regulatory arbitrage between bank providers of checkless debit card reports and presently unregulated card that is prepaid 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 missing cards or card that is unauthorized; and
- Prepaid cards are exempt through the Durbin interchange demands, at the least when it comes to smaller, rent-a-charter banking institutions. Plus »