For many Americans, prepaid accounts — which include prepaid cards, mobile wallets and other access devices — are an irreplaceable financial tool. For those who cannot afford or choose not to open a traditional bank account, prepaid accounts provide a safe and affordable alternative.
Importantly, prepaid products promote financial inclusion for all Americans, regardless of income or ability to pass a credit check. They also provide access to our growing digital and online economy.
The development of new regulations is often an arduous task. Appropriate care must be taken to gather input from all interested parties: from consumers to industry participants to policymakers.
Since 2012, the prepaid industry has been working with the Consumer Financial Protection Bureau in good faith to ensure the final rule for prepaid accounts protects and informs consumers and permits the industry to continue to innovate to meet customer needs.
The bureau issued its initial final rule in October 2016; however, in June 2017, the bureau proposed substantive amendments to the rule and extended the effective date to April 1, 2018. Despite the extended implementation deadline, these amendments have not yet been finalized, leaving prepaid providers with numerous questions regarding how to implement a rule that is not yet complete.
However, in a positive step, in the final days of 2017, the bureau announced that the amendments to the rule will soon be finalized in 2018 and that the implementation deadline will be extended. However, the bureau has not revealed the substance of the changes it expects to make to the final rule, nor did it specify the length of the implementation extension.
The same day as the bureau’s announcement, Rep. Scott Tipton (R-Colo.), Sen. Mike Rounds (R-S.D.), Rep. Randy Hultgren (R-Ill.) and dozens of their congressional colleagues called upon the CFPB to extend the effective date of the prepaid accounts rule by one year. The Network Branded Prepaid Card Association agrees with their assessment that extending the effective date to April 1, 2019, would remove the uncertainty surrounding the final rule and the upcoming amendments, and give prepaid providers adequate time to seamlessly implement the rule.
Most importantly, extending the effective date will also ensure consumer access to prepaid products is not compromised while the industry is implementing the changes required by the new regulation. Prepaid providers will be given the time required to make changes to their programs in a thoughtful manner that benefits cardholders by causing as little disruption as possible.
Without prepaid accounts, individuals would be less able to manage their money, track spending, pay bills, shop online and receive direct deposits. As a result, many Americans, including some of the 45 percent of unbanked Americans who turn to prepaid products as their primary bank account, would have fewer options and may face significant harm if these accounts were suddenly less available.
With the new year underway, the NBPCA will continue to work with the bureau, members of Congress and other industry stakeholders to advocate for a rule that, first and foremost, protects consumer access to prepaid accounts. Extending the implementation deadline to April 2019 would provide the industry the necessary time to review the final rule, determine its impact and make appropriate changes needed to fully implement the regulation.
Like the CFPB, the prepaid industry has always had a consumer-first approach, and consumers’ financial access and safety should not be compromised by rushing the implementation of a complex rule.
Brian Tate is president and CEO of the Network Branded Prepaid Card Association (NBPCA).
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