T-Mobile enters prepaid card market
Article from Washington Post:
T-Mobile on Wednesday became the latest retailer to barrel into the banking world with the introduction of a prepaid card, entering the market just as lawmakers and regulators move to impose tougher consumer protections on such products.
The use of prepaid cards has exploded in the wake of the credit crisis that pushed millions of Americans outside of the traditional banking system. Chain stores, including Wal-Mart, Walgreens and Target, have entered the marketplace with broad access to those consumers left on the sidelines.
Advocacy groups, however, have raised concerns that issuers of prepaid cards are not always transparent about the fees or rules associated with their products. And while the cards act much like debit or credit cards, they are not covered by the same strict consumer-protection laws.
But Michael Goo, vice president of marketing…………………continues on Washington Post
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Rise in prepaid debit cards entices banks to sponsor them
Article from Washington Post:
The entrance of more retailers such as T-Mobile into the prepaid debit card market could entice more retailers to launch their own cards and more banks to back them.
Behind every prepaid card is a bank that routes transactions and holds deposits in exchange for fee income. A handful of regional banks have dominated this niche market, but as the industry grows, more institutions could latch onto the service to offset diminishing revenue.
Gaining a foothold as a sponsor, however, entails a level of management and regulatory compliance that few banks can handle or afford. And as government agencies crack down on banks for failing to oversee their third-party partners, the risks of the business could outweigh the rewards.
“There’s great demand for bank sponsors,” said Karen L. Garrett, a partner in the banking and financial services division of Stinson Leonard Street. “But it’s not someth…………………continues on Washington Post
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