Today, the underserved — many of whom choose not to join a credit union or open an account with a bank simply because they do not trust U.S. financial institutions — are frequently using expensive nonbank financial services, like money orders, check-cashing and payday advances instead. Prepaid cards, too, are a growing alternative for this group, who are looking for fast, easy and cheap ways to pay bills and to make purchases.
To protect underserved consumers, scrutiny of prepaid card products is on the rise. In fact, financial regulatory organizations, like the Consumer Financial Protection Bureau (CFPB), are under enormous pressure to crack down on all manner of so-called predatory services targeting the underserved.
If your credit union plans to offer a prepaid card product as part of your strategic growth, this is something you need to keep an eye on. Monitoring the situation is not just to protect your business, but it is also so you understand the competitive advantage you can leverage with the right prepaid card product.
Before you partner with a prepaid card vendor, do your homework — know the differences in the available options (fee structures, terms and conditions, as well as disclosures). To make sure you are bringing the safest, most reliable and best-suited product forward, find the prepaid card that is tailored to match the financial behaviors of your members.
The content of this blog is based on the Coopera white paper “Prepaid Cards Are Not Created Equal.” Download the paper for free today.Leave a comment