of Card Programs
There are several dozen types of prepaid cards. UVG primarily focuses on the handful of types described here:
Prepaid Cards for Community Banks and Credit Unions
Prepaid cards can generate new fee income for depository financial institutions through revenue sharing of all fees and charges from card transactions. Revenue opportunities for community banks were negatively impacted by recent rules, regulations, and legislation like the CARD Act, the Dodd-Frank Act, and the Durbin Amendment. Unwilling and unable to make loans that generate profits, depository financial institutions big and small are struggling to increase fee income and revenues in a low interest rate environment.
Additionally, prepaid cards can result in new customer acquisition as well as expansion of the deposit base through the customer deposits made to these prepaid cards. These are cash deposits (rather than deposit accounts) that reduce the interest rate and the amount a bank must borrow each night from the U.S. Treasury for liquidity.
There is no risk of overdraft fees for prepaid cards. Payroll cards of corporate clients of a community bank or credit union are more cost effective than debit cards with heavily regulated transaction fees.