Implications Of The Government 's New Regulations On Prepaid Cards And Digital Payment Services

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Implications of the Government’s New Regulations on Prepaid Cards and Digital Payment Services

As reported in the Los Angeles Times and the Wall Street Journal, the Consumer Financial Protection Bureau recently announced that prepaid cards and digital mobile payment services like Venmo, PayPal, and Google Wallet, will have protections placed on them similar to those placed on credit cards and traditional banking transactions. These protections include clearer fee disclosures, restrictions on card issuers like the obligation to investigate and resolve errors, and limiting consumer financial losses when cards are lost or stolen.

There are differences in the implications for those who use prepaid cards and those who use digital payment services. Prepaid cards are used to make financial transactions just like those carried out by credit cards, but their market is catered toward those with lower incomes – roughly 23 million Americans. Digital payment services, however, are more likely to be used by those in the middle-to-upper classes. Digital payment services must be tied to credit cards and bank accounts. This difference in market share results in different impacts for prepaid card and digital payment service users. The implications for digital payment service users relate to fees, market share for the companies, transaction times, and data security. The implications for prepaid card users relate to

One consequence of the new regulations is that the digital

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