NEW YORK, N.Y. – Visa wants to make it easier for people to spot a cheaper prepaid card.
The payment processor said it will put labels on packages of cards that meet a new set of standards it unveiled Tuesday.
Those standards include a flat monthly fee and no hidden charges. Companies that issue Visa prepaid cards will have to apply for the new label, and the program is voluntary. It could take up to a year before the seal of approval starts showing up on packaging.
Prepaid cards are mainly aimed at people without checking accounts. The cards allow people to pay bills, receive direct deposits and swipe it like a debit card in stores.
But critics have said some cards aren’t clear about what they charge, even attracting attention from the Consumer Financial Protection Bureau. The federal agency is currently testing fee disclosures that it may propose on prepaid card packaging.
Visa hopes its new label will push card issuers to be more transparent and lower fees. To receive the label, the card must have no fees for declined transactions, calling customer service, paying at a cash register, using in-network ATMs or for getting cash back at a register. The cards also must be insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration. They will also have Visa’s fraud protection.
The new standards were developed with the Center for Financial Services Innovation and The Pew Charitable Trusts.
Visa hasn’t come up with a new name for the label yet, said Cecilia Frew, who oversees its prepaid card business. Since card issuers need to apply to receive the label, it could be nine to 12 months before Visa starts awarding them.
The new label is only for U.S. cards. Visa has 25,000 prepaid card partners around the world.