Prepaid debit cards - Easy targets for misinformed reporters
In a recent article in the Las Vegas Review-Journal (Prepaid debit cards endanger personal security) reporter Jane Ann Morrison references an incident with a Wal-Mart Prepaid debit card and a Consumer Reports article to infer that Prepaid debit cards endanger personal security. First of all, I take exception to holding the entire Prepaid debit card industry up to any standard set by a Wal-Mart financial tool. Secondly, this article has nothing to do with endangering personal security…it’s another article about fees.
In her article, Ms. Morrison reports on a 17 year-old girl who is asked to provide her name, address, phone number, email address, date of birth and - the last straw - her Social Security Number in order to activate a Wal-Mart MoneyCard Preferred Prepaid debit card. The reporter goes on to explain that the father discovered on the pay card’s website that the demand for this information was because of the Patriot Act, something the father and the reporter found ridiculous - “But apparently it’s one more thing the government wants to know about you to prevent terrorism and money laundering.” Now, to the best of my recollection, I have been asked to supply the exact same information at the doctor’s office, the hospital, the bank, car and motorcycle dealerships, schools, universities and pretty much every other institution where I intended to do some form of business transaction. Is this article, then, trying to intimate that this 17 year-old girl will never have a bank account, education or loan? Or, is it trying to point out that you can give all of this information to other entities, but not to Wal-Mart? Could this article be saying that all of these other business types “endanger personal security?” Certainly none of these things can be true. So what, exactly is this article trying to point out?
Many Prepaid debit cards were originally created to service unbanked people suffering at the hands of predatory consumer practices like check cashing, funds transfer, and bill paying via money orders. Over time, Prepaid cards have become the principal financial tools for millennials (who don’t trust banks), immigrants (who don’t trust banks), people who shop online (to protect their bank card accounts) and travelers protecting their travel funds and identities. Another current trend taking place involves banking groups creating Co-branded Prepaid card programs to provide payroll distribution services to their commercial accounts as well as alternative banking products to customers that cannot qualify for a standard bank account.
Prepaid debit cards have fees. Sometimes those fees are heavier in the setup and monthly recurring fees category and lighter in the usage areas. Sometimes it’s vice-versa. Sometimes the fees are heavy on both ends. Program Managers have been experimenting with fees for years, attempting to find the right combination of fee structures that appeals to their intended consumer. There is no “one size fits all”, but there is probably a card out there that fits a prospective cardholder just right. But, if you want to compare fees on Prepaid debit cards to having a bank account with a debit card there are just a few questions you need to ask:
Have you seen the charges for bouncing a check lately? (You can’t overdraft a prepaid card.)
Have you seen the charges for using your bank issued debit card at an “out-of-network” ATM? (Most banks do not support “surcharge-free” ATM networks.)
How much does your bank charge for Electronic Bill Pay? (Most often, $9.95 per month… whether you use it or not.)
Have you tried to cash a check issued from a bank that you did not have an account at? (Bring a DNA sample and $6.00 - $10.00 with you.)
I believe, with some research, you will find that bank accounts with debit cards aren’t such a great standard to be holding your Prepaid card up to for comparison.
In the end, we are still left wondering what the point of the original article was. But my guess is, demonizing an up-and-coming disruptive technology that upends the status quo would, as usual, be the end goal.
turnnoffyourmind
dailybridgerton