Prepaid cards have come a very long way since they were first introduced. Today, millions of Americans use these cards either as their primary financial tool or a backup to a traditional bank account.
Banks are facing stiff competition from prepaid cards. Additionally, as these cards add more features, standard checking accounts are less and less appealing for many consumers.
Here are some of the most exciting features that prepaid cards are beginning to introduce:
Mobile Check Deposit
Despite the ubiquitous nature of technology as it relates to banking, millions of small businesses - and even large employers - rely on paper checks for a variety of purposes. These include paying contractors, employee wages, and customers as well as making other person-to-person payments.
With that being said, many consumers continue to remain with traditional banks because they offer the option to complete check deposits remotely. A survey conducted by ath Power Consulting indicated that mobile deposit is one of the most sought-after banking features. Approximately 66 percent of banks offer this service to customers.
With the demand for mobile deposit so high, it’s no wonder that mobile deposit and mobile check cashing is slowly making its way to the prepaid card sector as well. Some individual prepaid card issuers will be rolling out the feature on their own.
Additionally, developers are hard at work on apps that can be used to make mobile deposits with virtually any prepaid card. One such app, Ingo Money, is designed to let consumers take photos of the paper checks and upload them onto their mobile devices, making funds available almost instantly.
Another feature that banks have traditionally offered is FDIC insurance on deposits up to $250,000 per bank, per account. This provides peace of mind for consumers who are worried about their money in the event the bank experiences some type of loss or large-scale fraud.
The Consumer Financial Protection Bureau (CFPB) recognized the need for financial products such as prepaid cards to be subject to similar insurance protection as accounts offered by traditional banks. The CFPB announced last year that card issuers would be held accountable for protecting consumer funds against loss or theft.
The regulations mandate that card issuers protect consumers from liability for fraudulent transactions in excess of $50. However, this is only the case provided the consumer reports the fraud within two days of its occurrence. In cases where the card has not been properly registered beforehand, there will be very little consumers can do to recover their lost funds.
In addition to mobile deposit and fraud protection, consumers are demanding the flexibility to transfer funds to friends and family who also use prepaid cards. Not only are many card issuers making this feature available to their customers, many times the process is almost instantaneous.
In order for the process to be seamless, the individual transferring the funds and the individual receiving the funds must typically be using the same brand of prepaid card. Assuming that is the case, this can be completed quickly and easily by phone or on the web.
As this feature becomes more common, mobile phone apps associated with prepaid cards may also be able to accomplish this task. Regardless of the method used, it is typically free to transfer funds in this manner (provided both users have the same brand of prepaid card). Not only that, but the transferred funds are available to the receiving party immediately.
Traditional checking accounts may require up to three days to process and make available funds deposited by check, which has historically been the most common way of making person-to-person payments. This means that many times, cash-to-cash transfers made using prepaid cards are actually more convenient than the alternative.
Particularly for those who do not reside in the same city or state as their family members, the convenience of instantaneous cash-to-cash transfers may be a deciding factor when determining how money will be managed. For example, parents of college students might find this method of transferring funds useful in the event their child has a cash emergency.
Additionally, friends who would not share bank accounts, but who do have joint financial responsibilities, can also pay each other easily by making cash-to-cash transfers. As a result, roommates could transfer their portion of rent and utilities quickly and conveniently to the individual responsible for making those payments.
With prepaid cards becoming a part of consumers’ everyday lives, the push for more - and more useful - features is inevitable. Prepaid card issuers are listening to their customer base and are diligently working to implement many of the most sought-after card features.
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