Pre-Paid Credit Card Spending Increasing

Banks are reacting to the potential of prepaid cards by offering new products and services to help businesses and consumers simplify payments and reduce the volume of paper. By 2008, the Pelorus Group anticipates the prepaid card market, which includes payroll, debit, spending and benefit cards, to more than double to 49 million users, up from the current 20 million cardholders. Similarly, by 2008 over USD 72 billion in prepaid transactions is expected, up from the 2003 total of USD 42 billion, which suggests that banks will look to prepaid card services for differentiation.

Stored-value cards are valuable to the financial industry in supporting a medley of services such as healthcare, payroll, remittances, insurance and basic ATM or debit transactions. To this end, Bipin Shah, CEO of solutions firm Genpass, speculates that all payment accounts will one day be consolidated onto a single card, according to ATM Marketplace.com. Prepaid cards are now used to support flexible spending accounts for healthcare, and Shah justifies Genpass’ moves to help banks enter this market with an estimate that about 40 million US consumers have FSA accounts.

As an example, the Flex Convenience medical benefit card from insurer MBIA runs on Genpass technology, and allows employees at US firms, including some at Citibank, to load tax-free dollars onto the cards to pay doctors’ bills and other expenses. Within the financial sector, prepaid gift cards are another possible revenue and customer stream for banks. National City Bank, which issues prepaid Visa cards, for example gains new customers from individuals who visit its branches to buy cards after receiving one as a gift, or to purchase a card for a friend or relative.

http://www.epaynews.com/index.cgi?su...215212&block=1

This is definately good news, i wonder if pre-paid cards however will still fall under the 'Visa' regulations?

Regards,

Lee