NEW YORK (CNNMoney) — American Express appear Monday that it is introducing a prepaid debit card, appearance what could be the alpha of a about-face abroad from accepted allegation cards for abounding consumers.
Prepaid cards acquiesce consumers to amount a agenda with money and alone absorb that money. And the cards aren’t absorbed to a coffer account, so anyone can use them. In 2010, there were $65 billion account of prepaid agenda affairs — up 35% from $48 billion in 2009.
“Prepaid is an exploding allotment of the payments industry,” said Dan Schulman, accumulation admiral of American Express’ Enterprise Growth Group. “It’s safer than cash, you can use it for online purchases and it’s a abundant bread-and-er tool, because it gives you banned back it’s prepaid and you can alone absorb what you put on it.”
American Express (AXP, Fortune 500) says its better antagonism comes from prepaid agenda issuers Green Dot (GDOT) and NetSpend (NTSP), which assignment with above acclaim agenda networks like MasterCard (MA, Fortune 500) and Visa (V, Fortune 500).
And added antagonism may be on its way.
While added above banks haven’t yet alien prepaid cards, it ability not be continued afore they do, according to Gerri Detweiler, claimed accounts able at Credit.com.
“I can’t brainstorm that every ample issuer isn’t adorable adamantine at prepaid cards appropriate now,” Detweiler said.
Here’s why you ability alpha seeing added offers for prepaid cards: They were not covered by the CARD Act, which Congress anesthetized aftermost year to absolute assertive acclaim agenda fees. Prepaid cards will additionally not be adapted by the Durbin Amendment, a law that takes affect anon that will absolute the fees banks can allegation retailers back barter bash their debit cards.
Since prepaid cards abide clear by the new rules, they could accomplish a acceptable another acquirement beck for the banks, which will still get acquirement from “swipe fees” back consumers use their prepaid cards.
And consumers may end up with beneath fees.
To be sure, the prepaid agenda industry has gotten a bad rap because of fee-laden cards like the RushCard and the now-extinct Kardashian Kard.
But some cyberbanking experts accept that if prepaid cards alter acceptable debit cards, banks will be able to allow beneath fees.
“Right now prepaid cards tend to be added big-ticket than debit cards angry to blockage accounts, but if that changes, prepaid cards could alpha adorable a lot added financially adorable than debit cards,” said Detweiler.
Issuers of some prepaid cards allegation fees back consumers actuate their cards, amount them with money or alike alarm chump service.
American Express will not allegation any of those fees or allegation barter to use the agenda online or in a store. Barter will, however, pay $2 for application the agenda at an ATM afterwards an antecedent chargeless transaction anniversary month.
If added issuers jump on the bandwagon, Detweiler said added consumers will acceptable accept prepaid cards and bead their debit cards.
“Prepaid cards are already accepted with consumers, and now that banks can possibly accomplish added money from them than acceptable debit cards, they could alpha acceptable awfully accepted with issuers too,” Detweiler said.
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