May 26, 2011
Demand for prepaid card services from government agencies as well as employers could help financial institutions recoup revenue if the Federal Reserve’s proposed debit interchange caps are implemented, according to Bloomberg.
“We’re just at the beginning of many of our government clients moving from paper to a paperless environment,” said Margaret A. Scopelianos, a treasury services executive at Bank of America Corp.
Employing cards in place of cutting and sending checks can reduce expenses by 75 percent, said Tim Wall, head of prepaid sales at Citigroup Inc. He called the exemption for the prepaid market from interchange regulation a “positive thing.”
“Consumers used prepaid cards in transactions totaling $65 billion last year, compared with $48 billion in 2009, according to the Nilson Report, an industry newsletter based in Carpinteria, California,” reports Bloomberg. “That would have generated about $1 billion in transaction fees for card issuers, according to Sanjay Sakhrani, an analyst at investment bank Keefe, Bruyette & Woods Inc.”
Click here to read more on how prepaid cards could help reenergize the banking sector in light of debit interchange regulation.
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