“To see a national bank experimenting with how [a prepaid card] can be part of a product portfolio is very interesting,” Rachel Schneider, the vice president for innovation research and policy at the Center for Financial Services Innovation, said, CNBC News reports.
Schneider said that the card could reel in customers who are unable to afford the monthly fees associated with a Chase checking account as well as recoup revenue lost as a result of the Durbin Amendment.
The Durbin Amendment, a provision of the 2010 Dodd-Frank Act, caps the interchange or swipe fee — the amount a bank can charge a retailer to process a debit transaction — at 24 cents. The provision applies to all banks with more than $10 billion in assets but would not apply to transactions linked to a prepaid card like Chase Liquid.
For a fee of $4.95 per month, Chase Liquid customers can add $25 or more to the card to start with. After the initial fund load, customers are not required to maintain a minimum balance on the card.
The card does offer a direct deposit feature, so paychecks can be directly deposited onto the card, and checks and other cash can be loaded onto the card for free if the customer uses a Chase deposit-friendly ATM. Customers are also able to withdraw cash from the card for free at a Chase ATM and use the card for purchases wherever Visa is accepted.
“Chase Liquid is a low-cost alternative to traditional checking accounts, and its terms are clear and simple,” JPMorgan Chase CEO of Consumer Banking Ryan McInerney said, CNBC News reports.
Greg McBride of Bankrate.com said that the card is a “very transparent offering in a marketplace that is rife with fees for various transactions,” adding that many prepaid card fees are not always clearly disclosed to consumers, according to CNBC News.
Prepaid card spending has grown substantially as of late. More than $50 billion was loaded onto prepaid cards in 2011, with that number expected to increase to $160 billion by 2014.