After losing a battle over debit card interchange fees, banks are looking for ways to regain lost revenue.
Many experts predicted a surge in marketing for prepaid cards, with American Express announcing a new prepaid card this week that aims to limit its charges, according to the New York Times.
Dan Schulman, president of American Express’ enterprise growth group, said this new prepaid card is different than other prepaid cards because it is light on fees.
The card is available online and can be ordered and activated for no cost, according to the New York Times. It is able receive direct deposits but will only hold $2,500 maximum. Although depositing cash onto the card is a multistep process, the card can be reloaded online at any time for no extra cost.
According to the Treasury Department, prepaid cards are the fastest growing segments of the financial services industry. They are exempt from the Dodd-Frank consumer protection and Wall Street reform law. That luxury may be short lived for banks, however, as oversight of the industry will be conducted by the new Consumer Financial Protection Bureau.
Schulman told the New York Times that the card will be popular for people who don’t have access to credit cards but want the security of having the card and ability to make online transactions.