A report released by the Center for Financial Services Innovation earlier this week gave the prepaid industry an overall grade of “A-“ for quality.
The scorecard evaluated 18 prepaid cards—comprising 90 percent of the marketplaces—against the CSFI’s recommendations outlined in its Compass Guide to Prepaid and its Compass Principles.
The overall grade of “A-“ indicated that prepaid cards currently available to consumer meet their “basic transactional needs.” All cards evaluated carry FDIC insurance, and 95 percent of the cards can be loaded with cash in person or at retail locations and bank branches.
In terms of marketing and communications, the cards evaluated in the scorecard received a grade of “B+.”
“While most of the cards featured in this report provide cardholders with tips and guidance, this advice is usually communicated through the card’s website or via written communications,” the report said. “Few providers directly engage with cardholders in a targeted or personalized way. Providers should explore ways to proactively communicate with cardholders to provide them with useful and actionable advice tailored to their unique financial circumstances.”
Cards evaluated in the report received a grade of “B” for customer service and account information. All of the prepaid cards have fraud and error resolution policies in place to protect cardholders funds, but consumers do not always have opportunities to receive ongoing monthly statements.
“While all cards allow cardholders to register for text or email alerts to receive balance updates or account information, there remains an opportunity for programs to provide a more robust set of alerts with customizable settings,” the report said.
In the category of overall pricing design, the cards received a grade of “B+.” The report said the cards are priced “in a fair and straightforward way that promotes positive consumer use.” Some of the cards, however, carry penalty fees that the CSFI report said should be lowered or eliminated.
“In order for prepaid cards to actively contribute to improving consumers’ lives, prepaid card providers must strive to continually improve their products and find innovative ways to meet their customers’ needs,” the report said.