When Power of Prepaid kicks off on June 11th, most of what can be said about the regulation of prepaid cards will already have been said.
But the special opportunity of a conference is to put ideas in to context, to show where forces complement
or constrain each other, and to push people to rethink their expectations. This conference could be one in which people simply agree to disagree. But the Network Branded Prepaid Card Association’s (“NBPCA”) has set up its 2014 session to make that kind of disengagement impossible. To my way of thinking, that is a good thing. Engagement in open debate is what makes a conference worth attending.
At last year's Power of Prepaid, NetSpend CEO Dan Henry and National Consumer Law Center Managing Attorney Lauren Saunders had a back-and-forth on overdraft during their Point/Counterpoint panel. According to the conference's organizers, the audience rated their panel as the best of the entire two-day period. I was there. Believe me, it was a full bucket of payments fun.
Part of what made their conversation so interesting was that they were saying things that are generally not said among mixed company. Policy is prone to settling in to teams. We agree to disagree when we are together.
But overdraft is one place that reveals some deep disagreements about how the prepaid card should evolve.
Many consumers and most consumer advocates say that the reason they like prepaid is because it does not have overdraft. Pew's "Why Americans Use Prepaid Cards" study found that "large majorities" of prepaid cardholders were against any kind of function that allowed them to overspend.
I think most prepaid card industry leaders understand that sentiment. They see overdraft-free as a positive differentiator.
But at the same time, at least a few investors and managers want overdraft because it dramatically ramps up the profitability of an account. There are others who favor overdraft for other reasons, as well. I think many people simply want to stand up for the principle of consumer choice.
For the moment, the ‘nays’ seem to be winning on overdraft. There are only a handful of cards that are set up to offer overdraft.
While it cannot be known with certainty that they will address overdraft again, it is true that NBPCA has put Saunders and Henry on the same panel again this year. This time, they are joined by Brad Hanson (Meta Payment Systems), Tom Feltner (Consumer Federation of America), and Douglas King (Federal Reserve Bank of Atlanta) in a session entitled "Point/Counterpoint: Prepaid Serving the Consumer."
I expect that the moderator will bring up overdraft. But bringing up small-dollar credit – i.e. ‘what happens after the I-Advance?’ – might produce equally charged results.