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finance & strategy
Q&A With Cecilia Frew, Visa
Paybefore: How did the new designation come about?
Cecilia Frew: Late last year we asked ourselves, “What’s holding people back from adopting pre- paid?” We found two things: One is a general lack of awareness of what a prepaid card can do. Two, if there is awareness, in many cases there are misconceptions about whether a product is good for the consumer. So we thought, “What if we could develop a shorthand standard for quality and protection?”
Paybefore: How will the designation help consumers who might be confused about how to choose a prepaid card?
CF: We hope this designation will be a beacon for consumers search- ing for a prepaid card that is simple, easy to use and fits their needs. This year, the Center for Financial Services Innovation (CFSI) issued its prepaid scorecard, which gave the industry an A-minus. There’s still
a perception problem, however, regarding prepaid. There’s a lot of
concern about fees and consumer protection and transparency, and many consumers are confused by outdated information and anecdotes from those who do not understand today’s prepaid products. This new designation promotes transparency through clearly disclosed fee structures, along with the protection of their funds they’ve come to expect from Visa.
Paybefore: How did you develop the standards and re- quirements for the designation?
CF: Underserved consumers have shaped and developed the new Visa designation. In addition to research by CFSI and Pew on consumer reload- able prepaid, Visa has conducted consumer research over the past few years specific to what the under- served consumer wants and needs in a reloadable prepaid product. We also engaged and solicited feedback from several consumer groups and regulatory agencies.
We involved CFSI early in the process. They were helpful in getting us to think about the pros and cons of different options. Their Compass Principles provided several points we really took to heart. And, as we thought through the stan- dards, we tried to incorporate many of those things, like quick-start guides, which are one-page instruc- tions on how to find a free ATM; how to use direct deposit; how to sign up for text alerts; and other helpful hints. And, these are things everyone wants from financial products—not just the underserved.
To qualify for The new Visa prepaid designaTion, programs musT haVe:
1. simplified fee structures and disclosures
• A flat monthly fee that includes all basic day-to-day activities. (Actual fees may vary.) Consumers will not be charged for:
-Transaction decline
-Customer service
-In-network ATM withdrawals or balance inquiries -PIN or signature purchases
-Cash back at POS
• Consumer-friendly communication of fees (e.g., fee box and disclosures).
2. Consumer protection and education
• FDIC/NCUA pass-through deposit insurance required.
• Dispute resolution rights.
• Visa’s Zero Liability policy applies.
• No overdraft capabilities.
• Cost management tips: Quick-use guide for using the product for the lowest cost.
• Opportunities for consumers to improve their financial health, such as financial education, budgeting tools and savings purses, will be added in the future.