Page 94 - Pay Magazine s2014

Government watch
Where Common Sense and Consumer Protection Converge
aim to protect consumers from potentially harmful financial products, its solution moves
the needle too far in the other direction, creating compliance requirements so onerous that they’ll effectively ban from the marketplace any short-term loan capability associated with a prepaid account.
• Second, applying the proposed rule’s requirements for prepaid accounts with credit features
to “force-pay” transactions effectively could remove prepaid products from the marketplace, whether such products offer intentional overdraft services
or not. A force-pay transaction occurs when a consumer has sufficient funds in his account
to cover a transaction when it’s authorized but insufficient funds to cover the same transaction when it’s paid. The proposed rule doesn’t consider that
the payment networks make
force-pay transactions impos- sible to prevent to give mer- chants confidence that when
a consumer uses a debit or open-loop prepaid card to make a transaction, the transaction amount will be paid. If the network rules did not allow force-pay transactions, many merchants simply would not accept debit or open-loop prepaid cards and consumers would lose the ability to use these products to buy certain
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