Traditional credit and debit cards are not the only plastic payment mechanisms contributing to the decline of paper at the point of sale. Prepaid cards, which include products such as gift cards, travel cards, and payroll cards, are quickly replacing a variety of paper payment products, including gift certificates, travelers’ checks, and paychecks. In addition, merchants, banks, and employers are announcing new stored value card initiatives almost weekly. Also contributing to the prepaid card buzz are impressive estimates as to the product’s potential.
MasterCard and Visa, for example, both estimate that the prepaid market could grow to over $2 trillion and include business-to-business, consumer to consumer, and government to consumer transactions.1 Although such volumes are not expected for many years, prepaid card issuers are already being confronted with a myriad of legal issues that threaten to impede the technology’s growth. It is unclear, for example, whether a host of federal and state statutes that cover traditional payment products can or should reach prepaid cards. Overall, the future of prepaid card law is unsettled.