Mercator Perspectives

U.S. Democrats Target Prepaid Debit Card Fees...and More

An article published  by Reuters describes the Democrats misguided effort to cap fees on prepaid products ignoring the overwhelming evidence that consumer costs increase as legislators eliminate transactional fees (as seen with Durbin Amendment and Reg E changes). 


“On Friday, a group of Senate Democrats introduced legislation that would limit the types of fees that could be charged on prepaid cards.” 


 Incredibly, the example used to indicate the need for this regulation, the Kardashian Kard, follows the very model these legislators will force on all prepaid products.  The Kardashian Kard required a large upfront annual fee ($90.00), but then charged no transactional fees for the year.  


 These legislators are now forcing a version of the Kardashian pricing model on all prepaid card products when they state "We need to ensure that families who rely on prepaid cards are not surprised by hidden fees and are not hit with fees that are totally unnecessary," Democratic Sen. Robert Menendez of New Jersey, who introduced the bill, said in a press release.   


So what Senator Menendez’s bill recommends is that all prepaid cards follow the Kardashian Kard model:  Eliminate transactional fees and replace them with a higher single-rate cost.  


Of course this legislation eliminates a cardholders ability to control costs.  Rather than a cardholder being able to avoid high cost transactions to keep costs low, this legislation will force issuers to charge higher upfront fees to cover these transactional costs for all cardholders – even those that don’t use them. 


This legislation is guaranteed to increase the upfront monthly fees charged to all cardholders, which in turn will benefit only those cardholders that make the most intensive use of these expensive transactions, such as ATM withdrawals.   


In short, Senator Menendez is forcing a version of the Kardashian Kard on all America.    



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