The Consumer Financial Protection Bureau should encourageprepaid card providers to offer credit, Phillip J. Philliou, the CEO ofTruBeacon, a financial Services technology company, said in anop-ed in PaymentsSource.
Although the CFPB is providing avaluable service by standardizing consumer protections, these protections donothing to advance the democratization of affordable credit. Prepaid is a viable launch pad to introducecredit to a population that is difficult to reach, and that should be fosteredand supported.
The issue of providing credit in association with prepaidcards is a complicated one, especially since the reason many cardholders turnto prepaid is to avoid spending anything more than what they have. At the sametime, if people are to develop financial lives beyond simple transactions, thenthey will need credit at some point. The severity of regulation will shape theodd of people developing their financial lives or remaining stuck at thetransactional level.
Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
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