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Friday, August 9, 2013

Fed Report on Government-Administered Prepaid Cards

The Federal Reserve released a report to Congress on government-administered general-use prepaid cards. The Dodd-Frank Act mandated the Federal Reserve to report annually to Congress on the prevalence of use of general-use prepaid cards in federal, state, and local government-administered payment programs and on the interchange fees and cardholder fees charged with respect to the use of such prepaid cards.

Government offices reported disbursing more than $1 trillion, 13% of which was disbursed through prepaid cards. Issuers of prepaid cards collected an average interchange fee of 1.1% of the average purchase transaction value in 2012 for these programs. Although the prepaid cards provided under these programs usually offer cardholders one or more free ATM cash withdrawals, ATM withdrawal fees constitute more than 60% of all cardholder fee revenue that issuers collected in 2012.

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