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Wednesday, July 23, 2014

Fed Report to Congress on Gov’t Prepaid Cards

The Dodd-Frank Act requires the Federal Reserve Board to report annually to the 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.

Across reported programs that provided a prepaid card option, government offices disbursed almost $1.1 trillion in 2013, 14% of which was disbursed through prepaid cards—a small increase in comparison to 2012 and 2013 data.

Issuers collected more than $502 million in fee revenue during 2013 across reported programs, with 65% from interchange fees and 35% from cardholder fees. Although the prepaid cards provided under government-administered programs usually offer cardholders one or more free ATM cash withdrawals per month, ATM withdrawal fees constitute 58% of all card- holder fee revenue that issuers collected in 2013. Customer service and account servicing fees constitute the next largest source of cardholder fee revenue, at 15% and 14%, respectively.

Read the report.

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