Mercator Blog

Get Ready for More Prepaid Regulation in 2014
Date: February 3, 2014
Ben Jackson
Director, Prepaid Advisory Service
While the weather led to several absences at the first day of the American Conference Institute’s Prepaid Card Compliance Conference last Thursday in Washington DC , it was the regulatory forecast that was causing concern among the attendees.

Regardless of the particular segment of prepaid, all signs seem to point to additional prepaid regulatory action in 2014. The conference panels covered everything from money transmitter licenses, to the Consumer Financial Protection Bureau’s advanced notice of proposed rulemaking, to international money transfers. Even in an area that has positive initial signs – appeal of the Judge Leon ruling on debit interchange and routing – conference goers were hesitant to declare victory.

The advice from the panels differed in the particulars depending on the topic, but it all carried a universal theme – make sure that your regulatory house is in order, and do the same for your partners. The complex nature of the prepaid value chain can create risks at each link in the chain. Thinking through the vulnerabilities can help prevent trouble if the players plan ahead. Another preventative measure for prepaid providers is to think about how their products could be misused and develop systems that monitor for signs of the misuse.

Of course, the industry is not stuck merely reacting to changing circumstances. Since many of the changes will still need to go through a comment period, there is an opportunity for companies to weigh in and influence the final shape of the regulations. Companies need to monitor the agencies for comment periods and weigh in when the opportunity arises.

Along with the discussions about prepaid, bitcoin and other cryptocurrencies regularly came up in conversation. Here, too, the consensus seems to be that bitcoin’s future will be largely determined by regulation – that is as soon as the regulators and everyone else figures out exactly what bitcoin will be.