Increased regulation on prepaid cards could cause other US banks to follow JP Morgan’s example by exiting the market, according to Fitch Ratings.
Fitch said that the introduction of a bill requiring standardised fee disclosures could cause banks to withdraw their prepaid offering, leaving the field clear for nonbank players.
Go deeper with GlobalData
A spokesperson for Fitch said: "It is possible that increased regulatory oversight could prompt more banks to rethink their strategy on prepaid cards and potentially exit the business.
"In this scenario, Fitch believes there are benefits for nonbank players such as American Express, Green Dot and NetSpend".
Fitch also said that the strong growth of the prepaid card market in the US is likely to continue, driven both by the popularity of gift cards and consumer use of prepaid cards to manage finances.
Fitch said: "According to the latest payments data provided by the Federal Reserve, general purpose prepaid card payments have been the fastest-growing noncash payment method in the US for the last several years.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData"Between 2009 and 2012, the number of prepaid card transactions grew by an annual rate of 33.5%, far outstripping similar rates for other types of noncash payment."
Related articles:
New EU cards legislation worries consumers – Ipsos
PSD-2: A headache for bank strategists?
Canadian government promises crack down on credit card fees
