The agency completed a rule that requires prepaid products to make more detailed fee disclosures and allow consumers to have easy access to their account balances and transaction history. Moreover, the regulation, effective in October 2017, sets limits on customer losses in case of lost or stolen cards. The rule covers mobile wallets, person-to-person payment products as well as general purpose reloadable cards that carry payment network brands such as Visa or MasterCard, and other electronic prepaid accounts that can store funds.
The proposal for this rule was made nearly two years ago and drew more than 65,000 comments. Digital wallets capable of holding funds, such as Google Wallet and PayPal, pushed back against regulation, because, according to companies’ representatives, could stifle the development of digital wallets (152 BBD, 8/7/15).
Fighting back, in a 1,689-page rule the CFPB said it thinks that digital wallets that can hold funds operate in large part in a similar manner to physical or online prepaid accounts. Therefore, a consumer can load funds into a digital wallet, spend the funds at multiple, unaffiliated merchants or conduct peer-to-peer transfers, and reload the account once the funds are depleted.
As a conclusion, the bureau believes that consumers who transact using digital wallets deserve the same protections as consumers who use other prepaid accounts. While most digital wallets available today do not typically charge many fees, the industry practice is subject to change. “If fees do become standard in this space, consumers ought to know what those fees are and when they will be imposed,” the regulatory body concluded.
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