Copyright 2013.
The Green Sheet Inc.

CTA lowers Ventra card fees

T he Chicago Transit Authority apparently listened to criticism of its upcoming MasterCard Worldwide-branded, general-purpose reloadable (GPR), contactless-enabled transit card and eliminated fees on the card. In a study of the changes to the card, banking product comparison site Nerdwallet.com found that the CTA had eliminated withdrawal and live customer service fees.

In April 2013, the Chicago Tribune reported on an April 1 hearing at the state legislator where CTA President Forrest Claypool was grilled about concerns that the Ventra card would charge cardholders excessive fees and that the program would be used as a revenue generator for the CTA rather than a low-cost service for Chicago mass transit users.

According to a May 24, 2013, Nerdwallet.com blog, the CTA eliminated withdrawal fees for Ventra card users who use domestic, in-network, Allpoint-branded ATMs, which number around 1,000 in the Chicago area and over 40,000 nationwide. The CTA also eliminated the $2 live customer service fee.

Additionally, the comparison site reported that the CTA lowered the paper statement and check refund fees by $1 each and waived the $5 purchase fee on the card, but for 2103 only. Nerdwallet said the purchase fee will start to be assessed in 2014 and "will be applied toward future transit service if the owner registers the card."

The blog noted that the elimination and reduction in fees wipes out over $500,000 in fees the CTA would have been able to collect yearly. "Still, the CTA will receive revenue from Ventra-related advertising and from tax savings," the blog post said.

The card is expected to be rolled out in the summer of 2013 and to be used on CTA and Pace trains and buses. The card will be available for purchase and reload at CTA rail stations, participating retail locations, online and by phone.

In April 2013, the CTA eliminated a $10 "research" fee that was to be charged certain cardholders for making customer service calls, as well as a $2.95 fee to reload the card online using a bankcard.

In comparison to the features offered by other GPR cards, however, the Ventra card does not stack up, Nerdwallet found. The Ventra card does not offer mobile check deposit and sub accounts (unlike the American Express Co. and Wal-Mart Stores Inc. co-branded Bluebird product) and it does not offer free paper statements (as does the Chase Liquid card issued by JPMorgan Chase & Co.)

Based on the Ventra card's new fee schedule, Nerdwallet gave the product its qualified approval. However, unbanked transit users in Chicago, who may more often rely on carrying cash than other transit users, might take heed from Nerdwallet's final opinion: "Still – the new Ventra card is not bad at all. If you don't load with cash, it's a solid choice." Nerdwallet was referring to the Ventra card's cash reload fee of up to $4.95, which remains unchanged from the CTA's previous fee schedule.

Green Dot takes stock
Thursday, June 13, 2013

M edia reports surfaced that Green Dot Corp. acquired the general-purpose, reloadable prepaid card portfolio of GE Capital Bank, which issues the Wal-Mart MoneyCard managed by Green Dot. The companies will reportedly close the deal in the second half of 2013. Financial terms of the acquisition were not disclosed.

In a June 12, 2013, investor presentation, Green Dot noted that significant pressures have come to bear on its business model, including:

• The national rollout of BlueBird, the alternative financial services platform that teams American Express Co. with Wal-Mart Stores Inc.
• The cards of multiple competitors now being stocked at nearly all of the store locations of Green Dot's retail partners
• Big banks entry into the prepaid card market

Green Dot also listed other pressures that arise from increased regulatory controls on the prepaid card industry. Like the industry in general, Green Dot noted it has implemented multi-factor authentication and enhanced portfolio monitoring, which has resulted in about a 10 percent decline in approval rates year-over-year; the fallout from that metric is that reloads, active cards and revenue are going down. However, Green Dot remains the leading U.S. prepaid card company. Since its initial public offering in July 2010, Green Dot reported revenue growth of $200 million and the near doubling of its gross dollar volume, and the volume on its reload network grew by almost 20 million transactions.

In comparison to its next largest competitor, NetSpend Holdings Inc. ( in the process of being acquired by Total System Services Inc.), Green Dot appears to have a significant advantage. Green Dot has 4.5 million active cards to NetSpend's 3.2 million; $566 million in revenues compared to NetSpend's $377 million; and more than four times the cash/check load volume of NetSpend.

Companies settle over AchieveCard violations
Tuesday, June 11, 2013

O n May 31, 2013, the Federal Deposit Insurance Corp. reported its settlement with a California bank and a Texas prepaid card marketer over alleged unfair and deceptive practices in the use of the automated clearing house system to deliver federal benefit payments to prepaid debit cards. First California Bank in Westlake Village, Calif., and Achieve Financial Services LLP in Austin, Texas, agreed to pay approximately $1.1 million to over 64,000 cardholders and to pay civil money penalties of $600,000 and $110,000, respectively.

The FDIC said the companies misrepresented to consumers the features of the FCB-issued, Achieve-managed, MasterCard Worldwide-branded AchieveCard. "A number of the representations and omissions on Achieve's website were deceptive, such as advertising free online bill pay, promoting certain features and services of the AchieveCard that were not available to cardholders, and charging fees that were not clearly disclosed," the FDIC said.

Additionally, Achieve's error resolution procedures imposed further, undisclosed requirements on cardholders, according to the FDIC. The agency noted that Achieve agreed to provide restitution to all affected consumers, with FCB liable for any unpaid restitution or other obligations unfulfilled by Achieve. The violations allegedly took place between April 2011 and January 2013.

Card combats fraud in UK scrap metal industry
Thursday, June 6, 2013

C anada-based prepaid card processor Carta Worldwide and Payment Card Solutions (UK) Ltd. launched the Bread4Scrap prepaid corporate card program designed specifically for the U.K. scrap metal industry. Using PCS's MasterCard Worldwide-branded BreadCard, the system allows scrap metal dealers to pay customers electronically.

The initiative follows in the wake of the decision by the border security and law enforcement arm of the U.K. government, the Home Office, to ban cash payments for scrap metal. In the U.K., a black market has arisen around stolen scrap metal, which reportedly costs the U.K. economy 220 million a year pounds sterling (over $370 million).

In December 2012, it became illegal for scrap metal dealers to trade in cash and employ the "no questions asked" policy, which facilitated payments between "metal thieves and rogue dealers," the Home Office said. Scrap metal dealers can now be fined for making cash transactions for scrap metal and face criminal charges.

The Home Office said in January 2012 that transactions for scrap metal were often completed without sellers having to show proof of identification, or proof that sellers legitimately owned the metal being sold. The U.K agency also noted that cash payments result in poor record keeping by the metal recycling industry, which can lead to tax evasion.

The Bread4Scrap program allows scrap metal dealers to sign up customers for the BreadCard. "The system provides a full electronic audit trail of funds and PCS carries out independent verification of customers' identity within seconds to allow a customer to be issued with a funded card in seconds," the solution providers said in a statement.

Banking Up touts mRDC-prepaid symbiosis
Tuesday, June 4, 2013

P lastyc Inc., dba Banking Up, considers mobile remote deposit capture (mRDC) technology to be one product that can grow prepaid card usage and revenues. "We consider mRDC as a new motivator to replace checking accounts with more affordable prepaid accounts or to get banked if they don't currently have a checking account," said Banking Up Chief Executive Officer Patrice Peyret. "Its availability will be a driver in the acquisition of new customers."

The alternative financial services company believes mRDC, also called photo check deposit, makes prepaid a better option for consumers without checking accounts. Underbanked individuals who would typically go to check cashing stores to cash paychecks can now have checks remotely deposited to prepaid accounts via smartphones.

"Now prepaid accounts with photo check deposits fully opens the market to serve these customers," Banking Up said.

Additionally, mRDC is not a mere convenience for the underbanked. Banking Up cited Federal Deposit Insurance Corp. statistics that said 91 percent of the underbanked have mobile phones and smartphones. "And many work in service jobs such as construction or child care where they don't have ready access to computers or bank branches," Banking Up said.

At the Underbanked Financial Services Forum, to be held June 5 to 7, 2013, in Miami, Peyret will participate in a panel discussion on the future of mRDC.