Stricter Pre-paid Debit Card Regulation to Affect Bitcoin Companies
Debit cards seem to be one of the most popular solutions for global consumers to spend their precious funds. Unlike a regular credit card, debit cards have a pre-paid option, which requires users to top up their cards’ balances before they can pay for goods and services. However, debit cards rely on centralized services to complete […]
Debit cards seem to be one of the most popular solutions for global consumers to spend their precious funds. Unlike a regular credit card, debit cards have a pre-paid option, which requires users to top up their cards’ balances before they can pay for goods and services. However, debit cards rely on centralized services to complete funding and spending actions. When those services experience issues, things can quickly go from bad to worse.
Also read: What Makes A Bitcoin Company Successful?
RushCard Users Can’t Use Debit Card Funds for Weeks
As appealing as pre-paid debit cards may sound, having access to funds at all times is paramount to the success of this payment method. Smaller companies offering this type of pre-paid plastic card are less versed in providing a continuous service at all times, which can leave customers stranded for weeks on end.
RushCard is one of those smaller companies, and thousands of their customers have been unable to use the debit card for several weeks now. The reason for this outage is a technical glitch plaguing the card issuer — MetaBank — itself. As a result of these problems, the owner of RushCard will have to reimburse customers for their losses.
It had taken nearly three weeks of issues before RushCard decided to reimburse affected customers. In more positive news, however, RushCard systems are now fully restored, and all services are, once again, accessible to all of the company’s customers.
More details regarding the MetaBank outage have surfaced as well, as the outage started during a planned software upgrade affecting the transaction processing system. Some people have started to question whether or not these internal software updates are often “rushed jobs,” as there may not always be time for proper “testing procedure” before deploying these upgrades.
Urging Regulation of Pre-paid Debit Cards
Consumer advocates have been asking for greater regulation of pre-paid debit cards. Even though these cards are a way of providing financial services to people with no bank accounts, customers are not privy to the same level of protection offered by credit cards and non-pre-paid debit cards.
Last Monday, no less than eleven different advocacy organizations created a joint letter to ask for more regulation of pre-paid debit cards. The legal gaps affecting consumer protection need to be addressed sooner rather than later. Evening the playing field regarding consumer rights between bank customers and pre-paid debit card users will prove to be quite a challenge, though.
Consumer protection for pre-paid debit cardholders will need to be enhanced, but there is a major hurdle to overcome in the current legislative framework. At this time, there is no law specifying the obligations of pre-paid debit card issuers when a dispute or technical meltdown occurs.
Regular bank-issued debit card users are protected by law, forcing institutions to give customers access to their funds within a 48-hour period. Pre-paid debit cards, on the other hand, do not offer the same right, although the current legislation is subject to various interpretations. More in-depth regulation, with clear boundaries and responsibilities for all parties involved, might be on the horizon.
Potential Effect on Bitcoin Debit Cards
Bitcoin debit cards could very well be affected by new regulatory requirements in the future. Most of the Bitcoin debit card issuers require customers to pre-fund their cards, rather than deducting funds from Bitcoin wallets linked to the cards themselves. However, there are companies taking the latter approach, creating more ways for consumers to access funds at all times.
One thing to keep in mind when using Bitcoin debit cards is how these plastic cards are always issued by a regular bank. While some card issuers might be more lenient towards Bitcoin companies using their services, the responsibility for accessing funds lies with the issuers themselves. If an issuing bank experiences an problem, there is very little the Bitcoin service provider can do about it.
Whether or not we will ever see Bitcoin-issued debit cards anytime soon remains to be seen. Debit cards are not the perfect solution to get more people using Bitcoin around the world, although there is a certain level of convenience attached to it. Many people seem to be enjoying the benefit of spending Bitcoin wherever debit cards are accepted.
What are your thoughts on this call for stricter pre-paid debit card regulation? Is this a good idea, and if so, how will it affect Bitcoin debit cards? Let us know in the comments below!
Source: NBC News
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