Federal Reserve Governor Elizabeth Duke said U.S. regulators need to protect consumers from differences among prepaid credit cards and other payment “devices.”
“It will be important for regulators to monitor, over time, the effect of differences in regulation and pricing restrictions to ensure that consumers are adequately protected regardless of their payment method preferences,” Duke said today in the prepared remarks of a speech at the Philadelphia Fed.
Consumers cannot be expected to know the differences between payments made using prepaid cards, which are subject to different regulations and fee restrictions based in part on their issuers and type, Duke said during speech at a conference on consumer credit.
About one-third of consumers reported having a prepaid card of some type, Duke said, citing preliminary estimates from the Federal Reserve Bank of Boston’s 2009 Survey of Consumer Payment Choice.
The emergence of mobile payments, which don’t yet “represent a meaningful percentage of overall consumer payments,” should be monitored by the Federal Reserve “to ensure that adequate consumer protections are put in place as the technology is adopted more broadly,” Duke said.
Duke didn’t comment on monetary policy or the outlook for the economy in the prepared text.