AML CHALLENGES
The prepaid card —
Growing in use and risk
I
n recent years, prepaid card products
have emerged into the mainstream of
the U.S. financial system at an increasing
rate. FinCEN estimates there are more than
2.5 million new prepaid cards issued each
year, and at any given moment there are an
estimated 7.5 million network branded cards
such as Visa or MasterCard in use.1 Prepaid
cards have experienced a growth rate of 35
percent since 2004, from $64 billion in annual
loads to more than $178 billion based on
information provided by MSN Money Tool.2
The security and convenience of prepaid
products appears to have been accepted and
embraced by many consumers.
The popularity of the prepaid card has been
sparked by a number of factors that are
primarily linked to the efforts to provide
cost-effective financial products to individuals who are either unbanked or underbanked. In addition, prepaid cards are used
by employers, federal, state and local governments and other agencies as a payment
method — the cards can be easily reloaded
with values to accommodate a variety of
payment needs. The accessibility and convenience of prepaid cards have made bank
provided benefits available and possible for
just about anyone, expanding the boundaries
of financial banking opportunities.
Unfortunately prepaid c