NetSpend weighs in on Durbin Amendment

As the April 21, 2011, date nears for the Federal Reserve to issue the final rules to implement the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, NetSpend Holdings Inc. gave its opinion on the effects of the proposed amendment on the prepaid card industry.

NetSpend's February 2011 letter to the Fed said the regulations should be structured in a way that "best protects the provision of financial services through GPR [general-purpose reloadable] cards, as it provides an extremely important point of accessibility to financial services for many underbanked Americans."

The five main comments NetSpend expressed in its letter are:

1. The proposed interchange fee cap of 12 cents per transaction for the types of prepaid cards that are subject to the regulations is not "reasonable and proportional" to a card issuer's costs.

2. The proposed rule fails to tie interchange fees to the costs of a particular transaction, as required by the Act.

3. The Fed should require that networks honor the prepaid card exemptions provided in the Act.

4. The Fed needs to clarify that an exempt prepaid card category will not lose its exemption status as long as the card issuer agrees to waive fees for the first monthly withdrawal of funds by the cardholder from a proprietary network ATM.

5. The Fed needs to allow for a signature-only debit or prepaid card, and not require all covered cards to have both a signature debit routing network and an unaffiliated PIN-based network.

To access NetSpend's letter to the Fed, go to www.federalreserve.gov/SECRS/2011/February/20110209/R-1404/R-1404_020811_64281_580501021667_1.pdf .

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