Banks Barreling Into The Prepaid Debit Card Market

By Danielle Douglas

Four years after the financial crisis, more than a dozen of the country’s largest banks have jumped into the once-niche market of prepaid debit cards, courting the millions of Americans on the margins of the banking system.

The banks, including JPMorgan Chase, Wells Fargo and PNC Bank, are tapping into the pools of consumers who either don’t qualify for a traditional banking account or can’t afford one. They are cheaper to serve and offer a simple way to recoup the billions the industry has lost to tighter financial regulations.

These efforts offer potential legitimacy to an industry that has existed in the shadows for decades with less government oversight and a reputation for high fees. Some regulators see the market shift as an opportunity to address the growing population of people who have no access to the banking system.

But the industry’s explosive growth, and large banks’ push into the market, has left some consumer advocates worried that low-income consumers will be trapped outside the banking system without the protections inherit in traditional checking and savings accounts.

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