Q: Are there any restrictions on the methods that may be used to load and reload funds onto a card in order for the card to be eligible for the general-use reloadable prepaid card exemption?
A: The criteria for the general-use prepaid card exemption do not restrict the methods that cardholders or other persons may use to load or reload funds onto a card. General-use prepaid cards are eligible for the exemption from interchange fee standards regardless of whether funds may be loaded onto the card using ACH, check, cash, or other methods. However, some funds-loading arrangements may warrant additional supervisory scrutiny to determine whether circumvention or evasion is occurring. One example is where prepaid cards are linked to an issuer's customers' transaction accounts such that funds may be swept from the transaction accounts to the prepaid accounts as needed to cover transactions. See paragraph 6(a)-2.ii of the commentary to Regulation II. (Added September 14, 2011)
This Q&A was obtained from FRB’s website, in a section for Regulation II (Debit Card Interchange Fees and Routing) Frequently Asked Questions, which may be found here: