Q: Section 235.5(c) provides that a general-use prepaid card is exempt from the interchange fee standards if, among other things, the card is "the only means of access to the underlying funds, except when all remaining funds are provided to the cardholder in a single transaction." Would a general-use prepaid card qualify for the exemption if a cardholder is able to use information from the card to make a payment on a merchant's website?
A: Yes. A general-use prepaid card is eligible for the general-use prepaid card exemption in § 235.5(c) if a cardholder is able to use the card number to initiate a debit to funds underlying the prepaid card to pay a merchant or other payee (such as a bill-pay provider) on the merchant's or other payee's website, provided the card meets the other criteria for the exemption. For example, the cardholder may enter the card number on the merchant's or other payee's website to initiate a one-time payment or to authorize the merchant or other payee to initiate recurring payments using the prepaid card. (But see Q7 of this section). (Revised May 30, 2013)
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: