Q: Does a general-use prepaid card qualify for the exemption under § 235.5(c) if the issuer offers the cardholder the ability to obtain cash through the offices of a money transmitter service business by calling the issuer to authorize access, which then transfers money to the money transmitter service business?
A: Such a card could qualify for the exemption under certain conditions. A general-use prepaid card would be the only means of access to funds underlying the card where the cardholder is able to initiate transfers out of the account to a money transmitter service business by contacting the issuer (or issuer's agent) via telephone and providing a card number for purposes of identifying the cardholder's account or subaccount, provided that only the cardholder may receive the transferred funds and the cardholder may receive the funds only as cash. (Added October 24, 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: