Q: Does a general-use prepaid card qualify for the exemption under § 235.5(c) if the issuer provides an account number and routing number to the cardholder for purposes of loading or facilitating loading funds onto the card through the ACH or otherwise? Does a general-use prepaid card qualify for the exemption if the cardholder may use the account number and routing number to authorize debits by non-card means, such as ACH debits, that access funds underlying the prepaid card?
A: An issuer may provide a cardholder with an account number (which may or may not be different from the number on the card) and a routing number so that the cardholder may load funds (or authorize the loading of funds) by an ACH credit transaction or otherwise (e.g., a direct deposit from an employer or government agency), without the card becoming ineligible for the exemption under § 235.5(c). For such a general-use prepaid card to remain eligible for the exemption in § 235.5(c), an issuer must take steps to ensure that the cardholder does not use the account number or routing number to access or authorize access to the funds underlying the prepaid card through an ACH transaction or other non-card means. The issuer may, for example, conspicuously disclose to the cardholder that such use is prohibited. If the issuer becomes aware that the cardholder is violating this prohibition, however, the issuer must take further action to prevent the cardholder from using an account number and routing number to access, or authorize access to, funds through a debit transaction through non-card means (e.g., an ACH debit transaction) in order for the card remain eligible for the exemption under § 235.5(c). (Added March 13, 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: