Q: Under Regulation E, what is a prepaid account?
A: Effective October 1, 2017, Regulation E will include a definition of “prepaid account.”
A “prepaid account” is a product that is one or more of the following:
1. A payroll card account.
2. A government benefit account.
3. An account that:
a. Is marketed or labeled as “prepaid;”
b. Is redeemable upon presentation at multiple, unaffiliated merchants for goods or services or usable at automated teller machines (ATMs); and
c. Does not satisfy a specific exclusion set forth in the Prepaid Rule.
4. An account that:
a. Is issued on a prepaid basis in a specified amount or is capable of being loaded with funds after issuance;
b. Has a primary function of conducting transactions with multiple, unaffiliated merchants for goods or services, conducting transactions at ATMs, or conducting person-to-person (P2P) transfers;
c. Is not a checking account, a share draft account, or a negotiable order of withdrawal (NOW) account; and
d. Does not satisfy a specific exclusion set forth in the Prepaid Rule.