| With a growing number of options and potential | | | | consumers who use SVCs. |
| applications, the many advantages of using stored | | | | Some SVCs can be used to help rebuild credit for |
| value cards (SVCs) far outweigh any potential | | | | consumers with poor credit scores. A number of |
| disadvantages. | | | | SVC issuing companies advertise these "credit |
| In addition to being a very useful way to pay for | | | | building" features. These companies will report |
| goods and services in advance, SVCs are a vital | | | | positive account information on their card users to |
| resource for unbanked consumers. Financial | | | | the three national credit bureaus. How much this |
| industry estimates place the number of | | | | can improve a consumer's credit score has yet to |
| households in the United States without a bank | | | | be determined. |
| account at somewhere between 10 - 15 percent | | | | Other SVC advantages include overdraft |
| of the marketplace. | | | | protection, which is now being implemented on a |
| There are a number of reasons why some may | | | | number of fee-based SVCs, and cash advance |
| not qualify for a bank account. Many low-income | | | | capabilities, which will likely be a regular feature on |
| families can't afford the monthly fees or potential | | | | many future cards. |
| overdrafts associated with low balance checking | | | | Any company that processes employee payroll |
| accounts. Some consumers are also denied bank | | | | can also benefit from issuing SVCs in place of |
| accounts because of poor credit or prior bank | | | | paychecks. Payroll processing cards can reduce a |
| accounts being closed due to bounced checks or | | | | company's payroll costs by up to 70 -75 percent. |
| other problems. | | | | There are a few potential fraud-related problems |
| With their ability to be reloaded with funds, some | | | | that can come from the use of SVCs. If your |
| SVCs can act as a virtual bank for unbanked | | | | SVC is stolen and no ID verification is required to |
| consumers. As long as a SVC doesn't have any | | | | use the card, a thief could drain your card of |
| additional fees for loading funds or other related | | | | funds before you know it. With signatures or PIN |
| account maintenance fees, there shouldn't be an | | | | numbers commonly in use on many newer SVCs, |
| associated risk of costly overdrafts or other | | | | the chances for fraud to occur are dwindling. You |
| excessive fees. All the available funds on these | | | | can also have the funds attached to an SVC |
| feeless cards are good and can be withdrawn at | | | | frozen temporarily if you lose a card and need to |
| any time. Some SVCs may not feature all of the | | | | be issued a new one. As most SVCs usually have |
| fund protection features of most bank accounts, | | | | fewer funds available than a credit or debit |
| however. | | | | account, losses due to fraud are even less likely |
| There are also no currently established rules or | | | | with SVCs. |
| legislation that specifically protects consumers who | | | | As we continue our transition into a "cashless |
| use SVCs at the national level. The Fed is | | | | society" SVCs will continue to play an important |
| considering expanding its Regulation E, which | | | | and ever growing role in the financial marketplace |
| protects consumers using electronic funds | | | | of the future. |
| transfer (EFT) systems, to include protections for | | | | |