Prepaid Card Compliance: Regulatory Requirements for Single-Purpose Cards
The Regulatory Frame (calibrate locally)
- Filing duty: single-purpose prepaid cards require commerce-authority filing in most markets.
- Caps: per-card amount limits (often differing for individual vs corporate issuers).
- Fund custody: some markets mandate escrow or banked proportions of prepaid funds.
- Disclosure: published terms, balance inquiry, refund rules.
Course cards and stored-value cards in aesthetics fall squarely in scope — the “membership cards aren’t cards” assumption is where violations begin.
Compliant Issuing Operations
- Before issuing: filing complete, terms legally reviewed (the package contract).
- While selling: caps respected; no false urgency (permanent “last 3 days” campaigns breed complaints); never sold to minors.
- After sale: balance inquiry works, refund lanes open (the refund policy), records kept.
Penalties and Remediation
- Penalties: fines and credit listing for unregistered issuance, fund misuse, refund refusal.
- Remediation: legacy-card regularization (file retroactively, split over-cap cards), refund lanes built, policies posted.
The Business View
Prepaid regulation fundamentally protects consumer funds — compliant issuers gain competitive advantage in tightening cycles as non-compliant competitors get cleared. Treat prepaid compliance as product strength, not burden.
FAQ
Discount cards exceed the cap?
Split into annual installment cards, or restructure into membership benefits replacing large stored value — the membership system is the compliant successor to big prepaid balances.
Client refuses a “card”, wants stored value only?
Stored balances are prepaid funds under the same rules — book “stored value” and “entitlements” separately in systems, keeping compliance and accounting clean.