The Federal Deposit Insurance Corp. says it believes it covers most assets associated with “stored value” or “prepaid” card programs.
Many employers with health savings account, health reimbursement arrangement and flexible spending account programs now let employees use stored value cards to draw on account assets.
If the account funds are deposited in an FDIC-insured financial institution, the FDIC will insure the funds, according to FDIC General Counsel’s Opinion Number 8.
If the account meets standard FDIC “pass through” requirements, then the FDIC will insure each individual card holder’s deposits separately, officials say.
Ed Braswell, chief executive of edo Interactive Inc., Nashville, Tenn., a company that runs prepaid MasterCard programs, including the facecard program for college students, put out a statement welcoming the ruling.
The ruling affirms that “a prepaid card, is one of the safest, most convenient and value-added financial service products on the market today,” Braswell says.