Tax Refunds Issued on Bank Cards

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Question:

If the government sends tax refunds via cards instead of checks this year what type of card will be used? Can the bank impose a fee if the card is for a non customer? And will the taxpayer's name be on the card?

Answer:

My understanding is that any prepaid cards issued under the Treasury's remittance rules will be Debit MasterCards. Your contract with MasterCard determines whether you can impose a fee for honoring a non-customer's card for a cash advance. Unless MasterCard has changed its rules since I last looked at them, such fees are not permitted. You will be required to conform your ID verification procedures to those permitted for Debit MasterCard cards, and if you do, you should not have fraud losses.

First published on BankersOnline.com 3/14/11