CENTRAL
NATIONAL BANK AND TRUST COMPANY
July 15, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington DC 20429
(By email)
Re: Definition
of “Deposit”;
Stored Value Cards
Thank you for the opportunity to comment on this Notice of Proposed
Rulemaking.
Our institution is located in the northwest portion of Oklahoma in
a primarily agricultural area. We are in the largest city in our region
and we are the largest local financial institution in our city. At
our last quarterly statement, we were $350 million in assets.
In a continuing
effort to find ways to meet the needs of the un-banked segment of
our community,
we have taken a great interest in the emerging
Stored Value Card (SVC) product. It is in this light that we will respond
to the “Notice of Proposed Rulemaking”.
Potential Stored Value products include: payroll cards, gift cards,
child support payments, other social service payments, student cards,
gift cards (closed loop cards are not part of this discussion) and
internet purchase cards. In marketing these new products, deposit insurance
is an important issue that will bring additional value and confidence
to this product.
By their very design,
most SVC’s have limits on the value that
can be loaded on them. In addition, many of the target audiences will
not be of sufficient means to maintain large balances and these balances
may represent a significant portion of the assets of the individual
cardholder. Hence, the value of FDIC insurance.
Where funds are placed at a financial institution on behalf of cardholders,
when the cardholders can be identified, the FDIC insurance should apply
to the individual cardholder's portion of the funds. Individual cardholder
funds that are held in a pooled funds account are tracked by card number
in sophisticated databases. Because the SVC uses conventional ATM/debit
card networks, ATM transactions and payments to merchants are processed
the same way that a debit card transaction is processed. To the consumer,
the way a SVC and a Debit Card are used should be the same.
Disclosures as to error resolution procedures, fees, card expiration,
fund recovery procedures, limitations on card activity and the like
are important and can be included with the card upon its issuance.
Subsequent paper disclosures may become problematic, and alternate
methods of distribution would need to be studied.
The proposed rule, as written, clarifies the definition of this product.
However, as the Stored Value Card System continues to develop, there
may be difficulties in obtaining clear guidance for coverage. It would
be unfortunate to render this rule out of date as the technology continues
to evolve. Therefore, the FDIC should adopt the proposed rule with
these changes:
• Broaden
the definition beyond cards usable at merchant POS terminals.
• Add a provision that the funds underlying the card are treated as deposits
regardless of how they are held at the institution.
Sincerely,
Mickie L. Giberson
Compliance Officer
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