Lawmakers consider bill to cover prepaid cards

Shanghai plans to tighten supervision on prepaid cards, according to a draft bill being reviewed by local lawmakers. 

The bill was drafted amidst a surge in complaints over such cards in recent years. 

There are about 100,000 prepaid card issuers in the city while only 396 are registered with the Shanghai Single Purpose Prepaid Card Association.

The daft proposes that a platform be set up to collect information on prepaid cards, including issuing, cashing and prepaid money, and to enable consumers to check information about card issuers. It should also connect with the city's other supervision platforms, public credit information service system and related complaint systems. 

It defines single-purpose prepaid cards as both physical ones and virtual prepayment vouchers. 

Issuers should also set up operation systems for prepaid cards, which not only manage card issuing and fund settlement, but also record transactions and consumers' information.

The issuers' systems have to connect with the supervision platform and transmit information, such as the number of cards issued, the amount of prepaid funds collected and the rest of the fund, to the platform on a quarterly basis. 

The government's commercial department is asked to guide Shanghai Single Purpose Prepaid Card Association or capable enterprises to set up a public operation system and issuers can choose to use it or develop their own.

The draft also suggests the city set up a risk alert scheme. It says the city's commercial department should join with other authorities to set up safe standards on the amount of prepaid money according to issuers' business scope and size. And when issuers collect prepaid money over the set standard, the supervision platform will make the information public and alert consumers. 

Existing protection schemes, such as requiring issuers to set aside deposits in banks or buy insurance, are also included in the draft. 

The prepaid card association is also asked to set up a credit system among issuers and rate them in terms of credibility.

The draft also proposes city commercial authorities take the lead in solving disputes. 

Proposed punishments for irresponsible prepaid card issuers include putting them on a list of unfaithful enterprises, banning them from issuing prepaid cards and fines. 

For example, issuers will be put on the unfaithful list if they fail to deal with already issued prepaid cards properly when they close their businesses or move sites. 

Issuers will be fined up to 100,000 yuan (US$15,260) if they fail to submit information to the supervision platform. 

The draft bill will be further reviewed by the city congress next month.