In the prepaid industry there are many players that have different versions of what rules apply when it comes to cards. Prepaid cards from different companies seem to have different requirements especially when it comes to KYC (know your customer) and FICA. Unfortunately the regulator in South Africa has not made it any easier with exact rulings. There seems to be players in the market that have different interpretations of the regulators requirements and tend to “bend” the rules when issuing card programmes. If you are trying to launch your own card programme the FICA requirement will probably confuse you and speaking to providers will probably leave you feeling even more confused with what exactly is required. The truth is that sometimes when an issuer says you don’t require FICA for prepaid cards or the FICA is minimal, it doesn’t necessarily mean that’s correct and eventually you may end up in a situation of compromising your card programme.
So what do we know about FICA how does it apply? FICA and KYC have different requirements based on the card capabilities. Prepaid gift cards can be Visa/MasterCard associated cards that do not have ATM access and can be used by shopping centres and corporates for gifting, rewards and incentives. The regulator has advised in 2010 that all Visa/MasterCard associated gift cards require a copy of customers ID when issuing cards. Some shopping malls now scan the customers ID when purchasing cards. Corporates that issue the cards have to also keep a copy of the cardholders ID.
There is a dispensation from all FICA requirements for gift cards sold with a value of R200 or less. What this means is that no customer information or copies of identification are required for gift cards of R200 or less. An interesting read on how e17 has evolved is available http://www.cgap.org/gm/document-1.9.42404/Updated_Notes_On_Regulating_Branchless_Banking_South_Africa.pdf
Cards that allow ATM access and are PIN based have a higher FICA requirement. The reason for this is that these cards not only allow for cash access but also have higher values loaded onto them. The cards can be used for payroll, micro lending, commission payments and other programmes that require the cardholder to obtain cash. In addition to the copy of the identification required for gift cards, a proof of residence is also required when issuing these cards. In the South African most issuers cringe at the thought of collecting proof of residence of cardholders. There are however many different means in which suitable proof can be provided. This can range from utility bills to a letter from a tribal chief.
When issuing your own prepaid card, it’s important to choose an issuer that will not only provide you with the facts when it comes to FICA requirements but also makes it easy to collect and collate the information for you. Some issuers offer API’s pr sites that allow for electronic collection of the information which makes it easier than you having to collect pieces of paper and storing it. The reality is that FICA and KYC is necessary for all prepaid Visa/MasterCard products. It may a be bit more of ‘schlep’ for the issuer to gather the information but it’s worthwhile having it from the start. You do not want to be the issuer that has the regulator and compliance officers threatening to shut your programme down.