Tax season is upon us and that means you may already be seeing an increase in your ATM withdrawals. H & R Block, Jackson Hewitt and other tax preparation services are teaming up with American Express and other prepaid card issuers to offer faster tax refunds by loading funds directly onto prepaid debit cards – a practice that has become very popular.
In recent years, CU24 has seen an increase in foreign ATM activity due to these prepaid debit card withdrawals. Here are some considerations for your credit union as these cards begin to reach the market:
- If your ATM is located in the same plaza or near a tax preparation service company, you will experience an increase in ATM withdrawals.
- These ATM withdrawals will be considerably larger than typical withdrawal patterns. For example, you may see several $800 withdrawals from the same card. Many of these cardholders may want to withdraw all of the funds on the card immediately.
CU24 recommends the following:
- If your ATM is located near a tax preparation service company, increase ATM cash loads during the tax season.
- Lower the maximum foreign ATM withdrawal amount to $200; this will help increase your ATM interchange revenue. This is a good practice, whether during tax season or anytime.
- Plan for this increased activity on an annual basis. Tax refunds on prepaid debit cards is increasing every year. If your ATM was impacted in 2016, you may already be seeing withdrawal volume increases this year.
- Contact your cash delivery service and inform them of the potential need for additional cash loads. This could help reduce delivery delays.
Although some of these prepaid cardholders will seek out surcharge free ATMs, the selection of an ATM for these cardholders is largely driven by location. These prepaid debit cardholders are more likely to access the ATM nearest the tax preparation service company, even if that ATM has a surcharge.