Blackboard Inc. recently launched an open-loop prepaid card program, Blackboard Pay, that enables colleges and universities to simplify the way they disburse financial aid credit balances and student payroll.

The prepaid account, which educational institutions also can choose to link to a student’s campus identification card, provides students with immediate access to their funds and eliminates the need to wait for a paper disbursement check. Students may use the card to initiate purchases or to make ATM withdrawals within the Pulse, Allpoint or Star electronic funds transfer networks. Discover owns Pulse. Cardholders also can use their signatures to initiate purchases over the Discover Network.

First Data Inc., which owns Star, provides the program management and transaction processing for Blackboard Pay as part of its Money Network program.

Blackboard Pay avoids charging overdraft fees by declining transactions when there are insufficient funds in the account. It also charges no monthly service fee, and students are not charged when using the card to initiate purchases or when using ATMs within the Allpoint surcharge-free network, says Jeff Staples, vice president of market development and strategy at Blackboard Transact, a Blackboard platform that also enables educational institutions to link their closed-loop campus ID cards to payments and building access. The card also uses contactless technology (see story). also receive courtesy checks they may use to pay utility bills and rent, to transfer funds to another account or to secure the full amount of their aid in cash. If a cardholder does not have a bank account, he can cash a check for up to $5,000 at Walmart stores for free, Staples tells PaymentsSource. The limit for an ATM withdrawal is $400.

Because of the state of the current credit market and the recession, some observers believe prepaid campus cards can help students to learn about financial management while avoiding debt or endangering their credit scores. “Prepaid cards are practical for students because they eliminate the need for cash or credit cards, especially if you look at the credit problem and The Credit Card Accountability Responsibility and Disclosure Act that has taken affect,” Adil Moussa, an analyst with Boston-based Aite Group tells PaymentsSource.

The Credit CARD Act forbids banks and issuers from marketing credit cards to students on college campuses. Issuers also may not provide consumers younger than 21 a credit card unless they show proof they can pay back debt.

Three universities are working with Blackboard to pilot a rewards program for Blackboard Pay. Blackboard expects to launch the program before the end of the year.

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