I introduced prepaid debit cards to the clinical trial industry in 2009 when I founded Greenphire and created the ClinCard. Since then, prepaid cards have become a popular method for distributing payments to clinical trial participants. At the time, prepaid cards offered the most convenient way of receiving payments quickly, and allowed trial participants to access funds, which most commonly were provided to reimburse expenses incurred, quickly. The ClinCard was launched with the least aggressive fee schedule of any prepaid debit card in existence.  This was our way of creating a payment delivery product that was optimized for use in trials.

Many participants, at the time, expressed frustration with these card fees, especially inactivity fees (a monthly fee that reduces the balance of the card until the balance reaches $0). But, the only other option, in 2009,  was a check or cash.

Over the years, prepaid debit cards grew in popularity across clinical trials. As adoption grew, so did the size of the high-margin revenues that were generated by card fees. Even though new technologies emerged to deliver fee-free B2C payments, representing better options for trial participants (PayPal, Venmo, Zelle, digital wallets, etc), the companies that offered prepaid debit cards chose not to evolve. No competitive pressure was forcing the change. And high-margin revenues drive valuations that benefit investors. Fees, not users, won the day.

In order to protect the revenues earned from card fees, some companies created convenient story-lines that shifted the blame, implying that the fees were out of their control, to avoid having to sacrifice profits. One of the most persistent misconceptions surrounding prepaid debit card fees is the belief that these charges—especially inactivity fees and/or monthly maintenance fees—are imposed by the sponsor bank that issues the card. In reality, the program manager (e.g., Greenphire, Payoneer, HyperWallet), not the bank, determines which fees are charged and the amounts. The program manager is also, usually, the primary beneficiary of the fee revenues.

In addition to addressing the myth about fees, it is also worth considering ethical issues linked to fees. Should certain types of payments be exempt from fees? For example, federal regulations protect payroll from certain types of fees. Should the Institutional Review Board (IRB) allow prepaid cards in a modern environment where many other options are available?

This article aims to clarify these issues, breaking down the realities of prepaid debit card fees and their implications for both participants and the organizations that issue them. By addressing these key questions, we hope to foster a more transparent discussion about the fairness and practicality of prepaid debit card programs in participant reimbursement.

Myth: The Issuing Bank Controls Card Fees

One of the most common misconceptions about prepaid debit cards—particularly those used for clinical trial reimbursements—is that the fees associated with these cards are dictated by a bank. Many of us assume (or maybe have been told) that inactivity fees, monthly maintenance fees, and withdrawal charges, and other fees are imposed by the financial institution that issues the card, when in fact, that is not true. The reality is quite different.

How Prepaid Debit Card Programs Work:

To understand who controls these fees, it’s important to break down how prepaid debit card programs are structured. There are three key entities involved in a typical prepaid debit card program:

The Sponsor Bank (e.g. FifthThird or Bancorp) – This is the financial institution that holds the funds and issues the card. It ensures compliance with banking regulations and provides the underlying infrastructure for the card’s operation. However, it does not dictate the specific fee structure for program users.

The Program Manager (e.g., Greenphire, Payoneer, HyperWallet) – The program manager designs and administers the card program, setting rules for usage, features, and most importantly, fees. This is the entity that determines how much and when fees are assessed.

‍The Payment Network (Visa, Mastercard, etc.) – These networks facilitate transactions, allowing the card to be used anywhere the network is accepted. They collect interchange fees from merchants but do not impose fees on cardholders.

Reality: Who Really Benefits from the Card Fees?

Contrary to popular belief, the program manager, not the sponsor bank, decides on most of the fees associated with a prepaid debit card program. The program manager is responsible for designing the card product and decides how to charge for the product. Most program managers rely on transactional fees to generate revenue, which is why most debit card products assess fees to the cardholder. Common fees include:

• Monthly maintenance fees – Charged for ongoing card usage and administration.
• Inactivity fees – Applied when a card has not been used for a certain period.
• ATM withdrawal fees – Fees for accessing cash at ATMs, beyond those imposed by the ATM operator. 
• Balance inquiry fees – Charged when checking balances via certain methods.

There are many other types of fees that can be assessed for a variety of reasons: account liquidation, receiving a paper statement, calling customer service, withdrawing from an ATM in a different country, currency conversion etc.  

These fees are set based on business decisions made by the program manager (the product owner), often as a way to generate revenue beyond the initial funding of the cards. While the sponsor bank plays a role in making a prepaid product work, it is not the entity profiting from these deductions. The bank’s primary revenue stream is the interest earned on the funds held in the prepaid card program before they are spent by cardholders.

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Why Does the Industry Think that Banks Require Fees?

The confusion surrounding fee responsibility may stem from the way prepaid card programs are branded. Participants see the bank’s name on the card and naturally assume it controls the associated costs. Additionally, terms and conditions often use legal language that can make it difficult to distinguish between the responsibilities of the bank and the program manager. The myth is likely also perpetuated by the program manager in order to avoid pressure to eliminate fees (and a very high margin revenue stream).

If you were wondering why companies that provide payment solutions for trial participants still rely on prepaid cards, despite the many modern payment methods that exist today and do not include fees for participants - this is why.

Ethics: Considerations for IRBs and Sponsors

Institutional Review Boards (IRBs) and sponsors have an ethical obligation to ensure that participants in clinical trials receive full and fair payment if financial support is provided to assist participants through the trial. However, many of them are unaware of the structure of prepaid card fees, and the impact they have on participants. Payments should not be diminished by excessive or undisclosed fees that reduce the actual amount participants can use. Failing to consider the financial implications of prepaid debit card fees can raise ethical concerns, particularly regarding transparency and fairness in participant reimbursements.  It is important to note that utilization of funds on a prepaid card (the amount that is used expeditiously) is lower than other types of payments. A natural conflict of interest also exists between the participant and the prepaid card company (the program manager): if the participant doesn’t use their funds, the program manager increases its profits.  

IRBs should require full disclosure of all potential fees before the issuance of prepaid debit cards to participants. This ensures that individuals are fully aware of any charges that may reduce their compensation, allowing them to make informed decisions about how they receive their payments. Additionally, IRBs should consider requiring at least one other alternative payment method, such as direct deposit, checks, or digital wallets (e.g., PayPal, Venmo). These options can minimize or eliminate fees, ensuring that participants receive the full amount they were promised. Lastly, IRBs and sponsors should evaluate the impact of fees on participant retention and satisfaction. If excessive fees discourage participation or create financial burdens for low income participants, adjustments should be made to ensure fair and ethical reimbursement practices.

Conclusion

As you are dedicating funds to make sure participants in your trial are fairly reimbursed and compensated for their participation, be well prepared to critically assess the tools you put in place to support these participants.

If you are told that there are no fees on the card apart from bank imposed fees - remember that prepaid debit card fees are determined by program managers, not sponsor banks, meaning the responsibility for these charges lies with the entities administering the card programs - your trial payment vendor. These fees primarily benefit the program manager, often at the expense of participants who may see their compensation reduced by maintenance, inactivity, or withdrawal fees. Alternative payment methods, such as direct deposit, may be more cost-effective and transparent. If you still wish to offer participants prepaid cards, you can do that at no fee. Mural Health, the business I founded after leaving Greenphire to address the challenge with the antiquated market solutions, offers a truly fee-free prepaid card. No “bank imposed fees”. No fees at all. 

As Mural Health continues to advance its mission to make it easier to participate in a clinical trial, we believe transparency and honesty are key. Prepaid cards are part of the problem, but they don’t have to be -  greater transparency is needed to ensure that participants receive fair compensation without unnecessary financial loss.

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To learn more about working with Mural Health, please get in touch with our team.