Expiry dates for funds held on open-loop prepaid debit cards will be abolished under new regulations announced by the Canadian government. The consumer protection rules will apply to all payment network-branded prepaid cards issued by federally regulated Canadian financial institutions, and will take effect on May 1.

The regulations will also prohibit federally regulated financial institutions from imposing account dormancy fees or maintenance fees for one year on prepaid debit cards.

"Funds cannot, in general, expire, nor can financial institutions impose dormancy fees or maintenance fees within the first year of the product's activation," Kevin Sorensen, Canada's Minister of State for Finance, said at a news conference, as reported by the Canadian Press.

While existing regulations protect users of other types of payment products, they didn't previously apply to prepaid debit cards, the Canadian Department of Finance said in a statement on its Website.

"Canadian consumers have raised concerns regarding some features of prepaid payment products issued by federally regulated financial institutions that had unclear and cumbersome terms and unfair fees," the Department of Finance said. "In its 2011 budget, the Government of Canada proposed to take action to develop measures to enhance the consumer protection framework with respect to payment network-branded prepaid cards. These regulations deliver on this commitment."

The new regulations require financial institutions to disclose their prepaid card fees in an information box that appears prominently on the exterior packaging and other documentation provided prior to issuance. "The regulations also require that information pertinent to continued usage be available on the product, including where to access the full terms and conditions of usage and a toll-free number to access the remaining balance," the Department of Finance said.

In November, Canadian mobile operator Rogers Communications said it will launch a Rogers-branded virtual prepaid MasterCard in its SureTap mobile wallet.

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