(NYSE: AXP)

A few weeks ago, I wrote about how prepaid cards are proliferating, that American Express and Walmart had come out with a no-fee card called Bluebird, and not everything is as it seems.

You all chimed in with lots of great comments, including some that questioned what I really had against prepaid cards, especially if they are "no-fee" cards and serve those with less-than-average wherewithal (wherever that descending measure is these days) who rely on them for everything from consumer transactions to bill paying and ATM access.

First of all, let me say that I think prepaid cards are good. They're not great, but I hope they get there.

But I want to talk about what's not great, and how to make prepaid cards better.

I told you about the interchange fees that are charged to merchants and how those end up being passed along to consumers. Maybe that's not such a big deal if we can quantify their additional cost on a per-item basis. All I'll say about that is, it adds up.

My problem with prepaid cards is what we can't see about them.

What's going on behind the scenes? Do they offer adequate protection to their users? Is the proliferation of them going to present some systemic risk? How should they be regulated?

Regulation? I know what some of you are thinking. We have too many regulations as it is, and the regulators are all asleep at the wheel anyway, so regulation is the problem not the answer.

I agree with you, but not exactly. You'll see what I mean.