About Prepaid 101
Prepaid or stored value cards are one of the most dynamic and fastest growing products in the financial industry. Anyone who makes purchases with a merchant gift card, places phone calls with a prepaid telephone card, or buys goods or services with a prepaid debit card is using a stored value card.
Stored value cards enable ‘cashless’ financial transactions. Stored value cards use magnetic stripe technology to access information about funds that have been prepaid to the card. Payroll cards, government benefit cards, prepaid debit cards, gift cards, and telephone cards are examples of stored value cards. There are two main categories of stored value cards in the marketplace. The first prepaid cards made available to the marketplace were single-purpose or ‘closed-loop’ cards. Gift cards, which can only be used to purchase goods at particular retailers, and prepaid telephone cards, which can only be used to make telephone calls, are examples of single-purpose cards. The second type of card to emerge was a multipurpose or ‘open-loop’ card, which can be used to make debit transactions at a wide variety of retail locations, as well as for other purposes, such as receiving direct deposits and withdrawing cash from ATMs. Our MasterCard® branded cards carry the prestige of the MasterCard brand and can be used wherever MasterCard is accepted worldwide.
Consumers obtain stored value cards in a variety of ways. They may obtain a payroll card from an employer, an electronic benefit card from a government agency, or a gift card from a retail store. Typically, a consumer would apply for a general spending multipurpose card by telephone or online, although these cards are being increasingly offered at check-cashing outlets, money transfer company locations, and retail stores.
Reloadable multipurpose cards are viewed as a more convenient and efficient way of making payments and are replacing the older, more traditional, credit card and formal banking processes Consequently these cards are the most likely to meet the needs of the nonbanked or underbanked consumer. Cardholders can not only use these cards to make payments to a wide variety of merchants and service providers but can also reload them with additional funds. The card can be easily reloaded in a variety of ways, such as Direct Loads, Money Order or cash presentment at designated retail locations such as convenience stores.
Prepaid cards provide a multitude of benefits: direct credits of payroll checks, withdrawals of cash at ATMs, payments for retail purchases, bill payments, and money transfers.
To find out how to get the power of prepaid working for your business, give us a call.
