About Prepaid
Prepaid 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 prepaid or stored value card.
Prepaid cards enable cashless financial transactions. Prepaid cards use magnetic stripe technology to store 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 prepaid cards. There are two main categories of prepaid 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 same prestige and can be used wherever the MasterCard brand is accepted electronically.
Consumers obtain prepaid 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.
The prepaid card market is growing and evolving rapidly. Experts put this industry in the introductory or early growth stage of the product life cycle, suggesting that there is substantial growth potential in the years ahead. This includes all stored value cards, such as multipurpose general spending cards,
payroll cards, government benefit cards, child support payment cards, merchant gift cards, and telephone cards.
Experts put this industry in the introductory or early growth stage of the product life cycle, suggesting that there is substantial growth potential in the years ahead. This includes all stored value cards, such as multipurpose general spending cards, payroll cards, government benefit cards, child support payment cards, merchant gift cards, and telephone cards.
Reloadable multipurpose cards are now viewed as practical alternatives to checking accounts. Among prepaid cards, reloadable multipurpose cards most closely resemble traditional deposit account debit cards in functionality and are thus most likely to meet the needs of the unbanked or underbanked. Consumers not only can use these cards to make payments to a wide variety of merchants and service providers but also can reload them with additional funds. The ways in which cards can be reloaded vary but may include direct deposit, money wire transfer, money order, or cash presentment at designated retail locations such as convenience stores.
Reloadable multipurpose cards are offered by a variety of firms and have an assortment of features. Some cards are both issued and distributed by banks, while others are issued by banks but distributed to customers by nonbank firms. Nonbank firms may also play roles in processing card transactions.
Prepaid cards provide a multitude of benefits: direct deposits of payroll checks, withdrawals of cash at ATMs, payments for retail purchases, bill payments, and money transfers. Some cards require the cardholder to enter a PIN (personal identification number) at the point of sale, whereas others require the cardholder's signature.
