The Application of Prepaid Cash Card for Consumers

What is a prepaid cash card?

A prepaid cash card is similar to a credit card and debit card, which gives cardholders the ability to purchase products and services on-line and off-line. The greatest feature of prepaid cash cards is that they do not get cardholders into debt, as only transactions up to the balance preloaded onto the prepaid account will be authorized. Therefore, cardholders can only spend what have paid in. Most prepaid card providers enable cardholders to manage their accounts online or via an interactive Voice Response telephone service. This provides convenience to the cardholders so that they are always within easy reach of their balance.

How does it work?

First of all, load a prepaid cash card with an amount of money by cash at a bank, Post Office, bank transfer, or even by another credit card.

Prepaid cash cards work the same way as a credit card, which includes the 3 steps: swap, enter/sign and collect. When purchasing a cardholder needs to swap his card on the electronic machine, enter personal identification number or sign a payment slip, and lastly collect a copy of receipt. The total amount will be subtracted from the card balance once the transaction is complete successfully.

What are the benefits of using a prepaid cash card?

No charges
There are no interest charges, late payment or over limit fees as this is cardholder’s money instead of credit. In fact prepaid cash cards are useful especially for teenagers as a cardholder needs not to be 18 to apply for one.

Convenience
Prepaid cash card can be used anytime and anywhere to buy groceries, to fill petrol, and to withdraw cash from an ATM. It can even be used to make online payment such as paying bills, buying movie tickets and airline tickets, and online shopping as it is widely accepted across the internet. Prepaid cash cards are issued under a MasterCard, Visa Electron, Maestro or Amex badge, and therefore having the same acceptance as credit and debit cards.

Cardholders can also use prepaid cash cards to register for services such as Ebay or Paypal to grab better deals pay via Internet immediately. This replaces the need to send cash, cheques or postal orders, which can add another 7-10 days before goods are received.

Safer than cash
Cardholders do not need to carry around large sums of cash. In most cases, if the card gets stolen or lost, the remaining balance will be transferred across to a new account to protect from unauthorized transactions, and cardholder will receive a replacement card.

Better financial planning
Prepaid cash cards allow cardholders to have better financial planning by limiting their spending and avoiding over spending as they are in complete control of their funds. They can only spend up to the maximum amount of money that has preloaded in onto the card. In UK, some of the card issuers enable cardholders to store some emergency funds by setting up pay as they go prepaid accounts.

Security
Prepaid cash cards would be the better choice if consumers are still uncomfortable on giving the numbers of credit card on the Internet. Since prepaid cash cards can be charged only up to the value of the pre-loaded fund, the thieves cannot make an excessive charge using the cards.

How to choose a right card?

It makes sense to look for a prepaid card with low sign-up, annual, monthly and top-up fees. However, there are other things to consider when deciding on the right card:

What are the reload options - can you pop into a local bank, can you reload online, etc?
Can you manage the card online - can you see transactions, etc?
Is there a 24 hour service to reload money on to the card when necessary?
Is there a free additional card?
What level of protection does the card provider offer?

As with a credit card, shopping around is the key to getting the best deal for consumrs. At the moment the prepaid card market has relatively few providers compared to the credit card market but competition is beginning to intensify which will in turn drive down costs and increase service.