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Prepaid bank cards: types, main differences, advantages and disadvantages of using
The report outlines the distinctive features of debit, credit and prepaid bank cards. The types of prepaid cards are presented: gift, virtual and instant bank cards. The advantages and disadvantages of using prepaid cards are revealed, as well as the legal framework governing the activities of prepaid cards.
Currently, many banks offer their customers prepaid bank cards, which are divided into three types: gift, virtual and instant issue. It should be noted that today the idea of prepaid payment cards is widely used outside the banking sector: in retail chains and service companies, to pay for purchases in online stores or international auctions, in social government programs, etc.
The legal framework governing the activities of prepaid cards as follows:
1. On insurance of deposits of individuals in banks
2. On amendments to the Regulation of the Bank On the issue of bank cards and on transactions performed using payment cards".
According to expert data, prepaid gift cards are mainly advertised on the financial services market. Bank gift cards appeared at the end of 2002. One of the first banks to sell gift cards was National City Corp. In November 2002, National City began offering Visa gift cards at branches and on its website. The card has a fixed denomination and is not replenished in the future, that is, after use, the card is thrown away. Instead of the name of the holder on the card, a Gift Card or any other neutral or congratulatory inscription can be indicated, that is, the card can be transferred to another person. Cards are issued with an already established limit, which can be used from the moment the card is activated at the bank.
In foreign practice, bank Gift cards are usually divided into two types - reloadable and non-reloadable. For non-reloadable ones, only the initial replenishment is possible, and sometimes the value of the card is indicated directly on the card and then the card is used until the deposited amount is spent. Rebootable ones allow you to make replenishments on them and use them like a regular bank card.
Thus, today prepaid bank cards (gift, virtual and instant bank cards) are gaining popularity.
Report
Currently, many banks offer their customers prepaid bank cards. The number of prepaid cards in circulation is increasing from year to year. For example, in 2017 there were 755 thousand cards in circulation, and in 2021 - 33.583 million.
Prepaid cards are very common abroad, therefore banks are actively promoting this financial payment service to the market, advertising mainly a gift option for its use.
According to experts, potential consumers of this service can be, for example, adolescents and students. Parents can use this financial instrument as a substitute for pocket money. In these cases, prepaid cards will perform an educational function for young people, teach them how to plan their expenses and lay the foundations of financial ethics.
Such cards can also be used to provide a social package for employees (payment for food, communication services, travel expenses, medical support and recreational activities).
According to experts, prepaid cards have great prospects in solving the tasks set to reduce the volume of cash payments.
It should be noted that today the idea of prepaid payment cards is widely used outside the banking sector: in retail chains and service companies, to pay for purchases in online stores or international auctions, in social government programs, etc. In the non-banking sphere, analogs of prepaid cards are cards with the indicated denomination of Internet providers, mobile operators, gift cards of stores, etc.
Let's consider in more detail the types of bank cards.
Distinctive features of debit, credit and prepaid bank cards are presented in table 1.
Table 1.Distinctive features of debit, credit and prepaid bank cards
Distinctive features of gift, virtual and instant issuance of prepaid cards are presented in Table 2.
Table 2. Distinctive features of gift, virtual and instant issuance of prepaid cards.
The main advantages and disadvantages of prepaid cards are presented in Table 3.
Table 3. Main advantages and disadvantages of using prepaid cards.
The legal framework governing the activities of prepaid cards is presented in Table 4.
Table 4. Legal and regulatory framework governing the activities of prepaid cards
Let's consider in more detail the main characteristics of gift prepaid cards. Gift card is a prepaid card that gives its owner the right to receive goods or services in the amount indicated on the card, usually used as a gift, instead of a "clothing" or cash gift.
Bank gift cards were introduced in late 2002. One of the first banks to sell gift cards was National City Corp. In November 2002, National City began offering Visa gift cards at branches and on its website. According to experts, prepaid gift cards could be distributed not only in bank branches, but also in retail chains, similar to other prepaid non-bank cards (cards of mobile operators, Internet providers, etc.). The card has a fixed denomination and is not replenished in the future, that is, after use, the card is thrown away. Instead of the name of the holder on the card, a Gift Card or any other neutral or congratulatory inscription can be indicated, that is, the card can be transferred to another person. Cards are issued with an already established limit, which can be used from the moment the card is activated at the bank. Such cards must be sold at a price higher than par in order for the merchant to have its own margin.
According to a Unisys report, 3% of consumers bought gift cards from a bank or credit card company, compared with 52% who purchased them from retailers. At the same time, 28% of the respondents expressed interest in one degree or another in buying cards from banks.
Gift cards have replaced store gift certificates - paper coupons, which contain the amount for which you can buy goods in the store that issued the certificate.
In foreign practice, bank Gift cards are usually divided into two types - reloadable and non-reloadable. For non-reloadable ones, only the initial replenishment is possible, and sometimes the value of the card is indicated directly on the card and then the card is used until the deposited amount is spent. Rebootable ones allow you to make replenishments on them and use them like a regular bank card.
Where you can buy prepaid cards with a balance for PayPal etc.?
plati.market/itm/1-prepaid-visa-usa-for-online-payment/949362
plati.ru/asp/pay.asp?idd=879155&agent=84200
paysafecard.com/products/mastercard/
epayservices.com//virtual-cards.html
king-gifts.ru/predoplachennye-karty
prostodar.ru
rsb.ru/cards/prepaid-common/
visa.com.ru/support/consumer/prepaid-cards.html
any.gift/predoplachennie-podarochnie-karti/
giftery.ru/bank-cards
tkbbank.ru/landing/prepaid-card/
platikartoi.com/predoplachennye-karty/
karta-podarkov.ru/catalog/predoplachennaya-karta-visa-my-gift
Conclusions
Today prepaid cards are gaining popularity. The retail banking market offers both gift and instant-issued virtual bank cards.
The advantages ofusing prepaid cards include: instant issuance to the client; cheap cost; the lack of linking the card to the client's bank account and, as a result, there are no commissions for servicing the account, however, a number of issuers have an insignificant payment for activation; no risk of debt.
The disadvantages of using prepaid cards include:
Prepaid cards are a rather low level instrument (Maestro, Electron); according to the "Deposit Insurance", the funds deposited by the client on the prepaid card are not subject to compulsory insurance; the inability to reissue a prepaid card, and the possibility of blocking the card in case of loss, etc.
The report outlines the distinctive features of debit, credit and prepaid bank cards. The types of prepaid cards are presented: gift, virtual and instant bank cards. The advantages and disadvantages of using prepaid cards are revealed, as well as the legal framework governing the activities of prepaid cards.
Currently, many banks offer their customers prepaid bank cards, which are divided into three types: gift, virtual and instant issue. It should be noted that today the idea of prepaid payment cards is widely used outside the banking sector: in retail chains and service companies, to pay for purchases in online stores or international auctions, in social government programs, etc.
The legal framework governing the activities of prepaid cards as follows:
1. On insurance of deposits of individuals in banks
2. On amendments to the Regulation of the Bank On the issue of bank cards and on transactions performed using payment cards".
According to expert data, prepaid gift cards are mainly advertised on the financial services market. Bank gift cards appeared at the end of 2002. One of the first banks to sell gift cards was National City Corp. In November 2002, National City began offering Visa gift cards at branches and on its website. The card has a fixed denomination and is not replenished in the future, that is, after use, the card is thrown away. Instead of the name of the holder on the card, a Gift Card or any other neutral or congratulatory inscription can be indicated, that is, the card can be transferred to another person. Cards are issued with an already established limit, which can be used from the moment the card is activated at the bank.
In foreign practice, bank Gift cards are usually divided into two types - reloadable and non-reloadable. For non-reloadable ones, only the initial replenishment is possible, and sometimes the value of the card is indicated directly on the card and then the card is used until the deposited amount is spent. Rebootable ones allow you to make replenishments on them and use them like a regular bank card.
Thus, today prepaid bank cards (gift, virtual and instant bank cards) are gaining popularity.
Report
Currently, many banks offer their customers prepaid bank cards. The number of prepaid cards in circulation is increasing from year to year. For example, in 2017 there were 755 thousand cards in circulation, and in 2021 - 33.583 million.
Prepaid cards are very common abroad, therefore banks are actively promoting this financial payment service to the market, advertising mainly a gift option for its use.
According to experts, potential consumers of this service can be, for example, adolescents and students. Parents can use this financial instrument as a substitute for pocket money. In these cases, prepaid cards will perform an educational function for young people, teach them how to plan their expenses and lay the foundations of financial ethics.
Such cards can also be used to provide a social package for employees (payment for food, communication services, travel expenses, medical support and recreational activities).
According to experts, prepaid cards have great prospects in solving the tasks set to reduce the volume of cash payments.
It should be noted that today the idea of prepaid payment cards is widely used outside the banking sector: in retail chains and service companies, to pay for purchases in online stores or international auctions, in social government programs, etc. In the non-banking sphere, analogs of prepaid cards are cards with the indicated denomination of Internet providers, mobile operators, gift cards of stores, etc.
Let's consider in more detail the types of bank cards.
Distinctive features of debit, credit and prepaid bank cards are presented in table 1.
Table 1.Distinctive features of debit, credit and prepaid bank cards
| Debit card | Credit card | Prepaid card |
| The debit card is used by the owner to make payment transactions, and payment is made from the client's own funds, from the personal account. In a number of situations, the bank service agreement provides for an overdraft - the overdraft amount in case of insufficient money on the account. Thus, a plastic debit card is a kind of key that opens access to the current account. | A credit card is used by its holder, and payments on it are made from credit funds, within a limited credit line provided by the issuing bank that has entered into a loan agreement with the client. Therefore, a credit card is one of the options for lending by banks to individuals. | A prepaid card is used to carry out transactions by an individual, for which the issuing bank pays independently, at the expense of funds received earlier into its consolidated account from the cardholder or (if it is provided for by contractual relations) from third parties. Receiving a prepaid card does not require opening a special account for an individual; it is often issued “to bearer” and does not contain personal identification data. This is the main difference between this type of payment instrument. Due to the lack of personal information, this means of payment can be used by third parties to whom the owner can transfer it. Debit and credit cards are used only by cardholders, because they are “registered”. |
Distinctive features of gift, virtual and instant issuance of prepaid cards are presented in Table 2.
Table 2. Distinctive features of gift, virtual and instant issuance of prepaid cards.
| Gift bank cards | Virtual prepaid cards | Instant prepaid cards |
| Gift bank cards are purchased as a gift. Such cards compare favorably with gift cards of stores, in that bank cards can be used in any store, not limited only to the outlet where the card was directly purchased. A nice feature of a bank gift card is the "festive design" with an indication of the face value of the card. Gift cards are usually non-refillable. | Virtual prepaid cards are designed to pay for goods and services on the Internet. They can be produced both on a physical medium and without it. They can be replenished or without the possibility of replenishment - at the discretion of the issuing bank. It was specially created in order to increase the confidence of Internet users in e-commerce, as well as allow you to separate expenses in real stores from money transactions in the Internet environment. | Daily prepaid cards are instant-issued cards, usually with a top-up option. They can be used to pay for purchases or withdraw cash. They can also be gifted, but, unlike specially designed gift bank cards, the design for such cards will be the most common. |
The main advantages and disadvantages of prepaid cards are presented in Table 3.
Table 3. Main advantages and disadvantages of using prepaid cards.
| No. | Benefits | Dsadvantages |
| 1. | Instant delivery to the client. | Prepaid cards are a low level instrument (Maestro, Electron). |
| 2. | Cheap cost. | According to the "Deposit Insurance", the funds deposited by the client on the prepaid card are not subject to compulsory insurance. |
| 3. | The lack of binding of a prepaid card to the client's bank account and, as a result, there are no commissions for servicing the account, however, a number of issuers have an insignificant payment for activation. | The impossibility of re-issuing a prepaid card, and sometimes blocking the card in case of loss. |
| 4. | No risk of debt. | When using prepaid cards, the client may experience inconveniences. For example, a prepaid card abroad may not be served in every store or retail outlet; there will be difficulties with booking a hotel or renting a car. |
The legal framework governing the activities of prepaid cards is presented in Table 4.
Table 4. Legal and regulatory framework governing the activities of prepaid cards
| No. | Legal and regulatory framework | A brief description |
| 1. | On amendments to the Regulation of the Bank "On the issue of bank cards and on transactions performed using payment cards": | According to the instruction, the prepaid card is intended for making transactions to pay for goods or services, as well as for issuing cash and certifies the right of the holder's claim to the issuing bank to make these payments. At the same time, the credit institution that issued the card makes settlements on its own behalf at the expense of funds provided by the cardholder himself or received in his favor from third parties, if such a possibility is provided for by the agreement between the issuing bank and the cardholder. Credit institution - the issuer is obliged to determine the limit of the prepaid card, which should not exceed $ 1500. The bank has the right to issue rechargeable prepaid cards. The total amount of funds transferred to replenish the card must not exceed $ 1000 per calendar month. A prepaid card does not require opening an account and is issued by the bank without identifying the client, that is, the client's full name is not indicated on it. Such cards are gift, virtual and instant issuance. The financial institution has the right to engage payment agents and retailers to distribute its prepaid cards. One of the interpretations of legislation states that reloadable prepaid cards cannot be issued by Russian banks, and are forced to limit themselves to the issue of non-reloadable cards. |
| 2. | On amendments to"On the National Payment System" | The Payment System has been supplemented with the concept of “prepaid card” - this is a payment card provided to the client by the electronic money operator, which is also used to transfer electronic money. The features of the transfer of electronic money using prepaid cards have been established. The procedure for using this card is regulated. It was established, for example, that the transfer of electronic money using it is carried out within a period of no more than three working days after the operator of electronic money accepts the client's order (unless a shorter period is provided for by the contract or the rules of the payment system). The amendment to the Combating the Legalization of Criminal Incomes establishes a restriction on the implementation of certain transactions carried out by individuals in relation to whom there is information about their involvement in extremist activities or terrorism: in particular, the right to carry out certain transactions with funds in in an amount not exceeding $ 150 a month (including transactions for receiving and spending wages, at the rate of $ 150 for each family member who does not have an independent source of income). |
| 3. | On insurance of deposits of individuals in banks | The funds deposited by the client on the prepaid card are not subject to compulsory insurance. |
Let's consider in more detail the main characteristics of gift prepaid cards. Gift card is a prepaid card that gives its owner the right to receive goods or services in the amount indicated on the card, usually used as a gift, instead of a "clothing" or cash gift.
Bank gift cards were introduced in late 2002. One of the first banks to sell gift cards was National City Corp. In November 2002, National City began offering Visa gift cards at branches and on its website. According to experts, prepaid gift cards could be distributed not only in bank branches, but also in retail chains, similar to other prepaid non-bank cards (cards of mobile operators, Internet providers, etc.). The card has a fixed denomination and is not replenished in the future, that is, after use, the card is thrown away. Instead of the name of the holder on the card, a Gift Card or any other neutral or congratulatory inscription can be indicated, that is, the card can be transferred to another person. Cards are issued with an already established limit, which can be used from the moment the card is activated at the bank. Such cards must be sold at a price higher than par in order for the merchant to have its own margin.
According to a Unisys report, 3% of consumers bought gift cards from a bank or credit card company, compared with 52% who purchased them from retailers. At the same time, 28% of the respondents expressed interest in one degree or another in buying cards from banks.
Gift cards have replaced store gift certificates - paper coupons, which contain the amount for which you can buy goods in the store that issued the certificate.
In foreign practice, bank Gift cards are usually divided into two types - reloadable and non-reloadable. For non-reloadable ones, only the initial replenishment is possible, and sometimes the value of the card is indicated directly on the card and then the card is used until the deposited amount is spent. Rebootable ones allow you to make replenishments on them and use them like a regular bank card.
Where you can buy prepaid cards with a balance for PayPal etc.?
plati.market/itm/1-prepaid-visa-usa-for-online-payment/949362
plati.ru/asp/pay.asp?idd=879155&agent=84200
paysafecard.com/products/mastercard/
epayservices.com//virtual-cards.html
king-gifts.ru/predoplachennye-karty
prostodar.ru
rsb.ru/cards/prepaid-common/
visa.com.ru/support/consumer/prepaid-cards.html
any.gift/predoplachennie-podarochnie-karti/
giftery.ru/bank-cards
tkbbank.ru/landing/prepaid-card/
platikartoi.com/predoplachennye-karty/
karta-podarkov.ru/catalog/predoplachennaya-karta-visa-my-gift
Conclusions
Today prepaid cards are gaining popularity. The retail banking market offers both gift and instant-issued virtual bank cards.
The advantages ofusing prepaid cards include: instant issuance to the client; cheap cost; the lack of linking the card to the client's bank account and, as a result, there are no commissions for servicing the account, however, a number of issuers have an insignificant payment for activation; no risk of debt.
The disadvantages of using prepaid cards include:
Prepaid cards are a rather low level instrument (Maestro, Electron); according to the "Deposit Insurance", the funds deposited by the client on the prepaid card are not subject to compulsory insurance; the inability to reissue a prepaid card, and the possibility of blocking the card in case of loss, etc.
