Prepaid cards: How are these useful?

Prepaid cards like other debit and credit cards are plastic cards however their penetration in the Indian market is comparatively less. But in due time, the product providing enhanced safety is expected to gain momentum. Different from the regular plastic card that are linked to the bank account, prepaid cards have no association with an individual's bank account and it is purchased from the card issuing institution which can be either a banking entity or a non-banking concern such as the Itz Cash Card.

Usually, secured after payment of an upfront fees, these card can be pre-loaded with the desired amount and few such cards also allow reloading of cash again when the amount in the held card gets exhausted. So, such cards though allow transactions at a price, nonetheless it can enable an individual to contain its spending with the budgeted amount for a particular purchase loaded in the card.

Different types of prepaid cards

These cards on the basis of their feasibility to operate the card in a particular geography, location, premise etc. are classified as open loop cards, closed loop cards and restricted loop cards. Among the open loop category, travel cards as well as payroll cards (used by employers to credit monthly salary to the employee account) are included that can be used in any geography both for withdrawal at ATM machine and for payment at POS terminals.

Within the closed loop cards category, cards that can be used for making purchases of a particular sort and at a particular place form its part. Food courts in malls in the country are seen as following the suit and entire amount fed into the card is available for redemption and claim on the unused amount is also honored.

Gift cards from retail stores which can be used at a particular outlet in different locations is an example of restricted loops cards. The same though allows redemption of the entire amount, cash-back facility on it is not offered.

Virtual cards are also a type of prepaid cards that allow only online transaction and such a card is unique in the sense that it can be used to carry out a single transaction. Know more about virtual cards.

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