Prepaid Cards
This page will discuss about Prepaid cards which are actually kind of credit cards but behave a bit different. We will broadly look upon these factors – what are its benefits and demerits( if any), how do we use these cards, which body/organizations issue these cards and what are different kinds in which these cards are offered !!
Let’s Begin !!
What, exactly, is a Prepaid card?
A Prepaid Card is issued by banks and financial institutions and can be used for transactions in a much similar way as a credit card. It comes loaded with funds and works using a really simple process. Unlike normal credit cards, which functions on borrowed credit from the bank, customers can make purchases using the funds available on the prepaid card.
Benefits of Prepaid Card
- Credit score of an individual is not a major criteria to qualify for a prepaid card.
- Prepaid card is easy to procure if you are not looking for any other credit card.
- Prepaid card can be used to pay for any good or service and it serves as a very good alternative for cash transactions.
- Spends would not go overboard as customers can easily plan their expenses and purchase goods only within the limit of the card.
- As long as the prepaid credit card is valid, customers can always get extra cash for urgent purchases and transactions.
- No employment verification is asked for card issuance.
- Prepaid card does not offer credit facility – so there is no chance of going into debt, for a customer.
- Prepaid card can be used to pay outstanding bills and utility bills.
- Prepaid card does offer you services of either a gift card or a travel card.
How to use a Prepaid Card?
You will have to load money into the prepaid card before you can use it. It can be done by using your bank account. As you start spending using your prepaid card, the amount of purchases is deducted from the total balance available on the card.
Types of Prepaid Cards
There are multiple types of prepaid cards available in India . We can broadly classified them into these categories:
- Open looped cards – Open looped cards are branded with the network they are affiliated to and are also called open system cards. Every card will carry the brand logo of the affiliate and will be issued by banks in association with American Express, Visa or MasterCard. All open looped cards are accepted at locations and merchant outlets approved banks.
- Closed Loop Cards – The acceptance of closed loop cards is restricted to the affiliated merchant outlet for buying services and good at only those outlets. Gift cards mostly are issued as closed loop cards.
- Semi-Open Looped Cards – As hybrid cards, Semi-Open Looped Cards are accepted by numerous merchant outlets or chains, who are affiliated with the card. Most cards are issued by retail chains or shopping malls and can be used at locations carrying stores with these brands.
- Reloadable cards – Most prepaid credit cards come as re-loadable cards, where the customer can add more funds, once the amount held in the card has been used.
- Non-Reloadable cards – Again gift cards fall under this category as once the customer uses the money available in the card, reloading cannot be done. Purchases can be done only up to what is available in the card.
(Courtesy: www.bankbazaar.com)
Demerits of Prepaid card
- Unless you load money into it, you cannot use this card for any transaction.
- There is a high chance of this card being misused in case of loss or theft, as it does not fulfill all safety obligations.
- Since there’s no revolving credit limit involved, the banks do not report your payment history to the major credit bureaus. In short, it does not contribute to improve the CIBIL score of an individual.
Prepaid Cards Variants Offered by Indian Banks
| Bank's Name | Prepaid Cards Variants |
State Bank of India
(SBI) | Achiever Card |
| Gift Card |
| Foreign Travel Card |
| EZ-Pay Card |
| Imprest Card |
| HDFC Bank | Millennia Prepaid Card |
| GiftPlus Card |
| eGiftPlus Card |
| FoodPlus Prepaid Card |
| MoneyPlus Card |
| Apollo Medical Benefit Card |
| FASTag - Hassle-free Toll Payment |
| HDFC Bank DigiThane Card |
| FleetXpress |
| GPR Card |
| Reward Card |
| MoneyPlus Retail GPR Card |
| MoneyPlus Dependant GPR Card |
| MoneyPlus Benefit Card |
| MoneyPlus Petro Card |
| MoneyPlus PettyCash Card |
| ICICI Bank | Expressions Gift Card |
| PayDirect Card |
| Multi Wallet Card |
| Gift Card |
| Meal Card |
| Reimbursement Card |
| Yes Bank | Payroll Card |
| Corporate Gift Card |
| Axis Bank | Meal Card |
| Gift Card |
| Smart Pay Card |
Note: If you are interested in learning more about the features & services offered by these prepaid cards, please do visit their respective bank’s website !!
Also, the Government of India , too, is pushing the Indian citizens to amend their spending habits and initiate using digital/virtual methods for the monetary transactions. You can read more about it here.
