Markets : Pre-Paid Cards
Pre-Paid Cards
Pre-paid is the fastest growing and most exciting area of payment cards, bringing many new players to the payment card market, previously the preserve of the banks.
Pre-pay cards come in two main forms, closed loop and open loop.
Closed loop cards are issued by organisations for use within their own company. The most common example of this is the retailer Gift Card.
Open loop cards are simply pre-pay cards that operate within the Visa or MasterCard schemes and can be used in the same way as credit or debit cards. In most cases the cards can be re-loaded with value by the card holder, relatives, friends or employers.
Examples of the use of pre-pay cards include:
- Payment cards for the adult un-banked market, including the ability for this group of people to participate in e-commerce for the first time
- Payroll cards, allowing employers to pay un-banked employees in the same way as those with bank accounts
- Youth cards, allowing young people (usually from age 13) to have payment cards for retail and e-commerce purchasing, thereby avoiding the need to use parents’ card details. Parents can also see where the money is being spent.
- Money Transfer cards, enabling migrant workers to make cash available to overseas relatives through ATMs, without using the traditional money transfer methods
- Travel Money, simply a more convenient form of travellers cheques that can be used to make purchases or withdraw money from ATMs whilst abroad
- Multi-retailer gift cards such as shopping mall and town centre gift cards
One major benefit of pre-pay cards is that it is not necessary for card holders to have bank accounts or to be credit-worthy. Another benefit is that the cards are marketed by the promoter of the scheme and are branded by them, not the bank.
To launch a pre-pay scheme, companies need three main partners that are linked together:
- Card Manufacturer certified by Visa and MasterCard
- Card Issuer – a bank that is either a Visa or MasterCard member (note, very few banks will carry out this role)
- Transaction Processor (usually specified by the bank)
ID Data is a Visa and MasterCard certified card manufacturer that has successfully enabled companies to launch pre-pay cards by introducing appropriate banks and transaction processors.
Alternatively, ID Data can introduce existing generic card schemes that can, in many cases, be white labelled, creating a fast track to market.
Contact us today to find out more about the opportunities in this rapidly expanding and exciting new market.