Uses of prepaid cards
As well as being an alternative to credit or debit cards, prepaid cards have a number of particular uses:
Prepaid cards can be used as an alternative to cash abroad, with re-loadable cards often used as a substitute for travellers’ cheques. Prepaid cards can be topped-up when funds start to run low, and are often available in different currencies, most typically in pounds sterling, euros or US dollars.
It is often possible for wages and salaries to be paid directly to prepaid card accounts. This is becoming more common particularly for those without bank accounts such as the young, migrant or temporary workers.
Prepaid cards are attractive to businesses such as insurers who may seek to issue claimants with a prepaid card to cover claims to a specific retailer or sector.
Payment of benefits
Although not commonplace in the UK due to the availability of Basic Bank Accounts, it is possible for un-banked claimants to receive direct electronic payments on a prepaid card.
Prepaid cards can be used as an alternative to business cards. Staff can be given cards that have been loaded with funds that they can then use to pay their expenses - removing the need to put in expense claims. Prepaid cards can also be used as a way to reimburse staff for any money they might have spent on business expenses.
Corporate incentive cards
Rather like traditional incentive schemes where staff rewards might have included paper vouchers, some companies may now choose to reward staff with a prepaid card.
Gift cards are usually only accepted at certain retail outlets. However, a number of organisations do offer gift cards that are issued under an international card scheme such as Visa or MasterCard – and therefore can be used anywhere these card brands are accepted. An area of growth is in retail shopping centres – that issue their own open-loop prepaid cards in the knowledge that they can be used in the majority of stores in the centre.