News : Prepaid Credit Card UK

Prepaid cards could be the way we all spend in future

Saturday, 3 May 2008

They avoid the need to carry cash, but are they worth it? Kate Hughes investigates

Prepaid cards are taking the world of consumer spending by storm. They claim to help you with everything from currency exchange to improving your credit rating, and by 2010, Europeans are expected to spend €75bn (£59bn) using prepaid cards, in 2.3 billion transactions every year.

In just two years, around 5 per cent of all card transactions are expected to be through 360 million pre-paid cards, according to payment technology consultants PSE. So why are users willing to pay through the nose for the privilege of spending their own money?

Plastic fantastic

The theory behind prepaid cards is similar to electronic gift vouchers available from large high-street stores. They are activated by being "loaded" with cash and have no borrowing facilities. Prepaid cards are not linked to accounts, but look like standard debit or credit cards, and once loaded, the card can be used just like a debit or credit card to use at cash points or purchase goods or services across the majority of shops.

Most are also accepted on secure payment websites such as Paypal. The majority of the cards can be reloaded online using a debit card, with cash at the Post Office or at shops displaying a PayPoint or Payzone symbol.

Users can often swipe the card for small purchases, typically under £10, and for larger amounts, it's by way of standard chip and pin technology.

The market is dominated by Mastercard and Maestro, and prepaid card users can use them anywhere they see the signs in the same way that they would use a credit or debit card.

Source: http://www.finextra.com