|Prepaid cards are increasingly gaining acceptance in the Indian market. With special benefits like being accessible to people who do not qualify for a credit card and enabling controlled spending, these cards are gradually carving their niche in the market.
A survey by payment service provider Visa has confirmed the rising trend in the Indian market for owning a prepaid card.
What is a prepaid card?
A prepaid card resembles a classic credit card but functions more like a debit card. In fact it is neither like a credit card nor a debit card in totality. The amount of money loaded in the card during its purchase is the amount that can be spent using the card unless it has the option of being recharged. It is different from credit card in the sense that it doesn't allow a person to accumulate debt on his card. It is not like a debit card because the spendable amount on the card is not linked to the user's bank account.
Features and benefits of prepaid cards
• The first benefit offered by these cards is that they enable controlled spending. One can spend only the amount that is put in the card. It thus also prevents debt trap.
• It reduces the hassle of carrying cash everywhere a person goes. So chances of theft are reduced. These cards therefore make for good travel cards.
• It limits the amount of misuse that can be done with the card in case of loss or theft. The card can only be used for the amount of balance available on it. Hence it is more secure.
• These cards make good gifts.
• They are accepted at many ATM locations as well as points of sale (POS) terminals owing to their association with leading payment service providers like Visa and American Express.
Types of prepaid cards
Prepaid cards mainly come in two categories:
• Open looped cards
• Closed looped cards