Are Prepaid Cards All-Inclusive?
Digitalization has led to several inventions. Financial transactions have become mostly cashless, and it has been both a boon and a bane for people. The usage of prepaid cards has been widely popular worldwide for all transactions and has been a constant topic of discussion for its pros and cons.
It is easy to procure cards online, but we also have alternate Digital prepaid solutions. The discussion of the prepaid card being an inadequate solution for digital payment inclusion arises because of the constant invention in the digital world.
Let us discuss, analyze and understand more about prepaid cards.
What are prepaid cards?
A prepaid card is a card or a medium used instead of cash. You need to buy a card and load money into it. The card can be used to spend up to the amount for which it is purchased. Prepaid cards are available in many stores and can also be purchased online.
Why are prepaid cards getting popular?
- Prepaid cards can be the easiest way to transact for people who do not carry cash and have less knowledge of any other online mode.
- There is no application or waitlisting process to get a card. You can buy it.
- The prepaid card providers advertise a lot making it more popular among youth and even the less educated crowd.
- The big celebrities and their endorsements make it attractive, and people assume it is the best way to manage money.
- Since it does not need a bank account, people find it hassle-free and try to obtain one.
- If you opt for money as a gift, a prepaid card comes in handy.
- If you want to control your expenses, you can just load the budgeted sum of money and spend it as per your plan.
- Unlike any other loan or credit card, your bad debts or score don’t matter here.
What is the usage of prepaid cards?
- Prepaid cards are an alternate way to pay for things if you are not carrying cash or have decided on a cashless transaction.
- You are not obligated to pay the bill since you are using the money you already have.
- A bank account is not required to own a prepaid card.
- You need not worry about possessing a good credit history to use a prepaid card.
How do prepaid cards work?
Prepaid cards work almost similarly to debit cards, except you need not create and link a bank account to get a prepaid card. Below is its functionality
- You receive a card from a store or online, or a vendor.
- Sometimes, you buy a card for a certain amount and spend it.
- A few other times, you buy a card and add desired funds.
- You can use the card to buy things in stores and from an ATM.
- Your card stops working when you spend all the money you added.
- You can add more money.
- The charges involved are higher than any other card.
What kind of fees do prepaid cards charge?
You might have to pay fees to:
- Purchase a card
- Load more money onto the card
- Buy something with the card
- Check the balance
- Use an ATM with your card
- Some vendors put card holding charges too
What are the disadvantages of a prepaid card?
- The card is not linked to any personal banking account, and hence there is no interest earned.
- By default, Prepaid cards do not have all the features you would expect with a Savings account, online or mobile banking, or any bank services.
- Losing money due to inactivity
- Known for hidden and miscellaneous charges
- Sometimes, your cards may not work due to technical glitches and may not serve their purpose.
- If you are new to digital transactions and loss or fraud is involved with your prepaid card, the protection is limited, unlike a credit or debit card.
How is a prepaid card different from a credit card?
|#||Prepaid card||Credit card|
|1||You can buy one card from anywhere (Store or online) with less protection involved||There is a procedure to apply, authenticate and issue and security involved|
|2||Hidden charges involved||A minimal amount is spent on procurement|
|3||No interest involved||Interest can be earned|
|4||Does not contribute to your credit history||It helps you to have a good credit score|
What is an alternative to a prepaid card?
Lack of security and protection can be a major concern for normally prepaid cardholders. Cashless transactions need the utmost security, and proper security layer protection like 3D secure protocol can encrypt your card in the best way possible. We have many service providers providing more efficient and Tokenization enabled 3D secured cloud-supported cards that are the best alternative for a prepaid card.
Understanding the terms and conditions involved is essential before buying any money transaction card. Many companies are offering mind-blowing digital prepaid solutions to provide a customer-friendly payment experience that is more trustworthy, customized, and secure than prepaid cards.
Due to its lack of long-term vision and benefits, Prepaid Cards are an Inadequate Solution for Digital Payments Inclusion.