We live in an ever-changing world with technology powering great advances in almost every field.
So it comes as quite a surprise that one of the fastest-growing payment methods is distinctly old-fashioned, at least in its concept.
Unlike the new so-called virtual card which, as the name suggests, you can’t hold in your hand at all, the pre-paid card is one that is finding a place in more and more people’s wallets today.
The concept is a simple one. You are issued with a card onto which you can load money up to an agreed limit. You can then use the card to shop in person and online just as you would with a debit or credit card. The difference is that when the money loaded onto the card is all used up you need to load more on.
This can be done in a number of ways including:
- Online via the card issuer’s website or app using a debit or credit card
- Via a bank transfer using the sort code and account number relating to the issuer
- By cash deposit at specified locations including at banks, postal offices and others offering a Paypoint Service
- Certain pre-paid cards also allow direct payments from an employer
So what are the advantages?
Pre-paid cards have been described by some as the modern equivalent of making cash payments. And, at a time when more and more places are going cashless this is very convenient.
It also fits in with the old mantra that you should only spend what you have. When we used to rely on cash this was easy to achieve. But now more of us rely on credit cards and bank overdrafts it’s less of a limiting factor.
It all adds up to the fact that having a pre-paid card acts as a useful budgeting technique.
As using one will never attract interest or overdraft fees also makes them a more cost-effective way to spend.
These cards are proving to be especially popular both with online casinos and the people who play in them. For the former, it’s an extra facility to offer, for the latter it can provide a handy way to put a ceiling of their spending. It’s even become a distinct category of online casino, as you can see when you check out the top ten pre-paid card casinos available in Canada.
Then there’s the question of safety. Carrying a pre-paid card is obviously a far more secure method than carrying cash. If this is lost or stolen then it’s probably gone forever. But a mislaid pre-paid card can be quickly cancelled by contacting the relevant provider.
Another less well-publicised aspect of pre-paid cards is their relationship to their holders’ credit ratings. While there are no credit checks when applying for one, the responsible running of a card can help to increase a person’s credit score. Not all cards have this feature, but an increasing number do.
The traveller’s friend
Because pre-paid cards can be loaded with almost any currency, they are also becoming increasingly popular with travellers. They may be going abroad on business and need a way to pay for everyday expenses. Or they may be holidaymakers who want to stick to a budget.
Not only is this a relatively safe way to carry money abroad it also avoids any bank charges for paying in a foreign currency, which can be as high as 2% in some instances. There’s also the advantage neutralising any fluctuations in exchange rates while the traveller is abroad.
Who’ll be using pre-paid cards?
The potential list of users for the pre-paid card is huge, hence the bullish predictions about their future. The key group is, and will be, people who want to keep a close control of their budgets as well as those for whom it’s an absolute necessity.
Using pre-paid cards could also be a good way to teach financial responsibility to children and young adults who may then go on to also use the more traditional debit and credit cards in the future.
We’ve already covered the travellers who have already started to embrace this payment method wholeheartedly with numbers set to rise here too.
Then there are the financially disenfranchised who need to either build or repair a credit rating. The pre-paid card can play a role in this too. It all adds up to a massive potential market that is being driven by the increasing globalisation in almost every sector.
Add to this the increasing reliance in many countries of internet commerce which necessitates the need of some kind of payment card and the future of the pre-paid card is plain to see. So, while cash will never die out completely, these cards will mean that its power is set to be diminished still further.