Unlike credit and debit cards, prepaid cards are a relatively new financial product that have only been in the Australian market for around 20 years. Thanks to the opening up of the Australian banking industry and the proliferation of FinTechs, prepaid cards are fast becoming a popular form of alternative payment with consumers and businesses alike. However, the vast majority of people are still unfamiliar with this product and how it’s used. So, let’s look at some the misconceptions people have with prepaid cards and bring out the facts.
- Prepaid cards are not widely accepted as a form of payment
Just like credit and debit cards, prepaid cards require a payment processor such as Visa for it to work. Visa prepaid cards are accepted in 40 million locations around the world – in-store, online and ATMs. With Vasco Pay, you can tap and pay the cards at a payment terminal or add your card to your Google or Apple wallet. There are only a few places where prepaid cards may not be accepted, such as Pay at the Pump or certain subscription websites.
- Only unbanked people use prepaid cards
Contrary to belief, prepaid cards are popular with many groups of people, such as travellers, children/youth, employees, freelancers and business owners. Owning a prepaid card doesn’t mean you can’t also have a credit or debit card, as we see prepaid, credit and debit cards as different forms of payments for different purposes. See the different ways consumers and businesses are using prepaid cards.
- Prepaid cards and gift cards are the same thing
Gift cards are actually a type of prepaid card that’s non-reloadable, which means once you use up the money the card cannot be used anymore. Gift cards are generally loaded with a small, fixed amount and purchased in-store or online for specific merchants (closed loop). On the other hand, general purpose prepaid cards are reloadable and open loop, which means you can use it at any merchant. In general, prepaid cards have higher deposit and spend limits.
- Prepaid cards are prone to fraud and security breaches
Security and compliance is paramount for prepaid cards just like any other financial products. To purchase a prepaid card, you would need to supply some form of identification such as an Australian driver licence or passport as part of the Know-Your-Customer (KYC) process.
Visa prepaid cards can be set up with two-factor authentication, which protects the cardholder against unauthorised use when shopping online. Your money is also protected by Visa’s Zero Liability Policy, which means that you won’t be held responsible for any fraudulent charges or unauthorised purchases made with your card or account information.
- It’s difficult to check your prepaid card balance
Gone are the days when you have to call or log onto the computer to check your balance (though these methods are still possible). These days, most prepaid card providers, including Vasco Pay, have a mobile app where you can check your card balance and transactions. In addition, Vasco Pay also has a Vasco Pay Hub (online portal) for company administrators to track the transaction details of ALL company cards.
- Loading cards with money is manual and time consuming
Prepaid cards have their unique account and BSB number, which means you can nominate to have your salary go straight to the card. Alternatively, you can also set up a recurring direct deposit from your bank account to your prepaid card, so that you won’t need to make the transfers manually each time.
With its ease of use and simple set up, prepaid cards are fast becoming a popular business tool for freelancers and contractors wanting to separate their work-related payments and spending, as well as business owners looking for an expense management solution.