Prepaid and Reloadable/Non-Reloadable Detection
Are you curious about using a prepaid card, but are not sure about its advantages and disadvantages? Whether you are a shopping enthusiast or an entrepreneur, knowing about the structure of prepaid cards will not only help you get the right one for your business but also enable you to make the most of its benefits.
Prepaid cards are the option that allows you to load advance money onto your card for making transactions and purchases. It’s not linked to your bank accounts and this feature of the prepaid card makes it stand out it from credit cards. For most of your purchases, you can use a prepaid card for spending the amount you’ve loaded in your account.
Unlike credit cards, you cannot charge purchases to your card to be paid later as they are not linked to any credit line. In case you try to make purchases worth more than your prepaid card’s limit, your transaction will be declined. Besides this, it is possible that some cards cost you a small fee if your card is declined, so it is important to read the print on your prepaid card before you use it.
In general, the following are the key beneficial features of prepaid cards;
- With prepaid cards, there is no need to have a bank account. That means you have this convenience to deposit money directly onto your card
- It provides you options to deposit money directly or reload cards from the financial institution or any retail stores
- No credit check is required
- You can deposit paychecks onto cards for conveniently spending money
- You can pay your tax refund if you have a prepaid visa card
- Prepaid visa card also offers purchase protection
- There is no chance you can overspend as you can’t spend cash more than the balance in the card
Types of Prepaid Cards
Another interesting feature of a prepaid card is its open and closed loop (with or without network a logo). Plus, prepaid cards are reloadable and non-reloadable and this characteristic distinguishes them from credit or debit card. Both these types of prepaid cards offer different advantages.
Difference between Prepaid Reloadable and Non-Reloadable
Reloadable Prepaid Cards
A reloadable prepaid card is more or less has some combined features of traditional debit and card, but it’s relatively a different form of payment method. As mentioned earlier, you can load money and funds in a reloadable prepaid card to shop, pay bills, transfer money, and withdraw cash from account and ATM. Not only this, you can receive payroll deposits and other government benefits. Plus, you can use the reloadable prepaid card anywhere, including American Express and MasterCard.
How Can You Set Up a Reloadable Prepaid Card?
To set your reloadable card, all you need to browse through available options in different financial institutions.
- Purchase the card and load money, but before that make sure you register it with the bank issuing the card. Once your details are verified, you receive your personalized reloadable card.
- Add funds onto your reloadable card with cash or direct deposit from any convenient location of your bank.
- Use the reloadable prepaid card for multiple purposes anywhere
Non- Reloadable Prepaid Card
Non-reloadable card, on the other hand, is often provided by the merchants as their rebates and promotional offers. Like reloadable prepaid cards, you can purchase these prepaid cards from credit unions, banks, and financial institution. The noticeable difference between reloadable and non-reloadable card is that it comes with a set limit. Once you spent all the balance in your non-reloadable debit card, you cannot reload it.
However, a non-reloadable prepaid card can be used to make a purchase in store, over the phone, or online until your card amount reaches zero. It is always better to use all your balance in the non-reloadable prepaid card as the issuer can deduct services charges if your account is dormant.
Challenges with Accepting Prepaid Card a Merchant Needs to Consider
There is no denying that prepaid cards offer a plethora of benefits in terms of offering convenient payment methods. Plus, merchants don’t need additional software or hardware when it comes to accepting prepaid cards. They are issued by almost all the card brands and have the same issuing process as a debit or credit card.
There are, on the flip side, few challenges merchants need to consider and timely detect while accepting prepaid cards.
Glitches in Automatic Installment Payment
This is one of the important challenges many merchant faces while working with prepaid reloadable and non-reloadable cards. Once you accept automatic installment payment, you need to be cautious. If your customer uses all his/her balance and they don’t reload prepaid cards or their card is non-reloadable, you might not be able to charge the prepaid card due to technical glitches.
To avoid this, a number of merchants do not accept the prepaid card for purchases, specifically made on installments. It is better to have a backup payment method to tackle these circumstances.
Disruption in the Payment Process
It is important that you work with an efficient payment processor that can segment reloadable prepaid cards from non-reloadable prepaid cards. It will allow you to take appropriate measures to avoid payment disruption, particularly on non-reloadable prepaid cards.
Another common issue that often merchants have to go through is declined transactions. As mentioned earlier, when a customer makes a purchase using a prepaid card and it may be declined due to insufficient funds in the card. The situation can be embarrassing for the customer and full of hassle for the merchant if there’s no alternative payment method.
With partial authorization, you can prevent this problem from happening. It charges a partial amount of the total purchase. You can pay the remaining balance via another payment method. This way, you can complete the transaction that might otherwise be declined.
High Transaction Fees
The high transaction fee is another worthy aspect/ challenge you need to consider before accepting the prepaid card. Although fees may vary from issuer to issuer, it may lead to high transaction charges and affect profit margins even for smaller purchases.
Overall, accepting prepaid cards is a way to help customers use a preferred payment method but it is important to consider the possible challenges that might come after accepting them. A merchant should detect these problems to avoid disruption in the payment process.