Prepaid debit cards offer many interesting features not available to normal credit card holders when using credit cards for purchase transactions. These new features apply to debit cards due to their unique nature within the Visa and MasterCard based payment card industry.
Since prepaid debit cards don’t come with a preassigned credit line the customer must be proactive in “loading” funds onto the card either at an ATM kiosk or online through the bank or issuers website. Funds deposited on the card can be electronically transferred online through Paypal, another credit card, a savings or checking account transfer or by feeding cash directly into a kiosk. Lower-tech loading methods are still widely used involving writing a check, endorsing a paycheck or handing cash over to a clerk in a merchant location that markets prepaid debit cards.
Recent technology innovations allow customers with text-enabled wireless devices (such as cellphones, blackberries, wireless laptop PCs or PDAs, aka personal digital assistants) to receive instant alerts and payment confirmations for prepaid debit card transactions. This can be a really slick feature to show off to your friends when you purchase your next double decaf latte at Starbucks or make a pay-at-the-pump card transaction for your next gasoline fill-up.
It’s also a great way to monitor the status of your deposited credit line. Unlike maintaining a checking account you don’t have to make entries and balance your checkbook — it’s done automatically with real-time reporting available through the Internet, text-enabled devices or by phone.
Many people are learning the ins and outs of this new technology because prepaid cards are being used by many employers in lieu of issuing paper checks. Once prepaid debit payroll cards are initially issued all future employer-employee payments are made electronically, saving large employers significant amounts of money in payroll processing expenses. This type of service typically applies to employers with significant numbers of employees who don’t use traditional banking services and can’t accept direct deposit.
In the past a person with a payroll check might take it to a check cashing service location on payday. This presented both a security risk (carrying relatively large sums of cash from a known location) along with a temptation risk (people tend to spend more money when they are feeling flush). By receiving paychecks through regular electronic reloads these individuals can enjoy the same security, reliability, convenience and savings (no more check cashing fees) as those with traditional banking relationships and direct deposit.
Technology continues to transform our society away from the use of cash and checks. If you want to learn more about prepaid debit cards, we invite you to read our article “What are the Pros and Cons of Prepaid Debit Cards?” To see a comprehensive listing of cards available through leading issuers please visit our prepaid debit card section to compare and apply for offers online.