InvestorQ : What is a prepaid card and what are its usages?
riya Ranade made post

What is a prepaid card and what are its usages?

Answer
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Nishita Gala answered.
1 year ago


A prepaid credit card is a credit card that’s more similar to a debit card in its features as it doesn’t allow a user to use credit he/she doesn’t own.

Investopedia defines a prepaid credit card as:a secured card issued by a financial institution that has been secured with a prepayment. These cards can be compared to prepaid debit cards which use preloaded funds for transactions.

Prepaid credit cards are cards that can be used by those individuals who either don’t have a good credit score or don’t have enough credit profile to get a credit card.

The usage of prepaid cards depends on who is the issuer of such cards. Prepaid cards can be open or semi-closed in nature. Open system prepaid cards are issued by banks and can be used to withdraw cash from an ATM, purchase of goods and services at POS terminals / e-commerce (online purchase) and for domestic funds transfer from one person to another.

Semi-closed system prepaid cards can be issued by authorised bank and non-bank entities and can be used for purchase of goods and services at POS terminals / e-commerce (online purchase) and for domestic funds transfer from one person to another, subject to prescribed limits and conditions.