Along with cashless transactions, another way of using cards is for pre-pay proceedings. In accordance to Wordline India’s third quarter digital pay report published on 1st of December, in the month of September 2020, more than 16
crore prepaid cards have got itself issued. The increase is due to this pandemic situation. Also, numerous fintech firms have joined itself with corporates for issuing prepaid cards for the employees.
Many banks issue prepaid cards including State Bank of India, HDFC Bank etc. In the same manner, fintech firms prepaid credit card issuers are Zeta, PayNearby, Transcorp International etc.
Prepaid cards are loaded with money by the users on their own self to use it for various purpose. These are issued by multiple financial institutions.
In the words of Ayan Agarwal, Vice President-Payment Systems, Transcorp says, “Prepaid cards are the safest methods of transacting, as the liability is limited to the balance in the card, as opposed to one’s entire bank account linked with a debit card or the entire limit of a credit card.”
It comes with a PIN and also OTP which is sent to the registered mobile number.
Prepaid cards were initially used for digital proceedings.
In accordance to Digital Payments Report (Worldline India), no. of prepaid card transactions at point of sale was 86.2 lakh. The amount for e-commerce dealings was 26.7 crore.
In the words of Sapna Tiwari, Co-founder and CEO, Rupeewiz Investment Advisors says, “These numbers show that consumers are taking measures to restrict their spending by taking to prepaid cards for regular day-to-day
transactions and for online shopping in these pandemic times.”
In the words of Ashish Apte, CEO at AAA ResearchOne Financial Consultants, “Using prepaid cards for e-commerce transactions also limits the risk of fraudulent transaction to amounts loaded, which may be a much smaller amount compared to your credit card limits and your debit card linked with your savings bank account, which will have higher balance,”
What works for these cards?
According to the RBI guidelines, the limit for each time use of these card is Rs. 2000 and the total limit set in that card is Rs. 1 lakh. Additionally, the users are allowed insurance cover by few banks and fintech firms who are the issuers of these cards. Prepaid meal cards issued by the employers may sometime even allow tax benefits. These meal cards are used only on food items.
In the words of Anand Kumar Bajaj, Founder, MD & CEO of PayNearby says,“One of the most salient features of the offering is that it enables the user toseamlessly lock/unlock the card digitally while also offering a summary of the
transaction statement which in turn helps users to keep their spending under check.”
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What doesn’t work for prepaid cards?
The issuers of this cards does not stand to incur any interest on the outstanding balance in those cards anytime. According to Apte, “You shouldn’t maintain a balance of more than three months’ expenditure on such prepaid
cards. Use the balance on this prepaid card while shopping or paying utility bills on priority,”
The total amount in the prepaid cards need to be debited within a perfect tenure. If there’s any outstanding balance, then, it will get itself transferred to a separate fund as instructed by the banks in regulation under RBI. The procedure for claiming this outstanding amount from the separate fund after expiry of the card will be a tedious and long process.” said Tiwari
Lost prepaid card loaded with money?
If by chance any one misplaces his/her prepaid card, then, s/he will have to inform this to it’s issuer via call or email. A replaced card will be thus ensured. It will carry forward the balance which was in the actual card that was lost.
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Source : Remarkable Progress On The Part Of Prepaid Cards As Per Reports Set-up On 1 st December.