Genome’s team is back with yet another article that dives into different types of fraudulent financial situations that people and businesses can face. And this time, card-not-present fraud is on the agenda. Want to know how to avoid scams associated with card-not-present transactions? We gathered some tips below. What is a card-not-present transaction? Before we get to the fraud part, let us first explain what card-not-present transactions are in general. Card-not-present transactions (also known as CNP transactions) are the type of payments a person makes with their debit or credit card. Such payments happen remotely, meaning that the card and
Prepaid cards first appeared approximately 50 years ago in the form of gift cards. They received wider recognition in the 1990-s as a convenient tool to receive and use money without opening a current bank account. During the past decade, prepaid cards became available to a large audience due to the development of modern financial technologies. You don’t need to apply for a checking account or pass credit checks to receive a credit card. On the contrary, everything is much simpler than that – you can order a prepaid bank card in a few clicks via the Internet.
So, what’s the hassle about prepaid cards? Why do we need one if you can have a debit or credit bank card? Read on to find the answers to these questions and dig deeper into the meaning of prepaid cards and in a new Genome blog post.
How does a prepaid card work?
The main thing that makes a prepaid card stand out – is where your money comes from. A debit card is linked to your current bank account. Once you use it – the funds are withdrawn immediately from this account. With a credit card, you take a loan from your financial provider.
When it comes to a prepaid card – you first load money onto it and only then can spend it. Different providers offer different ways to top up such cards:
- Regular transfer
- Link your debit bank card
- Via Google/Apple pay
- Cash deposit in ATM
While talking about all the other features of the prepaid card, they also vary depending on the card issuer. You should be able to order a physical or virtual prepaid card, withdraw cash in the ATM, pay online and in physical stores, and so on.
With some prepaid card services, you do not only receive a card itself, but also an e-money account. It means that you can make transfers from and to your wallet.
With Genome’s account, you can make both SWIFT and SEPA transfers and pre-order a debit card. We offer business accounts, as well as personal accounts for daily management of your finances. Last but not least, Genome supports instant and free transfers between its users, no matter in what country you’re located – you will receive the funds within seconds. Learn more about currencies supported and other Genome features on our website.
How to get a prepaid card
As we’ve already mentioned above, many fintech companies now offer prepaid cards. To get one, you will need to create an account on the website or via a mobile application. It only takes a few days if not less to order and receive a prepaid card.
Some card issuers work with retailers and participating banks. It means that you can get a prepaid card in some supermarkets or specialized shops. Most such cards are reloadable, but there are also the ones designed for one-time use, such as gift cards. These are especially convenient if you do not know what present to give to a person. You only purchase a gift card and load money onto it, so that your loved ones can use this money however they want.
Are prepaid cards safe?
The thing is that the functionality and limits of any prepaid card depend on the card issuer. Most prepaid cards are not protected by the Financial Services Compensation Scheme (FSCS). If the card gets lost or stolen, it’s quite unlikely that you will be able to get your money back. However, you can contact your provider anytime and block or freeze the card (if possible) to prevent any fraudulent transactions. At the same time, the fintechs that receive banking licenses and issue prepaid cards will protect your funds by the Financial Services Compensation Scheme (FSCS).
Nevertheless, it does not mean that using a prepaid card is not safe. Probably, it’s not worth loading huge amounts onto it if you’re not spending much. Still, a prepaid card works pretty much like a debit one – it can only be used with a PIN code and you can also set up your cash withdrawal or spending limits, for instance.
If you’re wondering how different prepaid cards work, as well as what are the advantages and disadvantages of prepaid cards, we’ve got your back.
Credit-builder prepaid cards
If your application for a debit or credit card was unsuccessful and you cannot open a current bank account, you can order a special prepaid card. Credit-builder prepaid cards were made to help you rebuild your credit history.
These prepaid cards have a monthly fee. It’s not big but counts as a loan. If you manage to pay this fee every month, it will improve your credit score. Sometimes, issuers of credit-builder prepaid cards can even give you a credit.
What is a prepaid travel card?
It’s as simple as that: a prepaid travel card is a type of prepaid card used for traveling. This one was created for higher safety during travels. You top up a prepaid travel card before the trip and can only use the available sum.
On the one hand, you never know when you will need more funds, especially in emergencies. On the other hand, using a prepaid travel card is much safer than taking your debit or credit bank cards and losing them. With a prepaid card, you will only spend the approximate amount you need on a trip and not more.
Prepaid cards vs. gift cards: what’s the difference?
A gift card is another type of prepaid card. Regular prepaid cards can be reloaded numerous times. Gift cards, in their turn, can be topped up only once and should be used within a specific timeframe. In most cases, gift cards can only be used with one merchant.
Advantages of prepaid cards
Even though a prepaid card is pretty similar to debit and credit bank cards, it has plenty of benefits:
- No need to pass a credit check
- No need to open a current account
- You can only spend as much as you load onto it
Disadvantages of prepaid cards
Let’s have a look at some of the drawbacks of prepaid cards:
Not all card issuers will necessarily charge you for using a prepaid card. However, most of them do have small fees for ATM withdrawals, each top-up, each time you pay with the card, etc. Keep this in mind when checking the offers to make sure that you will not spend a fortune each month using a prepaid card.
Doesn’t impact your credit score
Just like with a debit bank card, your financial history with a prepaid card will not be saved in your credit report. But are there any other ways to improve your credit except for ordering a credit bank card? Yes, there is one more way to do this and we’re talking about it further.
What is a prepaid card used for?
A prepaid card can be used just the same as a debit bank card. You can pay with it physically and online, add it to digital wallets, make cash deposits or withdrawals in ATMs.
What is the difference between a debit card and a prepaid card?
Their functionality is pretty much the same, the only difference lies in the funds available with both cards. A debit card is connected to your checking account. With a prepaid card, you can only spend as much money as you load onto it. Luckily, you can reload this card as many times as needed. If there are not enough funds on it, any transaction will be declined.
Is a prepaid card a credit card?
No, these are two different types of cards. A credit card is a card for “borrowing” money from a bank or financial provider. There’s a specific limit for the credit available with a credit card. The amount depends on your credit report. If your credit history does not satisfy the demands of the bank, you will not be able to receive a credit card.
When using a credit card, you should pay back the money you borrowed each month. Otherwise, you will need to pay interest. It’s a wide-known fact that credit cards impact your credit score. If you need it improved, you can go for the so-called credit-builder prepaid card. You’ll need to pay a monthly fee, and if done successfully, it guarantees that you’re a reliable payer with a stable financial income. As a result, your credit score goes up.
How much money can you put in a prepaid card?
The sum is different with different card issuers. Some of them set up their own daily or monthly limits, others allow you to modify the limits yourself. In addition, the limits vary based on the way you top up a prepaid card. For example, you can load a bigger sum with the help of your debit card, but with Google or Apple Pay load options, the sum should be smaller.