What is a Prepaid card?

Posted by Felix Okoli on Tuesday January 12, 2016 at 16:15:23:

There are different types of card products being offered by banks in Nigeria and given the way I was attended to at some banks, I have to say that it's not all the bank employees that really understand their differences and some of them don't really know what a Prepaid card is. Some bank customers don't also know what differentiates one card from another and what it takes to get one from their banks.

What really is a Prepaid card? From the way I see it, a Prepaid card is a card that contains funds that have already been provided for. It's an electronic card that actually carries money and it's a bit different from a debit card.

A debit card is a card that allows you to make payments and withdrawals using funds from a separately existing bank account. When you use a debit card, it deducts funds from an existing bank account that it has been linked with but a Prepaid card is different because it doesn't really have a separate bank account it's linked to but money has been loaded on it in advance.

A Prepaid card is normally a non-Personalized card unlike a bank issued debit card which comes embossed with your name. A prepaid card can be issued to anyone almost instantly by the bank unlike a debit card which takes more time. All the bank would do to issue a Prepaid card is create a profile for the intending customer and then credit the card with funds the customer has also provided in advance. A Prepaid card holder would then be able to use to card in about the same way as a normal debit card works.

A prepaid card doesn't earn interest on savings for the holder unlike a normal debit card holder because the latter has a separately existing savings or current account.

A Prepaid card can be issued in local and foreign currencies in Nigeria and there are brands like Visa, Mastercard and Verve. The Prepaid card can be issued in Naira, US dollar, Euro, British Pounds and so on but in all cases, the customer would have to provide the funds in advance for the currency he wants the card to be in.