In recent years, prepaid cards have exploded in popularity. According to the Pew Charitable Trusts, the use of reloadable cards increased by 50 percent from 2012 to 2014 alone. Additionally, the prepaid debit card industry is expected to continue to grow by over 20 percent throughout the remainder of 2017. With stats like these, it’s easy to see that prepaid cards are here to stay.
It’s obvious that prepaid cards have evolved. Most of today’s cards are robust, featuring a variety of convenience and safety features. From innovative chip technology to dedicated mobile apps, prepaid debit cards now offer options for completing nearly any type of financial transaction. Here, we explore three things you may not have known you could do with a prepaid card.
1. Send Money to Friends and Family
One of the most convenient features offered by today's’ prepaid cards is the ability to complete person-to-person payments. If you ever find yourself needing to send money to someone money, sending it directly from your prepaid card may be easier than other alternatives for transferring money.
In the past, to send money to another person, you would have to go to the bank and complete a wire transfer. This process was problematic for a few reasons. First, wire transfers are used to send money between bank accounts. This presents a problem if you need to send money to someone who doesn't have a back account.
Additionally, bank-initiated wire transfers are notoriously expensive and the associated fees can cut into the amount of money you're able to send. Finally, banking hours do not offer a lot of flexibility when there is a need to send or receive money after hours.
Prepaid cards, on the other hand, eliminate these issues. Instead of standing in long, inconvenient bank lines and paying huge fees, you can send money directly from your prepaid debit card. Some prepaid card issuers allow you to send money to other card holders with the same card for free; for a fee, others allow users to send money regardless of the type of card the recipient has.
In addition to sending money between prepaid cards, many cards are compatible with popular cash transfer apps. This can be a convenient option to use when you're out with friends and need to split the check at dinner or share the cost of cab fare.
2. Pay Bills
Not only are prepaid cards useful for transferring money between individuals, they can also be a convenient and easy way to pay companies for bills such as utilities, insurance, and more. With a prepaid card, there are generally two methods for paying bills: one-time payments and recurring transactions.
For one-time payments, prepaid card holders can visit a company's website and enter their card information or pay over the phone with a company representative. Prepaid card information can also be entered on the physical bill remittance form that comes in the mail, in the space used for credit card payments.
For recurring bills, some prepaid debit card issuers offer bill payment services directly on their websites. Cardholders can then set up specific dates and times for the bills to be paid. This is great for the budget-conscious. Bill payments made from a card issuer’s website are typically routed through a payment processor. Using the card issuer’s site allows cardholders to not only pay their bills, but also view their transactions as well.
3. Pay with Your Smartphone
With today’s technology, you can do nearly everything with your smartphone or other mobile device. Many virtual wallets support the use of prepaid cards. This means consumers can pay for purchases without ever having to pull out a physical card.
To find out if a specific prepaid debit card is compatible with mobile payment services, consumers can visit the card issuer's website, where there will usually be information on how to add the card to a mobile wallet. Once it’s clear that the card is eligible, consumers just need to enter their card information once. They can then use the phone to pay wherever contactless near-field communication (NFC) terminals are present.
With the two most popular virtual wallet services, consumers can make purchases at hundreds of thousands of retailers across the US. In addition to the convenience of mobile wallets, they are also very secure. Debit card information is encrypted, so even the phone’s manufacturer has no way to access sensitive consumer data.
The world of prepaid debit cards is continuing to expand, with exciting new features made possible by emerging technologies. As the industry evolves, it will be interesting to see how many more things consumers will be able to do with these already-convenient cards.
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