Prepaid cards have evolved from early versions that were only used by a small number of consumers to popular financial tools that are being used by millions of consumers of all ages and socioeconomic status. There are literally hundreds of prepaid cards to choose from, which can sometimes make it hard to choose the best one. Depending on your needs, prepaid cards can be used to manage money, avoid currency conversion hassles when traveling, giving money to teens, or just as a way to make online purchases.
Most prepaid cards are reloadable and are backed by the same protection as bank-issued debit or credit cards. In addition, many prepaid cards support direct deposit, and employers have even begun to implement programs that allow them to pay wages via prepaid card.
With so many great features, it’s easy to see why prepaid card use has grown and fewer consumers are carrying cash. This is typically not an issue, but in the past, lack of cash could be a problem in certain social settings. When having dinner with friends, for example, splitting the check was problematic. Often, one person would end up being responsible for putting the entire bill on their credit or debit card and then had to wait for the other parties to pay him or her back. This scenario was sometimes a burden on the person who paid; people might forget to pay back the money, resulting in strained friendships.
Today, technology has grown to the point that there are a variety of mobile payment apps that have nearly eliminated the problem described above. Some consumers have even abandoned traditional bank accounts in favor of prepaid cards and check cashing services. There is almost no financial task you can’t accomplish with a prepaid card; combining prepaid cards with person-to-person payments opens up even more possibilities.
A Variety of Options for Prepaid Cardholders
The leading mobile payment apps typically require users to link the app to a bank account. This can be problematic for those who rely solely on prepaid cards for their financial transactions. Though there are several options that allow consumers to easily open bank accounts online, some people have declined to maintain a bank account by choice. This makes it hard, but not impossible, to use popular mobile payment services.
Although some mobile payment apps do not support the use of prepaid cards, there are many that do. Even if you don’t have a traditional bank account, you will still be able to send funds to friends. One of the top person-to-person payment platforms, Venmo, allows consumers to link any card - even a prepaid card - in order to effortlessly send money to friends and family.
Another easy way to use a prepaid account with mobile payment services involves using the routing and account number associated with your card. Many prepaid card issuers support ACH transfers and provide a routing and account number to facilitate these deposits. When using a mobile payment service, consumers can simply enter their prepaid routing and account number when given the option to link a bank account.
Digital wallets are another viable option for prepaid card holders and are becoming a popular method for transferring funds. Many digital and mobile wallets are built into smartphones and do not require a link to a bank account.
Some Apps Have Been Slow to Adopt Prepaid Card Support
Despite the available methods for using a prepaid card to send money to others, there are still some hurdles. Currently, the two largest mobile payment platforms support a variety of credit and debit cards but do not support the use of prepaid debit cards or business debit cards.
As far as mobile wallets are concerned, Google Wallet doesn’t support prepaid cards or credit cards. Apple Pay does not publish a list of the cards it supports, so consumers are advised to check with their card issuer or attempt to add their prepaid card to Apple Pay. A message will appear if the card isn’t supported.
A Few Things to Consider
Regardless of whether you send money in person, via mobile device, or online, it’s always a good idea to research which method will best suit your needs. If you need to send money abroad, be sure the service you want to use allows you to do this and verify the associated fees. When sending money to friends and family domestically, fees are usually minimal, and sometimes it is completely free.
Another important consideration when transferring funds is the terms and conditions of the payment app or mobile wallet. Consumers should carefully review all associated disclaimers and terms. Some service providers have been known to freeze or suspend accounts for policy violations.
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly