Prepaid card: what are the differences with a “real” bank card?

Prepaid card: what are the differences with a “real” bank card?

It’s a small mention, often discreetly integrated into the design of the card: since June 2016, and the entry into force of regulation on the subject, all bank cards issued in Europe must specify whether they are “debit”, or “credit” or “  prepaid  ”, for prepaid.

The distinction between a debit card and a credit card is quite simple to grasp: transactions made with the former are debited from the account as they occur; those paid with seconds are deferred, with interest (in the case of cards linked to revolving credit) or without (for deferred debit cards).

On the other hand, what is the specificity of prepaid cards, issued in particular by certain neobanks? And what constraints can they cause daily for their holders?

What is a prepaid card?

The European regulation of June 2016 defines it as follows: it is a card “allowing you to have a limited sum of money”. To simplify, we could speak of a bank card without a bank, insofar as they do not debit a bank account in its own right, but a simple payment account, with systematic balance control and the impossibility of going into the red. However, it is a “real” payment card.

The universal gift cards distributed by certain commercial brands or the rechargeable cards available in tobacconists, supermarkets, or on the internet are thus prepaid. But some new banks also distribute them: for example, Revolut and Lydia.

Why do some neobanks choose to offer prepaid cards?

For two main reasons. First, the approval to be able to distribute them is easier to obtain than that of debit cards. Secondly, these prepaid cards, unlike debit cards, do not necessarily come with cover for the bearer against theft or loss, and therefore cost less to issue.

Is a prepaid card less accepted in stores?

In theory, no. The prepaid card allows you to pay anywhere in France and, abroad, in points of sale affiliated with Visa or MasterCard, depending on its acceptance network. Accepting it does not cost merchants more since the interchange commission – the commission paid by the merchant’s bank to the customer’s bank for each payment made – is identical on prepaid cards and debit cards, the most common. “There is no real difference for a merchant between a Revolut, PCS Mastercard or Paytop prepaid card and a Max, Nickel, or C-Zam debit card”, confirms a professional in electronic banking.

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The only possible limit is related to the very nature of the prepaid card: it is essentially a card with systematic authorization, which does not tolerate so-called “offline” payments, ie those validated online. no balance inquiry. This is less and less of a problem as the number of payment terminals and ATMs is modernized, but it can still occasionally lead to payment refusals.

Is a prepaid card less well accepted on the internet?

Once again, nothing prohibits paying for online purchases with a prepaid card. In practice, however, this exposes you to more frequent refusals of payment than with a debit card. Why? Quite simply because you can use a prepaid card anonymously, without having to prove your identity. “These cards, therefore, present a higher risk of money laundering or misappropriation and are frequently blocked for remote payments”, confirms our specialist.

Cases of anonymous use have, however, been greatly reduced by regulation in recent years, after investigations into the attacks in France showed that this type of card had been used by the attackers. In the absence of complete identification of the bearer, with proof of identity, its use is limited to 250 euros of payments per month, only, and prohibits cash withdrawals.

By Master James

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