A prepaid credit card is a payment method that derives from the debit card. The fundamental difference is the lack of connection to the bank account of the cardholders bank.
Without bank account and without commitment, it allows:
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pay for purchases in stores and on the internet as a standard credit card without inconvenient;
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withdraw cash in ATM ticket.
No risk of overspending, no risk of having to pay interest expense since the card stops working when the amounts charged were spent. Fees vary depending on the card, but the principle of operation and costs are similar to prepaid phone cards.
Origin and development
Mobile phone
The prepaid credit card is rooted in the mobile phone. Technology enabled mobile phones to be used to purchase a variety of products and services that go beyond simple phone calls. It was therefore necessary that Europe adopts clear and applicable rules in the 25 Member States. By introducing a Directive for supra national value, the European Commission wants to encourage investment in the electronic communications sector and the development of new and innovative services for consumers.
Electronic money
Electronic money is defined in the Directive (2000/46/UC) as monetary value stored on a smart card (prepaid or “electronic purse”) and is accepted as means of payment by undertakings other than transmitter. Under the Directive, electronic money must be exchanged against cash of equal value and issuers of electronic money are required to implement safeguards against money laundering.
Prepaid phone cards
Under the Directive at national level, authorities in some Member States decided that, in certain circumstances, by providing prepaid phone cards, mobile operators must also comply with the rules of the Directive.
The prepaid credit card, also called Bank Gift Card, was invented in 2001 by a French Laurent Granier, who has filed two patents (2001 and 2002) under the trade name “Spidercuard” (trademark).
MasterCard® and Visa were able to open their networks to independent operators holding an E-Money license, outside the banking system for the sale and distribution of prepaid credit cards.
Translated and adapted from Wikipedia.
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