Prepaid Cards and E-cash
Prepaid cards are gift cards or Visa and MasterCard branded payment cards, portable, valuable, exchangeable for cash or products (via an ATM or shop purchase), and anonymous. Key risks:
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Anonymous card holders and funding, access to funds
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High value limits, and no limits to the number of cards that can be acquired
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Global access to cash at ATMs
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Offshore card issuers
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Substitute for bulk-cash smuggling
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There is some regulatory discrepancies over prepaid cards – in Germany adding value is considered the same as making a deposit, so prepaid card institutions are considered credit institutions, and are regulated. In the US regulations do not exist that cover such situations.
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Stored value cards (or electronic purses) hold the funds physically on a chip inside a card.
Ways to reduce risk:
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Limit the functions and capacity of smart cards
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Link new payment technologies to financial institutions and bank accounts
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Require standard documentation and recordkeeping
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Allow the examination of records by investigating authorities
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Establish international standards for the above measures
Name |
Description |
Anonymity |
Reloadable |
Value stored on card |
Examples |
Open system cards |
A Visa, MasterCard, or American Express card that can be used in ATMs and retailers |
Usually not, often embossed with the card holders name, looking similar to a debit or credit card |
Yes: electronic banking, via retailers |
Usually no – transactions authorised in real-time |
Visa or MasterCard prepaid cards |
Semi-open system cards |
Same as open cards, without ATM access (purchase only) |
No – same as open cards |
Yes |
Usually yes – lost and stolen cards/vouchers cannot be replaced |
|
Closed system cards |
For buying goods from participating retailer. |
Typically yes |
Often not, but some cards can be reloaded |
Usually yes – lost and stolen cards/vouchers cannot be replaced |
Proprietary gift cards |
Semi-closed system cards |
Can be used at selected retailers |
Usually yes |
Often not, sold at preset denominations |
Usually yes – lost and stolen cards/vouchers cannot be replaced |
Gift cards or vouchers that can be used at a range of merchants. |
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