Prepaid card
A payment card loaded with money in advance, so each purchase draws on the loaded balance instead of a checking account or credit line.
What a prepaid card is
A prepaid card is a payment card that runs on a network such as Visa or Mastercard but draws on funds loaded in advance. The cardholder, an employer or a business loads the funds. It is not credit, and it does not need a checking account. Cards can be reloadable or designed to be spent down once.
How it works
The issuing bank holds the loaded funds, often in a pooled FBO (for benefit of) account, and each card transaction is approved against that balance. In the US, many prepaid cards are prepaid accounts under the Prepaid Rule of the Consumer Financial Protection Bureau (CFPB).
- 01 · LOAD Funds are loaded by the cardholder, an employer or a business.
- 02 · SPEND Each purchase on the card network draws down the loaded balance.
- 03 · RELOAD Reloadable cards are funded again; non-reloadable cards are spent down.
When businesses use it
- Payroll cards and faster access to earned wages
- Employee incentives, travel allowances and corporate spend control
- Healthcare spending accounts such as FSAs and HSAs
- Reloadable cards that widen access for people without a bank account
Cross River issues prepaid card programs for consumer, commercial, payroll and healthcare use cases. It uses its Visa and Mastercard membership and bank identification number (BIN) sponsorship. See prepaid card programs at Cross River.