Free Gift Cards

Find Information about Free Gift Cards, Prepaid Cards and Visa Gift Cards.

Prepaid Credit Cards

How to Issue Pre-Paid Credit Cards By Jay Way, eHow Contributor

Found This Helpful How to Issue Pre-Paid Credit Cards thumbnail

Prepaid credit cards function as normal credit cards, but are prepaid by cardholders through depositing money into their card accounts. There is no actual credit extended to cardholders, and the amount deposited is the spending limit on the card. Prepaid credit cards are more similar to bank debit cards, but do not require a checking or savings account, which people with bad credit may not be able to obtain. Prepaid credit cards provide those who do not have either a credit card or a debit card the convenience to make purchases where using cash is not possible.

Instructions

  • 1. Apply for a a money transmitter license as a money services business (MSB). Both banks and MSBs issue Prepaid Credit Cards. While banks are regulated by the Federal Reserve and must be a member of the Federal Deposit Insurance Corporation, MSBs are regulated by states. Check with the appropriate department at your state that issues money transmitter license for money service businesses.

  • 2. Register with the Financial Crime Enforcement Network (FinCEN) at the Department of Treasury. Money service business must register with the FinCEN. The registration deadline is 180 days after an MSB has been established with a license obtained. The registration form, Registration of Money Service Business or FinCEN Form 107 must be signed by the owner and renewed every two years.

  • 3. Participate in an electronic-payments network. Credit card transactions are processed by various electronic-payments networks, such as the mostly used Visa and MaterCard. The networks are the gateway between card issuers and card processors that eventually transmit funds from customers' accounts to those of merchants after card purchases are made. Apply with the networks for endorsement of issuing prepaid cards. Or alternatively, join in an affiliate program with an existing card issuer if your business wishes to focus more on attaining a customer base.

  • 4. Set up customer account management system. Have a website up running for both initial card application and the ongoing account management. The starting setup work also includes preparing a cardholder agreement and stipulating service fees. As most customers who use Prepaid Credit Cards likely do not have a bank account, depositing funds cannot be made online by electronic funds transfer and so the company must choose physical locations to handle in-person deposits.

Tips & Warnings

  • If a cardholder has direct deposit available from his or her employer, funding the card account can be arranged by direct depositing money to the company's bank account.

  • Prepaid Credit Cards are not to be confused with secured credit cards. Secured credit cards also require potential cardholders to deposit a certain amount of money but as a collateral against the assigned credit line. Because credit is extended, the money on deposit is not used as long as the cardholder pays the monthly minimum.

  • Carefully monitor and filter your customer base and protect yourself against any potential, suspicious money-laundering uses.

Jay Way

An investment and research professional, Jay Way started writing financial articles for Web content providers in 2007. He has written for goldprice.org, shareguides.co.uk and upskilled.com.au. Way holds a Master of Business Administration in finance from Central Michigan University and a Master of Accountancy from Golden Gate University in San Francisco.

View my portfolio

Via eHow.com

Next page: Visa Card


Bookmark/Share This Page:

ADD TO DEL.ICIO.US ADD TO DIGG ADD TO FURL ADD TO NEWSVINE ADD TO NETSCAPE ADD TO REDDIT ADD TO STUMBLEUPON ADD TO TECHNORATI FAVORITES ADD TO SQUIDOO ADD TO WINDOWS LIVE ADD TO YAHOO MYWEB ADD TO ASK ADD TO GOOGLE ADD TO MAGNOLIA ADD TO NING ADD TO RAWSUGAR ADD TO SPURL ADD TO TAGTOOGA

  Bookmark and Share

Recommended Products