DEFINITION of 'Prepaid Cards Processor'

A company that processes transactions for prepaid payment cards. Prepaid card processors are responsible for processing transactions for prepaid credit or debit cards, gift cards, payroll cards, and other payment cards that are considered secured by the front-loading of money.

BREAKING DOWN 'Prepaid Cards Processor'

Prepaid cards allow a cardholder to conduct transactions without the use of cash, but limit the size of the transaction to the amount of money available on the card. Examples of prepaid cards include gift cards and phone cards, but can also be used in government aide programs instead of sending a periodic check. Prepaid cards are often reloadable.

Prepaid cards are secured cards, meaning that the value of the card is limited to the amount of cash that has been loaded to the card’s account. For example, a gift card may have a maximum value of $50 if only $50 has been loaded to that account at the point at which the card was activated. Requiring prepayment before activation limits the exposure of the issuing company to a precise value, unlike an unsecured card linked to a line of credit.

Prepaid card processors are unlikely to provide point-to-point encryption (P2PE) because they do not provide a direct link between the point-of-interaction, such as the card terminal at a merchant, and the processor. Instead, prepaid card processors are responsible for the payment processing component of the transaction. This requires the processor to record purchase information and manage the account balance of the prepaid card, as well as manage chargebacks, returns, and payment disputes.

Prepaid payment cards are typically more customizable than cards issued by banks and other financial institutions. This is because the needs of the organization offering the card can vary greatly. Large credit card processors, such as VISA, are frequently involved in this line of business, though smaller businesses may also provide prepaid card processing services.

RELATED TERMS
  1. Prepaid Credit Card

    A card issued by a financial institution that is preloaded with ...
  2. American Express Card

    A credit, charge or prepaid card branded by American Express, ...
  3. Payroll Card

    A prepaid card onto which an employer loads an employee’s wages ...
  4. Debit Card

    A debit is a payment card that deducts money directly from a ...
  5. Authorized Transaction

    A credit card purchase for which the merchant has received approval ...
  6. Chip Card

    Also known as a smart card or memory card. A chip card is a plastic ...
Related Articles
  1. Personal Finance

    How To Find The Right Prepaid Debit Card

    Prepaid debit cards are becoming increasingly popular. Here are some tips for choosing the right prepaid debit card.
  2. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  3. Personal Finance

    How Many Credit Cards Should You Have?

    National stats indicate most consumers have three or more cards - are you one of them?
  4. Personal Finance

    Credit, Debit and Charge: Sizing Up The Cards in Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  5. Personal Finance

    10 Considerations For Using Your Credit Card Abroad

    Credit cards can be the best item you pack when traveling, just make sure that you are taking the right card that suits your needs.
  6. Personal Finance

    How Many Credit Cards Should You Have?

    Having several credit cards provides many benefits. Here are a few factors to consider when you’re deciding how many credit cards you need.
  7. Personal Finance

    The Dangers of Getting a Paycheck on a Prepaid Debit Card

    Receiving your paycheck on a prepaid debit card may seem like a boon until you discover all the fees that can come with it.
  8. Personal Finance

    Credit Card or Cash?

    Credit cards are convenient to use, but not always the best choice. Here are 5 times you shouldn't pay with a credit card – and 5 times you should.
  9. Personal Finance

    What Happens When Your Credit Card Expires

    You can take advantage of this process to learn about other cards that may better suit your needs.
  10. Personal Finance

    Understanding Credit Cards

    Credit cards are a type of unsecured personal loan between the credit card issuer and the credit card holder.
RELATED FAQS
  1. What is the difference between a prepaid credit card and a gift card?

    Although prepaid and gift cards are used in the same manner, a prepaid credit card can be used repeatedly, while a gift card ... Read Answer >>
  2. Can I use a prepaid credit card to pay bills or to transfer money to other accounts?

    Learn how prepaid credit cards enable convenient bill payments and transfers. Explore different fees charged for such transactions. Read Answer >>
  3. Why should I register a prepaid credit card?

    Explore reasons why registering a prepaid credit card is a good idea. Learn about protection if the card is lost or stolen ... Read Answer >>
  4. Do prepaid Credit Cards have monthly fees?

    Choose a prepaid debit card with a fee structure that doesn't eat away at the existing balance by considering how you intend ... Read Answer >>
  5. What are the pros and cons of digital gift cards (e-gift cards)?

    Examine the pros and cons of gift cards. Learn about protection in case of loss, monitoring spending by teens and wasted ... Read Answer >>
Trading Center