Stored-value card

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A stored-value card represents money on deposit with the issuer, and is similar to a debit card. One major difference between stored value cards and debit cards is that debit cards are usually issued in the name of individual account holders, while stored value cards are usually anonymous.

The term stored-value card is usually a misnomer, as most indicia of the cards' value are maintained on computers affiliated with the card issuer.

The value associated with the card can be accessed using a magnetic stripe embedded in the card, on which the card number is encoded; using radio-frequency identification (RFID); or by entering a code number, printed on the card, into a telephone or other numeric keypad.

1 Typical applications
2 See also
3 External links

[edit] Typical applications

Typical applications of stored-value cards include transit system farecards, gift cards, and telephone prepaid calling cards.Gaining accptance is the payroll card used to pay employees.

[edit] Transit system farecards

A vending machine sells farecards for the Washington Metro subway.

Transit system farecards are popular with passengers because they eliminate the need to fumble with money when entering (or exiting) buses, subway trains, etc.

Many transit system operators have implemented farecards because they can accurately track system usage; they are useful for charging different fares depending on the distance traveled; they can automatically discount fares for seniors and persons with disabilities; and passengers can in some cases replace them if they are lost, stolen, or damaged. The tracking characteristic has implications for privacy: if a card can be matched to an individual passenger, its usage history can reveal when and where the passenger has travelled.

[edit] Gift cards

Gift cards have all but replaced gift certificates, can be purchased in various values, and are good at various shopping, dining, and entertainment establishments. They are usually anonymous and no refund is available if they are lost or stolen. Also, issuers profit from the interest or float that is earned between the time of purchase and the time of use. Gift cards are sometimes referred to as "closed loop" cards in the business as they can only be used at the merchant who issued it.

In some cases, gift cards are rechargeable. This means that many purchases are made with gift cards, which a customer then recharges when they get low. This spares both parties the difficulties of dealing with small change.

[edit] Stored value credit cards

A Stored value credit card is similar to a gift card. They feature a credit card logo such as Visa or MasterCard and can, unlike gift cards, be used anywhere a Visa or Mastercard may be used. They are very similar to a debit or check card except that they don't require a checking account to be issued one. They have been heavily marketed in the United States as a safe and responsible means for parents to give their children some spending power which is why they sometimes are referred to as teen cards. These cards are also sometimes referred to as "open loop" cards. Stored value credit cards are usually not anonymous. They have to be enrolled under the cardholder's name and are mailed by the issuer to the cardholder's address.

A variation on this are the 3V cards issued in the Republic of Ireland. These consist only of a card number plus expiry date and verification number, so can only be used for customer not present transactions.

The Tobacco Card has undergone testing and is scheduled for nationwide introduction in Japan in 2008. It will contain an IC with information about the cardholder's age, and will be required for purchasing cigarettes from vending machines. It will have stored-value capability.

[edit] Payroll Cards

Payroll cards are used by employers to pay employees. The employee is issued a card that permits access to an account established by the employer. At the end of each pay period, the employee's ability to draw money from that account is increased by the amount of his or her wages. The card may be used at an Automated Teller Machine (ATM) to obtain cash, and, in some instances, may be used at a store to pay for goods purchased. The payroll card is particularly useful for employees who do not have a regular checking or savings account at a financial institution because they can access their wages conveniently. Also, if there is no charge for using the ATM, they avoid fees charged for cashing checks. The advantage to the employer is low cost of paying wages and efficiency. The Federal Reserve Board has adopted regulations affecting payroll cards that will become effective July 1,2007. 71 Federal Register 1473 (Jan. 10, 2006) Other types of stored value cards are not affected by the regulation and are generally unregulated by the federal government.