Gift Cards & Stored Value Cards

Stored value cards provide a way to make financial transactions.
Stored value cards use magnetic stripe technology to store information about
funds that have been prepaid to the card. Payroll cards, government benefit cards
prepaid debit cards, gift cards, and telephone cards are examples of stored value
cards. There are two main categories of stored value cards in the marketplace.

The first prepaid cards made available to the marketplace were single-purpose or
‘closed-loop’ cards. Gift cards, which can only be used to purchase goods at
particular retailers, and prepaid telephone cards, which can only be used to make
telephone calls, are examples of single-purpose cards. The second type of card to
emerge was a multipurpose or ‘open-loop’ card, which can be used to make debit
transactions at a wide variety of retail locations, as well as for other purposes
such as receiving direct deposits and withdrawing cash from ATMs.

Some multipurpose cards are branded by Visa or MasterCard and can be used
wherever those brands are accepted. Consumers obtain stored value cards in a
variety of ways. They may obtain a payroll card from an employer, an electronic
benefit card from a government agency, or a gift card from a retail store. Typically
a consumer would apply for a general spending multipurpose card by telephone
or online, although these cards may be increasingly offered at check-cashing
outlets, money transfer company locations, and retail stores.

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