BFSI GUIDE

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Pre­paid/Gift Cards

(Pre) Loaded, handy, user-friendly

While banks call them pre­paid cards or gift cards, the Re­serve Bank of In­dia prefers the term ‘ru­pee-de­nom­i­nated co-branded pre­paid cards’. Th­ese are smart cards that look like a credit/ debit card and bear a sim­i­lar se­rial num­ber, but act like a debit card with­out be­ing at­tached to any bank ac­count. In fact, to buy a card like this, you don’t need a bank ac­count at all. They come in pre-de­nom­i­nated amounts and are gen­er­ally valid for one year to three years from the date of its pur­chase. They can be used in merchant es­tab­lish­ments (or POS ter­mi­nals) to buy goods and ser­vices. So, if you are look­ing for a thought­ful gift for your loved ones in this fes­tive sea­son (or any oc­ca­sion, for that mat­ter), a gift card from a bank is a cool op­tion be­cause it lets the re­cip­i­ent buy the stuff they want. So, here is a low­down on th­ese cards.

1. What are gift cards?

ift cards are a cool al­ter­na­tive to cash or gift vouch­ers. Th­ese are pre­paid cards.

ift vouch­ers tie re­cip­i­ents to a par­tic­u­lar store and leave them with lim­ited choices.

You can buy a gift card over the counter at des­ig­nated branches of banks.

The card is ac­ti­vated as soon as the bank re­ceives the pay­ment.

The ser­vice providers are ei­ther Master­Card or Visa.

You don't have to be a cus­tomer of the bank to buy the card. How­ever, it helps if you have an ac­count; oth­er­wise you need to pro­vide

‘know your cus­tomer’ (KYC) doc­u­ments such as ad­dress and iden­tity proofs.

While KYC de­tails of the re­cip­i­ent are not re­quired, you will have to men­tion their name, ad­dress and con­tact de­tails.

Some banks al­low per­son­al­i­sa­tion of the card by let­ting you add the ben­e­fi­ciary’s name on them.

2. How do they work?

ift cards can be used at any es­tab­lish­ment that ac­cepts plas­tic.

Some gift cards can be used for on­line shop­ping as well. Th­ese cards work just like debit cards.

very time the user makes a pur­chase, the amount is de­ducted from the bal­ance.

The card can be dis­posed of once the bal­ance is ex­hausted.

Some come with 4-digit PINs that al­low them to be used in ATMs to know the bal­ance amount.

You can’t use them to with­draw cash (in the case of semi-closed and closed sys­tem of pre­paid cards).

Some banks even let you check the bal­ance on­line. For most oth­ers, how­ever, the user must ap­proach the call cen­tre to know the bal­ance in the gift card.

3. What are the fea­tures?

A num­ber of banks of­fer gift cards. While some finer de­tails may vary, the broad fea­tures re­main the same. The card can be loaded with any amount be­tween Rs 500 and Rs 100,000, and the amount has to be ex­hausted within three years. Un­til re­cently, the va­lid­ity was one year. There is a card-is­suance fee of around Rs 100,

plus taxes. The gift card can be used for mul­ti­ple

trans­ac­tions. There is no trans­ac­tion charge. How­ever, if you use an­other bank’s ATM to know the bal­ance, there will be a trans­ac­tion charge of about Rs 15 to Rs 20. The user will have to pay any sur­charge ap­pli­ca­ble on the trans­ac­tion. For in­stance, if you use the card to buy petrol, you will have to bear the sur­charge payable on such trans­ac­tions. Pre­paid cards are is­sued by banks/non-banks against the value paid in ad­vance by the card­holder and stored in such cards that can be is­sued as smart cards or chip cards, mag­netic-stripe cards, In­ter­net ac­counts, In­ter­net wal­lets, mo­bile ac­counts, mo­bile wal­lets, pa­per vouch­ers, etc. The pre­paid cards is­sued by banks can be used to with­draw cash from an ATM, for pur­chase of goods and ser­vices at point of sale (POS)/ on­line pur­chase, and for do­mes­tic fund trans­fer from one per­son to an­other. Th­ese are open-sys­tem pre­paid cards. Pre­paid cards is­sued by au­tho­rised non-bank en­ti­ties can be used only for pur­chase of goods and ser­vices at point of sale (POS)/on­line pur­chase and for do­mes­tic fund trans­fer from one per­son to an­other. Th­ese are known as semi-closed sys­tem pre­paid cards. Th­ese cards can be used only do­mes­ti­cally. The max­i­mum value that can be stored in any pre­paid card (is­sued by banks and au­tho­rised non-bank en­ti­ties) at any point of time is Rs 100,000 (in De­cem­ber 2014, RBI raised the up­per limit from the ear­lier Rs 50,000).

4. Can you get a re­fund?

ift cards can­not be reloaded once the bal­ance

is used up. When the va­lid­ity ex­pires, even if there is

some bal­ance re­main­ing in the card, some banks may not al­low the card to be used. Most do not al­low un­used funds to be redeemed

af­ter the va­lid­ity ex­pires. Some banks do al­low un­used funds to be with­drawn. But the orig­i­nal card pur­chaser (not the re­cip­i­ent) must take the card to a branch where the bank will re­fund the bal­ance (min­i­mum Rs 100) af­ter de­duct­ing some charges. This re­fund can be claimed within three months from the date of ex­piry of the card. If the card has a PIN and the re­cip­i­ent for­gets it, the orig­i­nal buyer will have to step in again. The bank will then give a new PIN, but only to the orig­i­nal buyer.

5. What should you do if card is lost?

ike any other card, a gift card too can be lost

or stolen. The first thing to do is in­form the bank about it, so that the card can be de­ac­ti­vated to pre­vent pos­si­ble mis­use. Some gift cards come with zero card li­a­bil­ity once the loss of card has been re­ported to the bank. Af­ter this, the card­holder will need to file a po­lice re­port and sub­mit a copy of the FIR to the bank. The bank will then give the orig­i­nal buyer the un­used amount af­ter sub­tract­ing charges, if any. Some banks won’t re­fund the money but reis­sue a re­place­ment card on pay­ment of about Rs 199. You might have to un­dergo the KYC

pro­ce­dures again for get­ting a new card.

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