(Pre) Loaded, handy, user-friendly
(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.