prepay credit card

Prepaid Debit Cards A guide to better understanding This guide will help you to understand the basics of Prepaid Debit cards, to ensure that you can make the right choices when your program is designed. IM T C a r d L L C Version: 1.0 Page 2 Table of Contents What is a Prepaid Debit card? What can a Prepaid Debit card be used for? What are the benefits? Card Types Networks Understanding pay ment transactions Loading the Card Getting funds off your card Card distributions KYC rules Country limitations Card design & embossing 3 4 5 6 7 8 11 12 13 14 15 17 IMT Card LLC Page 3 What is a Prepaid card? The prepaid card is far from a new idea. How many of us have used a prepaid phone card, a prepaid gift card or a prepaid sim card? The concept is basically the same. You load money on to a card that can then be used at retailers and online merchants. It can even be used to pay your bills and top up your mobile phone, and you can withdraw cash with the prepaid card at ATMs. Money can be loaded on to your prepaid card by cash, bank transfer, credit card, or any other available method and because it can be a Visa or MasterCard you can use it anywhere in the world. Prepaid cards generally have the same uses as a credit card, so much so that they are commonly referred to as ‘prepaid credit cards’. However, there is a difference. A prepaid card is completely powered by your cash and therefore the money you have in your prepaid account is the money you have to spend. This means there is no risk of running into debt. There are no credit checks and no interest to pay. Consequently, rather than referring to it as a prepaid credit card, a better description would be a prepaid debit card. IMT Card LLC Page 4 What can a Prepaid card be used for? The prepaid card has no shortage of uses, including: • • • • • • • Topping up your mobile phone Buying groceries and petrol Internet shopping Making flight and hotel reservations Paying bills Transferring money to friends and family Withdrawing cash from an ATM Please note that the uses of the card are dependent upon the design structure of the program. IMT Card LLC Page 5 What are the benefits of using a Prepaid card? There are numerous benefits to the prepaid card. These include: • Accessibility - There are no credit checks, which means you can get a card without worrying about your credit history. • Safety – Carrying a card can be safer than carrying cash and you can never spend more than you have. • Control - prepaid cards are an ideal way to control spending. Like a credit card you get a full breakdown of spending on the card so you can see what has been purchased. • No debt risk -With a prepaid card there is no chance of spending too much as you are limited to the amount you put on your card. • The card for travel - As well as being able to top up the card, depending on the specific provider, you will be able to use it at ATMs worldwide. IMT Card LLC Page 6 Card Types A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, sometimes called a magstripe, is read by physical contact and swiping past a reading head. Smart cards are a newer generation of card containing an integrated circuit chip. The card may have metal contacts connecting the card physically to the reader. A smart card, chip card, or integrated circuit card (ICC), is defined as any pocket-sized card with embedded integrated circuits which can process information. The international payment brands MasterCard, Visa, and Europay agreed in 1993 to work together to develop the specifications for the use of smart cards in payment cards used as either a debit or a credit card. The first version of the EMV system was released in 1994. In 1998 a stable release of the specifications was available. EMVco, the company responsible for the long-term maintenance of the system, upgraded the specification in 2000 and most recently in 2004. The goal of EMVco is to assure the various financial institutions and retailers that the specifications retain backward compatibility with the 1998 version. EMV is a standard for interoperation of IC cards ("Chip cards") and IC capable POS terminals and ATM’s, for authenticating credit and debit card payments. The name EMV comes from the initial letters of Europay, Mastercard and VISA, the three companies which originally cooperated to develop the standard. Europay International SA was absorbed into Mastercard in 2002.JCB (formerly Japan Credit Bureau) joined the organisation in December 2004. IC card systems based on EMV are being phased in across the world, under names such as "IC Credit" and "Chip and PIN". IMT Card LLC Page 7 Networks An interbank network, also known as an ATM consortium or ATM network, is a computer network that connects the ATMs of different banks and permits these ATMs to interact with the ATM cards of non-native banks. Cirrus is a worldwide interbank network. It links MasterCard, Maestro, Diners Club credit, debit and prepaid cards to a network of over 1,000,000 ATMs in 93 countries. PLUS (also known as Visa PLUS) is an interbank network that covers all VISA credit, debit, and prepaid cards, as well as ATM cards issued by various banks worldwide. Currently, there are one million PLUSlinked ATMs in 170 countries worldwide. IMT Card LLC Page 8 Understanding Payment Transactions Payment transactions take place every minute of every day in every corner of the world. Consumers, businesses and merchants increasingly rely on Payment systems to conduct safe and convenient commerce. The Two Stages of a Typical Transaction A typical transaction involves two stages – authorization, and clearing and settlement. Authorization is the process of approving or declining a transaction before a purchase is finalized or cash is disbursed. Clearing is the process of delivering final transaction data from an acquirer to an issuer for posting to the cardholder’s account, the calculation of certain fees and charges that apply to the issuer and acquirer involved in the transaction, and the conversion of transaction amounts to the appropriate settlement currencies. Settlement is the process of calculating, determining and reporting the net financial position of the issuers and acquirers for all transactions that are cleared. IMT Card LLC Page 9 How a Transaction Is Completed Authorization A transaction begins when the cardholder presents his or her card to a merchant as payment for goods or services. The transaction information is then transmitted electronically to the issuer for authorization. The following diagram illustrates the processing steps involved in a typical transaction authorized through a network. 1. The cardholder presents the merchant with a card for payment. The merchant point-of-sale terminal reads the account number and other data encoded on the card’s magnetic stripe or chip. 2. The merchant terminal transmits the card information and transaction amount to the acquirer. 3. The acquiring bank or its third-party processor combines the transaction information into an authorization request message and transmits it to Visa or MasterCard. 4. Visa or MasterCard routes the authorization request to the issuer for review. 5. The issuing bank or its third-party processor sends to Visa or MasterCard an authorization response message either approving or denying the transaction. 6. Visa or MasterCard routes the authorization response to the acquirer. 7. The acquirer transmits the result of the authorization request to the merchant terminal. IMT Card LLC Page 10 Clearing and Settlement Clearing occurs at the time of the authorization for single-message transactions, or in a single daily batch message containing all transactions reported by the acquirer for dual-message transactions. Settlement occurs on each business day and is conducted on a net basis for all transactions submitted during the previous settlement cycle. The following diagram illustrates the clearing and settlement process between the issuer and acquirer for a typical transaction processed through a system. Clearing 1. The merchant transmits sales draft information for the transaction, including account numbers and transaction amounts, to the acquirer. 2. The acquiring bank or its third-party processor formats this information into a clearing message, which it transmits to the appropriate Network. The Network routes the clearing message to the card issuer and calculates the settlement obligation of the issuer and the amount due to the acquirer, net of certain applicable fees and charges. Settlement 4. The issuer sends funds to the Network’s designated settlement bank in the amount of its settlement obligation. 5. The settlement bank, at the direction of the Network, transfers funds due to the acquirer. IMT Card LLC Page 11 Loading the Card IMT Card has developed alliances with many 3rd party processors and sponsoring banks, providing the most extensive international load options available today. Giving you complete access to monetary transfers all throughout the globe. IMT is able to offer various card loading methods which can easily be integrated with the card platform. Most notably, IMT and Gosmo have jointly developed the ultimate monetary transfer solution, enabling consumers to make purchases and load their card via sms technology. By integrating the two technologies we are able to provide a quick, cost effective remittance solution for companies and individuals. Some of the more common load methods are listed below, please note that not all options are available on each card program. • • • • • • • • Bank transfer Credit card load Cash load Sms loading Batch loading Direct Deposit EFT/ ACH loads Card-to-card transfers IMT Card LLC Page 12 Getting funds off the card Prepaid cards can either be ATM cards, or prepaid debit cards. ATM cards run only on an interbank network such as Plus or Cirrus. These cards can be used at ATMs but cannot be used at POS terminals. Prepaid debit cards generally carry the same features as a standard debit card, with integrated functions available. Prepaid debit cards are commonly being developed with features such as online functionality, where the card can be used just like a credit card, and sms remittance. • • • • • • ATMs POS Online purchases Telephonic purchases Transfers to Bank accounts using sms technology Transfers to other Prepaid Debit cards, not limited to the issuer. IMT Card LLC Page 13 Card Distributions Cards can either be issued instantly (face-to-face) or mail ordered. All cards need to be activated either online or via the telephone, where possible, this is to assist in the prevention of money laundering in compliance to regulations. Cards will commonly be ordered as the KYC documents need to be verified. The verification of documents or details supplied by a card holder is generally completed by the card manager. Cards are shipped by standard post or alternatively can be shipped via a courier company such as FedEx. Cards may only be actively marketed in countries where the issuing bank has a banking license, passive marketing can be used in countries where no banking license is held, this is done in most cases by potential card holders becoming members of an organisation (a simple online registration may be used) before they are offered the card. Cards cannot be distributed to a card holder who resides in a blacklisted territory. For more information on which countries are barred please refer to page 15 of this presentation, Country Limitations. IMT Card LLC Page 14 KYC What is it? Know Your Customer (KYC) is the due diligence and bank regulation that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. Know your customer policies have becoming increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing. How it affects your program The intensity of the KYC requirements are, in most countries, dependant on the features of the card program, the primary function of the card program and the transaction limits placed on the card. For programs with a low risk assessment the cards can be issued instantly and even be anonymous. For most card programs some form of KYC must be collected, this however allows the program to have much higher transaction limits, great features and allows the card to be embossed with the card holders name. IMT Card LLC Page 15 Country Limitations FATF Non co-operative territories (commonly known as the FATF “Blacklist”): • • • • Syria Myanmar (Burma) Nigeria North Korea • • • Libya Sudan Iran List of Drug producing and drug conduit countries—2005: • • • • • • • Afghanistan Laos Brazil Pakistan Dominican Rep. Guatemala Venezuela • • • • • • • Jamaica Bolivia Nigeria Colombia Paraguay Peru India • • • • • • Bahamas Mexico Burma Panama Ecuador Haiti Note: The list of drug producing and drug conduit countries is not a blacklist and we are not suggesting that no business should be done with these countries; however attention is drawn to the increased possibility of drug related crime and laundering. IMT Card LLC Page 16 Other Government Country warnings: • • Nigeria (FinCEN 2002) North Korea (FinCEN 13 December 2005) Designated Country as a “primary money laundering concern”: • • Burma Nauru List of sponsors of terrorism: • • • Iran Libya North Korea • • • Sudan Syria Cuba Banks will not facilitate business with any Merchant or Cardholder located in a blacklisted country or who are sponsors of terrorism. IMT Card LLC Page 17 Card Design and Embossing 15 square centimeters of plastic can be the most influential piece of branding your company owns. Personalised Debit Cards offer a marketing niche, which is designed to communicate your brand's values in a highly personal and engaging manner. The card is a constant reminder of the service and benefits that your company provides. Have your card completely personalised and branded with your corporate signature by our professional design team, or submit your own design and start building brand awareness and customer loyalty today. All custom-branded cards must identify the issuer name and be formatted according to strict specifications. IMT can create multiple card designs and card carriers. Embossing is the process of creating a three-dimensional image on the card. Cards can be personalised with the card holders name using embossing. Embossed cards cannot be issued instantly to the client. IMT Card LLC IMT Card LLC