A pre-paid card has a magnetic strip and looks no different from a debit card and credit card. However, the amount spent is not linked to your bank account. You also cannot accumulate debt on the card. Pre-paid gift cards are available in banks, which work in association with Visa, Mastercard or American Express. You can purchase the card from a bank by simply paying the card value. Some banks also charge joining fees. Other than banks, some online portals also sell pre-paid gift cards.
When you make the payment, the card is loaded with this amount, which you can then gift to anyone. The recipient can use the card across merchant outlets which accept that particular type of card (Visa, Mastercard or American Express). When the gift card is used, the transaction amount is reduced from the card balance. Like a credit card, the user signs on the charge slip after the purchase and signatures are matched by the merchant. The card can be used till the entire amount is exhausted.
Banks charge a nominal fee of Rs.50 - Rs.100, exclusive of service tax as joining fee when you purchase the pre-paid gift card. Some banks charge similar amounts towards other services like replacing a lost card, cancellation, requiring physical statements, regeneration of the PIN etc. Pre-paid gift cards are issued in denominations of Rs. 500, Rs. 1000, Rs. 2000 and Rs. 5000. Some banks also issue in multiples of Re.1. Most Indian banks issue non re-loadable pre-paid gift cards in Indian rupees. Pre-paid gift cards have a validity period. Banks generally issue it with a validity of 1 year. The balance on the card can be found out by contacting the respective bank. In some cases, you also have the option to check the balance and transaction history using a secure PIN.
If the purchaser of a pre-paid gift card is already a customer of the bank, the purchaser can simply pay for the card to purchase it. However, in case the purchaser is not a customer of the bank, a full KYC is generally needed, which includes providing an ID proof and a residence proof along with the completed gift card application form.
The biggest advantage of a pre-paid gift card is that it gives the receiver the freedom to decide how he wishes to spend the card amount - either on shopping, dining or other entertainment. It is also safer, more durable and easier to carry compared to cash or any other type of gift voucher, as each card carries a unique number which can be used to trace the card. Pre-paid gift cards have become quite popular in recent times in India due to the ease of use and various other benefits.
Have you gifted a pre-paid card to anyone? Do let us know your experience.
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