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Will prepaid credit cards be a good thing for eCommerce?

February 20, 2007

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As a concept, prepaid credit cards for people without bank accounts or teenagers without self-control have been available in the U.S. for many years. Lately, Visa New Zealand, in cooperation with that country's postal service is taking the idea to a new level that it claims would be an additional measure of protection from online identity theft.

Visa also says these prepaid cards are becoming a "de facto" means of conducting commerce online. The company is anticipating its market will move well beyond gift-giving and those who otherwise cannot get regular credit cards for any number of reasons.

Whether this evolution in prepaid cards will be moving to a post office or convenience store near you is a question left for debate and one which Visa prefers not to answer.

Dubbed the Prezzy Card, New Zealanders now can buy them preloaded with an amount between US $25 and $500 at any postal outlet, and this without providing any identification or proof of age.

Although cash purchases are limited to $100, the stipulation seems little deterrent to an individual interested in amassing a kitty of untraceable online currency.

From a New Zealand press report: "Visa's New Zealand country manager Iain Jamieson says it is already clear that prepaid Visa cards have a far wider market and are emerging as a 'de facto' tool for online shopping."

Users simply type in the card number and expiry date on the card when buying online, as with a standard credit card, and type "prezzy card holder" into the name field, if required.

So far, New Zealand's Postal system has sold 40,000 Prezzy Cards, and more than 10 percent of the transactions have been online purchases, Jamieson says. On regular credit cards, about 5 percent of transactions are made online," he added.

In the U.S. parental controls are not only a staple of prepaid credit card programs, such as Payjr Prepaid MasterCard and Visa Buxx. They are also marketed to parents as a primary justification for caving in to a child's craving for plastic.

If teens can load their allowance and after-school job earnings onto plastic that is free from any oversight by Mom and Dad, one would guess that such an arrangement would prove popular with young people, if not their parents.

As to the ultimate question of which merchants will or will not accept such anonymous payments (porn sites, gambling venues, etc.) that's another Pandora's box! Visa has not mandated any age verification by online merchants who accept the cards, and some observers see this as a potential problem.

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Source: IT World Canada



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