The difference between prepaid cards and credit cards

July. 22,2020
The difference between prepaid cards and credit cards

1. The consumption method is different: you don't need to pay cash when consuming with a bai credit card. You can first discover the consumption, then repay. The prepaid card must deposit the charge before consumption and it cannot be overdrawn.

2. The reimbursement method is different: the credit card can be reimbursed after issuing the monthly invoice. The prepaid card does not need to be refunded. The card is useless when the amount of the card is exhausted. It is either recycled by the competent agency or collected by you.

3. The scope of use is different: all merchant institutions or companies that support payment by credit card can use it, and prepaid card holders can only spend at the company or merchant designated by the card issuer.

4. The application requirements are different: The method of applying for a credit card is usually by filling out a credit card application form. The content of the application form usually includes the name of the applicant, basic information, financial situation or source of income, guarantor and basic information etc. Copy and certificate of the card issued by the bank issuing the card. Prepaid cards do not require an individual application, are issued by designated issuing agencies, and can be used in the business services industry as credit certificates, which are specifically expressed as purchase coupons or consumer cards. .


Application of the prepaid card:

Prepaid cards are actually an additional currency. Often used in the following institutions:

1. In the telecommunications sector, mobile phone cards are prepaid cards;

2. Prepaid contactless chip cards issued by UnionPay and Bank of Communications;

3. Merchants: shopping malls, supermarkets, restaurants, entertainment, beauty, hairdressing and other industries;


4. Third party card issuers: sign agreements with many merchants, deploy and accept point-of-sale terminals and issue a prepaid card for cross-industry consumption, which can be swiped at many alliance merchants for consumption;

Overview of use


Prepaid card purchases are a form of transaction after credit cards. The most commonly used is Japan. Japan started issuing prepaid cards in 1983, and by the end of 1989, over 1.09 billion cards had been issued, of which the telecommunications and transportation industries were the largest. Seven-one ELEVEN chain stores in Japan with more than 4,300 convenience stores launched a prepaid card in the system in 1989, which was a success.


Traders are profitable


Promoting the use of prepaid cards has the following benefits for both sectors.


The first is to increase security. After using prepaid cards, merchants do not handle cash, which greatly reduces the flow of cash, which can prevent the loss of counterfeit banknotes and reduce the risk of theft.


The second is increased profitability. When using a prepaid card, merchants receive cash in advance, and the amount of arrears is greatly reduced, and the amount of funds that can be used flexibly increases, which is good for business operations. At the same time, it is possible to get a lot of interest by using the jet lag. When consumers use prepaid cards to make purchases, reducing the number on the card is not as heartbreaking as cash is sold, and reducing consumer withholding can increase sales.


The third is to improve efficiency and reduce costs. The use of prepaid cards can dramatically reduce cash inflows and receipts and expenses, which can improve efficiency and reduce labor and equipment costs.


The fourth is to stabilize the source of customers. After a consumer has paid cash in advance at a store of a certain system and obtained a prepaid card, he will "break" with the store of other systems within a certain period of time and become a stable customer. from the system store.


The fifth is to improve the image of the company is conducive to long-term development. Convenience stores are hard to compete with giant commercial buildings, but prepaid cards can provide more convenient services. The technological product of prepaid cards gives ra companies a cutting edge image, which can effectively attract the younger generation of consumers and improve their competitiveness.