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accept prepaid cards

Accepting Prepaid Cards Online

While credit and debit cards have enjoyed mainstream popularity for many years, prepaid cards are starting to catch up. Mercator Advisory Group reported that in 2013, approximately $71.6 billion was loaded onto general purpose reloadable prepaid cards.(1) This represented an increase of 26 percent since 2011 and that pace of growth shows no signs of stopping. In fact, Mercator forecasts that number to jump to $97.9 billion by 2016.1

Prepaid cards work like a checkless checking account. They can be used at any store that accepts credit cards and can provide access to cash at ATMs. Money can be loaded or reloaded onto card with cash and there's no need for a credit check. They can eliminate the need for bank accounts and can provide an extra layer of privacy for security-conscious customers.

Despite their benefits, accepting prepaid cards can be tricky in eCommerce. They can present challenges to merchants that offer subscription services that may not be fulfilled once the prepaid card depletes its balance. However, they can also prove to be a source of new revenue when approached wisely. Here are some tips to consider as you evaluate prepaid card acceptance for your business.

Prepaid Card Intelligence

Your payment processor may be able to segment reloadable prepaid cards from non-reloadable prepaid cards.  This information can help you take a more nuanced approach to prepaid card acceptance.  For example, some merchants sensibly reject non-reloadable prepaid cards for purchases made on installment.  Consider combining this intelligence with a customer engagement strategy that includes requesting a backup method of payment.

Bank Identification Numbers

If prepaid card intelligence isn’t an option, most acquirers can provide you with a list of Bank Identification Numbers (BINs) specific to prepaid cards.  With it, you can filter prepaid cards entirely but that might mean blocking potentially good customers as well. If you have the resources to do the analysis, monitoring prepaid BINs to detect patterns in approval rates can help optimize prepaid card acceptance. Some BINs might show patterns of higher decline rates, which you can identify and plan your acceptance schematic accordingly.

Card Brand Support

Features supported by the card brands may also be good tools for your business. Partial Authorizations can help prevent declines when the available balance on a prepaid card is less than the full purchase price. By authorizing the partial amount and then prompting for another form of payment to cover the balance, you can successfully complete a sale that you might have otherwise declined.  

As prepaid cards continue to gain popularity, consider having a strategy in place for how you accept and process prepaid cards. Contact us to learn more.

1 Bankrate.com, http://www.bankrate.com/finance/banking/prepaid-cards-get-makeover.aspx, (2014).

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