What is the difference between a Debit Card and a Prepay Card (like Revolut)?
In: Economics
I wonder if this concept is different between countries.
For the US the difference is the source of money.
A debit card is tied to a normal bank or credit union account. This is harder to get if you have a poor financial history (like you abandoned accounts with other banks and owe money to a bunch of people).
A prepaid debit is tied to an account that has more fees or restrictions. Usually more transaction fees and maintenance fees. Its nealy impossible to not be able to create one of these accounts and usually people with bad financial history have these.
A prepaid credit card is a gift card that isn’t tied to a store and can be used anywhere credit cards are accepted. Like most gift cards once its out of money its garbage.
When you use a debit card, money that has been yours come out of your bank account. With prepaid card, you pay for that card (perhaps with debit card) to the retailer, and money goes from you to them in return for credit, and every time you use it your credit goes down. So a big difference is at what point do you pay for the goods/services.
Well hello there.
Prepaid cards are more useful to do do online and other shady payments, since it only has the money you put in it.
Debit cards are linked to your account a d if it gets cloned or anything, someone could dry your bank account.
Other advantages of prepay cards like me (BNext) is that have some travel bonuses or point rewards… and we cost notjing cause our benefits come from other sources! 😋
They’re largely the same. They both work under the premise that you have a fixed amount of money stored with a financial institution that is taken out when transactions are executed. The big differences are how the money is put in and how the transactions are processed.
In debit cards you have money in a traditional bank, typically a checking account, and you execute a PIN based transaction that uses a separate network than the traditional Visa/Mastercard processing system. Money is removed from your account sooner and the merchant pays a smaller fee to the card processingnetwork.
In prepaid credit cards you deposit money into a financial institution, perhaps differently than you would a bank. Point of sale activation cards (the kind you see at grocery stores) are a common way to do this. You then have a credit line equal to your balance. You can execute credit transactions based on the card’s affiliation (Visa/Mastercard/American Express). The money is removed from your balance after a slightly longer period and the merchant pays a larger card processing fee.
Fraud protection is typically higher with credit transactions, but having an account with a bank processing debit transactions may offer a smoother experience than a company that doesn’t even need your name.
Iirc, you have an account with a bank tied to your debit card. You would earn interest on money that’s in there. Your employer/prepaid company has an account that you put your money into. They earn intrest on this, its their account.
A debit card is funded by a bank account that is tied to it. A prepaid card is funded by you paying cash which is added to the balance of the card.
A debit card is tied to a bank account, when you spend money it comes from that account.
A prepaid card is tied only to the money you put down when you paid for the card. The bank that backs it creates a temporary account with only that amount in it.
The biggest difference is that the debit card will have personal information tied to it. Your name, bank account, etc. A prepaid card is anonymous, especially if you paid cash for it.
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