
They’re just the shot as a gift for travellers or for those who don’t have credit cards, Ed Charles reports
THE pre-paid credit and cash-card market is barely nine months old, yet there are already more than six cards on the market, with more predicted to be launched this year.
They can be used for internet transactions and telephone shopping by people who have traditionally shunned credit cards.
“It is definitely an area of growth in the credit card market,” says Denis Orrock, general manager of Infochoice.
“They suit a range of people. The suit students. They suit people who wouldn’t otherwise be able to get a credit card.”
They may also suit parents who want to apply budget constraints on their children, those who want to limit their own spending, or people who prefer that their transactions remain anonymous, Orrock says.
In the US, pre-paid cards have proved popular because there is a large immigrant population without bank accounts. About $US126 billion ($161 billion) was spent in 2005.
Julian Little, director of pre-paid card issuer Bopo (which is owned by Bill Express), says Australia has a large percentage of young people and families who are interested in simpler ways of making transactions.
Bopo was among the first to enter the pre-paid market in July with its Visa card and is a leader in the pre-paid mobile market.
Little says making electronic payments out of bank accounts isn’t as widespread as it should be, and that pre-paid cards will fit the Australian market — just like pre-paid mobile.
Pre-paid cards are not linked to a bank account. Most are pitched as offering greater security than regular credit and ATM cards, as they are not linked to large cash deposits or credit cards with high credit limits. Most only allow a $1000 balance but some can increase the balance to $10,000 or more after a 100-point identity check.
Orrock warns that the costs of the cards do add up, and that none pays interest.
It costs just to be issued a card, and often for eftpos withdrawals or point-of-sale transactions or for dormant periods.
Most cards also charge about $1.50 for using automated telephone enquires and about $4 to speak to an operator. Some cards charge a closure fee and unused balances can be forfeited on expiry.
The first card launched in Australia was Travelex’s Visa Cash Passport, aimed at business travellers and tourists.
It has two products. One is available in currencies including the euro, the US dollar and the British pound and is for ATM use only.
The other can be used at the point of sale and is only available in Australian dollars. With a three-year life, the cost of a Cash Passport is up to 1.1 per cent of the total balance added to the card, the maximum load being $25,000. It costs $US2.35 ($3.75) for each cash withdrawal. And it costs $10 to close the card.
By contrast, the Bopo card does not expire and has no annual or monthly fees — simply a joining fee of $9.95, or $19.95 for a photo card.
Domestic point-of-sale transactions cost 0.25c while international ones cost 0.5c. ATM withdrawals cost $1.85 in Australia and $3.95 abroad.
The Bopo card also has several SMS features. It can be cancelled or reactivated by SMS. Balance inquiries cost 20c by SMS and money — from 25c to $5 — can be transferred by SMS. The card costs $5 to close.
Pre-paid cards are also marketed as gift cards, an alternative to the David Jones or Myer voucher. ANZ was the first of the big four banks to launch a pre-paid Visa card, which is also marketed as a gift card, in November.
It can be used for electronic payments but not in ATMs, has a 12-month expiry, and if lost, the cash balance is forfeited.
The bank says the card has proved popular. The gift cards sold well in December, both online and through branches located in key retail locations such as shopping centres.
An ANZ spokesperson says strong growth is expected as awareness of the product grows. Several launches are expected this year, including a gift card from Bopo.
The ANZ gift card costs $6.50 to buy online, or $6 from an ANZ branch, and does not charge for point-of-sale transactions. The cards can be bought from branches for any value from $25 to $1000 or for up to $500 online. Foreign currency transactions attract a 2.5 per cent fee.
Westpac offers a similar Mastercard-based product that costs $4.95. It can be charged up with $15 to $800 of cash.
The Canvas Visa, which cannot be used for online gambling, costs $19.95 and $3.75 to load. A $2.95 monthly management fee is charged. ATM withdrawals cost $1.75 locally or $1.95 internationally, plus a foreign exchange fee equating to 4.5 per cent of the transaction.