Three main questions typically face the manager or executive who is considering the use of prepaid cards:
How do prepaid cards work?
When a prepaid card is used for a transaction, the card works like any other plastic method of payment. Prepaid cards offer the convenience of a credit card without the debt, and without the need for a bank account because a prepaid card doesn't need to be attached to a bank account, although it can be.
The money spent comes from the funds associated with the prepaid card. As the prepaid card is used, the amount of each purchase is deducted immediately from the amount loaded onto the card, not from a line of credit or a bank account. Each time a fee or charge is incurred, the money comes from the balance, leaving less money to spend.
As long as there is enough money available, the cardholder can continue to use the prepaid card. Once the entire balance is spent, the user must reload or top up more money onto the prepaid card before it can be used again.
In other words, the cardholder can't spend more than the balance available. Whatever amount is available in the account is all the user is able to spend. This is why the prepaid card user doesn't have to worry about finance charges, interest charges, late payments, due dates, or revolving balances.
Reloading is simple, and additional money can be added to the prepaid card account on an ongoing basis. For retail prepaid cards, typical options for topping up are transferring money from a PayPal account, or reloading the card at a retail store, drugstore, or convenience store. For corporate prepaid cards like those of UVG, the options include transferring money from a bank account or financial institution, or to have the cardholder's employer direct-deposit paychecks onto the prepaid card.