According to 2021 data, the prepaid card industry was worth $612.7 billion in the U.S. While it’s a massive figure, prepaid cards are still not as popular as conventional credit or debit cards. Based on a study conducted by Finder, only a little over 2% of Americans prefer using prepaid cards. If you’re looking to buy a prepaid card online, you should first understand how they work.

This guide has all the information regarding:

• Types of prepaid cards available online
• Steps for purchasing prepaid cards
• Pros and cons of prepaid cards

Prepaid Cards—Quick Overview

A prepaid card is a payment card that comes preloaded with a fixed balance that you can use to make purchases. 

Prepaid cards can be non-reloadable and reloadable. Non-reloadable prepaid cards (such as gift cards) can be used until exhausting the balance, while reloadable cards allow you to add additional funds as needed. Most prepaid cards available in the market are branded with prominent card networks like Mastercard^®, American Express^®, and Visa^®.

Source: Lukas

Prepaid cards can be used at physical locations or on merchant websites like regular credit or debit cards. You can purchase prepaid cards online or at physical locations—here are some examples:

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Most prepaid cards in the U.S. are issued in the Visa network, which handles more than 54% of the debit and prepaid card purchases in the country. Mastercards come second, with a purchase volume of about 22%.

What Types of Prepaid Cards Can You Buy Online?

You can generally purchase two types of prepaid cards online:

1. Physical prepaid cards—These are standard plastic payment cards. Once purchased, they get shipped to the specified address via mail.
2. Digital prepaid cards— A digital prepaid card exists only in digital form and has a 16-digit card number, security code, and expiration date required to complete online transactions. You can typically load it to e-wallets like Google Pay and Apple Pay to make contactless payments at stores.
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Prepaid cards can also be categorized as open and close looped. Open-loop cards have an identifiable card brand logo (like Visa, Mastercard, or Discover) and can be used anywhere a particular card brand is accepted. Closed-loop cards are issued by specific retailers (like Amazon or Starbucks) and can only be used at the particular merchant’s online or physical storefront.

How To Buy Prepaid Cards Online

The process of purchasing prepaid cards online depends on the vendor. Two of the most popular options are:

1. Purchasing prepaid cards on a retail platform
2. Ordering prepaid cards from Visa’s online portal

Purchasing Prepaid Cards on a Retail Platform

Buying prepaid cards on retail websites typically does not require providing extensive identification details in advance. Below are the standard steps required to get them:

Source: Campaign Creators

Ordering prepaid cards from Visa’s online portal

Visa prepaid cards are versatile and can be used to:

• Complete online and in-person purchases^[1]
• Pay bills^[1]
• Withdraw cash at select ATMs^[1]

Visa purchases are typically protected by a zero-liability policy^[1] (certain commercial transactions and anonymous payments are excluded from the cover, and a cardholder has to meet certain conditions like taking reasonable care to protect their card).

Various financial institutions offer prepaid Visa cards with different perks and customization options. If you’re struggling to pick one, you can explore cards directly on Visa’s website. Here’s what to do:

1. Go to Visa’s reloadable prepaid cards portal.
2. Click on Get a Visa prepaid card.
3. Explore the benefits of the featured cards and pick an option that works for you.
4. Click on Get a card—you will be redirected to the website of the financial institution that sells the card.
5. Enter information required to verify your identity (name, address, Social Security number, etc.).
6. Select a load value for the card and complete the order.
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For some Visa prepaid cards, you may be asked to sign up or open an online account before you can order.

Using Prepaid Cards Purchased Online—Important Considerations

Your prepaid card credentials can be used for purchases at most online and physical locations provided the card is activated. If it’s not, you have to activate the card online or over the phone—the details are usually provided in the card packaging or delivery email.

Pros and Cons of Prepaid Cards

When acquired from reputable sources, online prepaid cards have versatile use and offer robust payment security. The primary benefits of using a prepaid card are that it:

• Isn’t linked to a funding source—A prepaid card is independent of your credit or debit card, which reduces the damage in the case of fraudulent activities. If a prepaid card is stolen, you cannot lose more than the current balance on the card.
• Allows for budgeted spending—Using a debit or a credit card means you have access to a significant balance, which can often lead to overspending, high-interest payments, overdraft fees, etc. A prepaid card is a safer choice in terms of budgeting because you cannot spend beyond the amount loaded on the card.

One of the disadvantages of using prepaid cards is the cost. You accrue fees at multiple stages, which may significantly reduce the available balance. For example, take a look at the charges that typically come with Netspend^® Visa prepaid cards^[2]:

If you want to enjoy many of the benefits of prepaid cards without paying multi-level fees, Privacy Virtual Cards may be a better option.

A Smarter Investment—Use Privacy Virtual Cards Instead of Prepaid Cards

Virtual cards have unique, randomly generated 16-digit numbers, security codes, and expiration dates. They are linked to a funding source, such as a debit card or bank account, but allow you to pay without revealing your true bank details to the merchant. This makes virtual cards a more secure option than traditional cards as a potential data breach on the merchant’s website won’t expose your real card or bank data. 

Virtual cards are typically branded within major card networks like Visa and Mastercard, making them as versatile as conventional cards.

Privacy is one of the most reputable virtual card providers in the industry, allowing users to mask their debit card or bank account details during online purchases. The company is BBB^®-accredited and acknowledged by Forbes as one of the most consumer-focused businesses of 2022.

Source: Ivan Samkov

Privacy Cards Features

Creating a Privacy account provides access to features beneficial for personal and business use. You can:

• Create Merchant-Locked and Single-Use Cards—You can set up Merchant-Locked Cards that “lock” to the first merchant they’re used with. These cards cannot be used with other merchants if stolen. There’s also the option to create Single-Use Cards that close after the first transaction, rendering them useless to a potential hacker.
• Save time during checkout—Privacy’s browser extension for Chrome and Firefox enables fast and seamless checkouts. The extension auto-fills the card data into payment fields, allowing you to complete quick and spontaneous purchases without having to memorize card numbers or look for your wallet.
• Set spending limits—Privacy Virtual Cards enable you to set spending limits, preventing overspending and unexpected charges. You can share your Privacy Card with a trusted family member and feel confident they won’t go over the designated limit as you remain in full control of the card settings. Privacy allows setting limits per transaction, month, or year.
• Monitor account in real-time—You can monitor the activities associated with your active virtual cards on Privacy’s centralized dashboard. The platform also sends real-time push notifications and email alerts every time a virtual card is used or declined.
• Close, pause, and unpause cards instantly—With Privacy, users can close, pause, or unpause cards in a few clicks. If you suspect fraudulent activity on your virtual card, close it immediately to prevent further transactions. You can also close or pause a card if you want to prevent charges for an unwanted subscription (but remember to also cancel your subscription directly with the merchant).

Requesting Privacy Cards

Privacy Cards are available to U.S. residents over 18 years of age with a bank account or debit card at almost any U.S. bank. Here are the steps for requesting a virtual card with Privacy:

1. Access the Privacy signup page
2. Enter mandatory KYC details
3. Connect your debit card or bank account
4. Request a Privacy Virtual Card
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Privacy users can currently create 12 virtual cards every month that are free to use for domestic transactions. Unlike with prepaid cards, you don’t have to worry about inactivity fees, delivery fees, or ATM fees.

You can also sign up for the Pro ($10/month) or Premium ($25/month) plan to get more virtual cards per month and 1% cashback on eligible transactions totaling up to $4,500 per month.

Source: Tim Douglas

If you shop on your phone frequently or use mobile wallets, go to Google Play or App Store to download Privacy’s mobile app. The app enables you to create and close cards and monitor transactions on the go.

Privacy also enables free integration with 1Password, a password manager that keeps your passwords and other financial data in a secure vault.

References

^[1] Visa. https://usa.visa.com/pay-with-visa/cards/prepaid-cards/all-purpose-reloadable.html, sourced May 2023

^[2] Gregory Devictor. ToughNickel. https://toughnickel.com/personal-finance/Your-Guide-to-25-Prepaid-Debit-Card-Fees, August 23, 2022

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