Prepaid Gift Cards: Not a plastic gesture

Oct 18 2013, 20:03 IST
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Prepaid gift cards are fast picking up as a trend, replacing cash gifts with a more graceful and well-thought-of plastic money. Prepaid gift cards are fast picking up as a trend, replacing cash gifts with a more graceful and well-thought-of plastic money.
SummaryWorried about what to gift your friends this Diwali? Here's why prepaid gift cards are a good option.

India is a country of festivals. Our cultural diversity ensures that we have celebrations of some sort or the other every month and these extend to our friends, family members and neighbours. An integral part of the festive season is giving gifts and youngsters, in particular, make a lot of money from elders who give them cash as a form of blessings. Prepaid gift cards are fast picking up as a trend, replacing cash gifts with a more graceful and well-thought-of plastic money.

Mostly, they are preferred by corporates for giving Diwali or Christmas gifts as they come with many tax benefits but, lately, even individuals are lapping up this option as they are easily available in the market.

What are prepaid gift cards?

Prepaid gift cards are basically designed like debit cards and can be purchased from banks, retail stores, vendors or online merchant sites. They come preloaded with a cash value from the vendor and the customer simply needs to purchase their desired value, which generally ranges in rounded figures from Rs 500 to Rs 5,000 and above.

Anyone who wishes to gift a prepaid gift card must visit the bank or store from which they would like to purchase it (in case of banks, the buyer must have an account there) and purchase the gift card with the desired value. Once the amount has been added and the card approved, it is ready to use.

The recipient of the gift card may use it for purchasing products from any store that has a card machine. They are also given a PIN number to check the balance at any ATM machine, which is handy, as the entire gift card amount neednít be spent on a single swipe.

Essential features

Some of the essential features of prepaid gift cards are:

a) They are powered by Mastercard, Visa or American Express; hence, they can be swiped just like oneís debit or credit card.

b) They come in single currency mostly (i.e., rupees). However, if you want, you can avail international gift cards with American Express, which can be swiped in select countries.

c) Prepaid gift cards mostly come with a validity of up to one year. They can be reloaded by the issuing bank, but they are not transferable or refundable.

As per RBI guidelines, the receiverís details must also be provided to the bank for security reasons. Some banks offer personalisation options, whereby the recipient name and a message like 'Happy Birthday' can be included on the card.

Documents required

Although most banks do not require the person buying the gift card to be their customer, it is mandatory with some banks for him to be an account holder. The essential documents required for applying for a prepaid gift car are:

a) Know Your Customer (KYC) form, if the customer is not an account holder with the bank

b) Identification proof, residential address and proof of the buyer of the card if not an account holder

c) Details of the recipient, including name, age, contact details, etc.

d) Application form for the gift card

Fees and other charges

A prepaid gift card may be purchased from any bank for a nominal fee of R50-100 plus service tax as joining fees for the prepaid gift card.

In case of card loss and reissue, a reissue fee is levied by some banks.

Prepaid gift cards from non-bank vendors

Prepaid gift cards can be purchased online from websites that deal exclusively in selling gift cards or also from multi-brand retail stores as well.

The cards purchased from any store will be valid only for the chain of stores under its brand and will not have many of the features of the bank prepaid gift card such as being powered by Visa, Mastercard or American Express, or having a PIN number. Also, if the person wants to track the balance, he will have to visit the store and have it checked at the cash counter.

* Prepaid gift cards are designed like debit cards and can be purchased from banks, retail stores, vendors or online merchant sites

* They come preloaded with a cash value from the vendor and the customer simply needs to purchase their desired value, which generally ranges in rounded figures from R500 to R5,000 and above

* Anyone who wishes to gift a prepaid gift card must visit the bank or store from which they would like to purchase it (in case of banks, the buyer must have an account there) and purchase the gift card with the desired value

* Once the amount has been added and the card approved, it is ready to use

* The recipient of the gift card may use it for purchasing products from any store that has a card machine

* They are also given a PIN number to check the balance at any ATM machine, which is handy, as the entire gift card amount neednít be spent on a single swipe

The writer is CEO, BankBazaar.com

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