Definition
A stored value card is a tool for buying goods and services in which the bearer of the card accesses a set amount available from either a cash deposit or from a retailer credit.
Analysis
A stored value card can take different forms. Each form can be used according to the restrictions and terms of the account.
- Gift card: These closed system cards may be purchased for the face value from a retailer and used by the individual or recipient to purchase items from that retailer. The card does not have a major credit card logo, and it may only be redeemed at that retailer.
- Stored Value Credit Card: These open system cards may be purchased from a bank or they may be received by a consumer as a form of rebate from a previous purchase. These have a major credit card logo and may be used almost anywhere a credit card may be used. Sometimes there are restrictions on the use of these cards. For example, a consumer buying gasoline may be required to pay inside the store rather than at the pump.
- Payroll cards: These cards work as a type of ATM card, allowing them to withdraw cash as they need it. The balances are replenished by payroll deposits. These are sometimes used in lieu of paper payroll checks when employees lack bank accounts.
