Prepaid Card Customers Trade Privacy for Rewards in... - Products News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Products » Prepaid Card Customers Trade Privacy for Rewards in Western Union Plan

Prepaid Card Customers Trade Privacy for Rewards in Western Union Plan

Will prepaid card users be willing to give up the privacy that using a prepaid card gives them, in exchange for a rewards program?

That`s the question that Western Union is gambling on, as they prepare to offer prepaid card holders a rewards incentive program by the end of the year. Just last week they announced their plan to use cardholder transaction information to create a program offering discounts and rewards to card holders. There`s no word yet how big the discounts might be or what sort of rewards might be offered, but presumably any rewards program they create will have to be enticing enough that customers are willing to trade their privacy to participate.

Award-Winning Cards Move Millions

Western Union`s prepaid cards have some of the lowest fees around and even recently won an award as best-in-class at a prepaid card trade show. The president and chief marketing officer of Western Union Ventures, Diane Scott, talked in a recent interview about the discount program, saying that she hoped it would encourage more Western Union customers to use prepaid cards instead of cash. She said that in the last year, Western Union “moved $81 billion to different parts of the globe, and most of that ends up cash. The opportunity to convert a lot of that cash into stored value is our sweet spot.”

However, the advantage of cash over prepaid cards is privacy – and many customers use it for just that reason.

A Short History of Prepaid Privacy

Privacy is already a hot topic when it comes to plastic – whether credit cards, debit cards, or prepaid cards. Anyone who has read a true-crime book or watched a television crime drama probably knows that if you`re trying to run away without a trace, using a credit card is a mistake. For the most part, paying for things with plastic makes you traceable, as credit card companies know who you are and where you are using your card.

It used to be that people could use prepaid cards without giving up any information about themselves. They were a completely anonymous way to make purchases; as untraceable as cash. That changed after the passage of the Patriot Act in October 2011, following the 9/11 terrorist attacks.

The Patriot Act required vendors of prepaid cards to verify the identity of anyone to whom they issued a card, keep that identification information on file, and check it against a list of known or suspected terrorists. Nowadays it`s standard for any financial institution to gather names, addresses, dates of birth, and even Social Security numbers from anyone applying for a card, prepaid or otherwise.

Gift Card or Prepaid Card?

The exception to this is gift cards – and that`s one of the key differences between gift cards and prepaid cards. The two are similar in that they are loaded with money at the front end of a transaction; they aren`t credit cards which let you spend money that you`ll pay back later. Gift cards, unlike prepaid cards, are usually not reloadable, and in order to buy one, you don`t have to provide any identifying information.

Some gift cards are reloadable, but in order to reload them, the cardholder will have to provide personal information. Also, if the holder of a gift card wants to use it to make purchases online, they will have to register the card – a process that means giving up a zip code at the very least, and sometimes also a name, birth date, home address; possibly even a Social Security number.

Identifying vs. Tracking

So if prepaid cards have always asked customers for identifying information – or since 2001 anyway – then what`s different about what Western Union is proposing to do? The answer is, just because a company may have known who you were before, didn`t mean they were tracking your purchases. Just like stores offer loyalty cards that track your purchases in exchange for discounts, prepaid cards are looking at ways to offer rewards in exchange for information about how you shop. In the case of a prepaid card, they will have access not only to shopping habits at one merchant, but complete access to the spending habits of a prepaid card customer.

Worth it or Not Worth it?

Since this program is yet to be unveiled, and other companies like PayPal, eBay, and American Express are preparing to follow in Western Union`s footsteps by offering their own rewards programs, there is much we don`t yet know about how customers will respond to this type of program – whether it will attract them or drive them away.

Many prepaid cards saddle customers with heavy fees – some charge monthly fees of up to $9.95, as well as fees for reloading the cards, withdrawing cash from ATMs, making calls to customer service, and even making balance inquiries. Any discounts or rewards would have to more than compensate for fees incurred for simply using a prepaid card.

As the story develops and the actual plans are unrolled, Credit-Land.com will follow along and keep you updated with the latest news and expert opinions on these customer-tracking rewards programs.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Partnership Makes Western Union and MasterCard Largest Prepaid Reload Network in US
Partnership Makes Western Union and MasterCard Largest Prepaid Reload Network in US

Posted: September 19, 2012

Prepaid card holders whose cards have a MasterCard rePower logo on them can now reload their cards with cash at over 45,000 Western Union locations, thanks to a new partnership between MasterCard and Western Union announced this week. The... Continue reading
The New Chase Starbucks Rewards Visa Card
The New Chase Starbucks Rewards Visa Card

Posted: February 08, 2018

Starbucks and Chase have joined forces to roll out the Starbucks Rewards Visa Card, letting cardholders earn rewards every time they buy a latte, a cappuccino or anything else at Starbucks - and they also earn rewards on all other... Continue reading
Free Toolkit Aims to Help Seniors Understand Prepaid Cards
Free Toolkit Aims to Help Seniors Understand Prepaid Cards

Posted: January 20, 2014

If your grandparents have trouble figuring out how to use a prepaid card or gift card, they’re not alone. Many seniors struggle to manage their various cards, and they are carrying more of them than ever. Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.49% - 25.49% based on your creditworthiness*
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!