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How to Use Open Loop Cards Effectively

How to Use Open Loop Cards Effectively

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What are Service Vouchers, and How Can They Benefit Your Business?

Did you know that open-loop cards command a global market share of 71.92% out of all prepaid cards in the market?

Open-loop cards have simplified payments, especially for efficient and flexible payment options. These versatile cards allow users to access services like dining, shopping, and recurring payments through simple and easy finance options. They can even be used at ATMs to withdraw cash.

Businesses can enhance their customer value offerings and revenue by understanding the mechanics of open-loop cards, harnessing their true potential, and streamlining payments. Let’s dive in!

What Are Open Loop Cards?

An open-loop card is a general-purpose card that customers can use at any retail outlet or online store that supports the issuing brand. Open-loop cards carry the brand name or logo of the brand or the network over which the card operates, such as VISA or Mastercard.

Open-loop cards can be debit cards, credit cards, prepaid cards, universal gift cards, or other types. Their biggest benefit is their usability across retail or online outlets nationally or internationally.

Other popular examples of open-loop cards are American Express and Discover, which offer contactless payment solutions for users. With open-loop cards, you can enhance your payment ecosystem with better expense management using Card PPIs, controls, and just-in-time funding. The best part is that open-loop cards help businesses keep regulatory compliance, manage escrow accounts, and regulate network interfaces efficiently.

How Do Open Loop Cards Work?

Several open-loop cards work on the same principle but for different scenarios. Here are some common types to consider:

Debit Cards: Debit cards are physical cards that allow you to make payments using money in your bank account.
Credit Cards: Credit cards are physical cards that allow you to make advance payments using credit that you can repay to the bank on a schedule.
Gift Cards: Gift cards are preloaded brand cards that customers can redeem through shopping at retail outlets or online.
Prepaid Cards: Prepaid cards are preloaded general-purpose charge cards that can be used across authorized retail outlets.

Unlike closed-loop cards, open-loop cards aren’t tied to a specific business or a single brand. They provide customers wider access to services and goods via one of the three networks: VISA, Mastercard, or RuPay. The way they work is pretty simple:

1. Issuance

Authorized financial or banking institutions issue open-loop cards, which can be physical or virtual and used for online transactions.

2. Network Affiliation

The issuing authority associates the open-loop card with a specific payment network. Today’s most popular card networks are Visa and Mastercard, which facilitate financial transactions through charge cards.

3. Transaction Processing

When a customer offers their open loop card for payment, the business’s payment processing system transmits the customer information further for verification. The card network receives this information and verifies it against the card and the user before processing the transaction.

4. Authorization

The card issuing authority is responsible for authenticating the user and authorizing the payment based on several factors, such as available balance, credit limit, etc. Once these checks are passed, the payment is processed.

5. Settlement

The payment is settled between the card user and the business after all verifications, authorizations, and authentication are complete.

Benefits of Open Loop Cards

Open-loop cards are one of the most advantageous to use because of the following benefits they offer to both customers and businesses alike:

1. Pay Using Any Bank

Most banks offer open-loop cards to their customers. These cards are widely accepted and trusted by businesses, offering a seamless payment experience to users who can choose from their bank cards to make payments.

2. Secure

Physical open-loop cards are equipped with EMV chips, which help secure transactions against theft or fraud. EMV stands for Eurocard, Mastercard, and Visa. The cards on these networks are equipped with unique chips that provide added protection against fraud.

3. Scalable

Open-loop technology is highly scalable because it allows customers to use their cards across various outlets. They can use their open-loop credit cards to buy services or goods from different businesses.

If businesses wish to expand their operations, a payment system based on open-loop cards is the quickest way to scale.

4. Cost Saving

Open-loop cards support payments in various forms, such as NFC, bank cards, digital wallets, QR codes, RFID, or other modernized payment mechanisms. This makes them an extremely simple payment system for businesses to implement for lower costs.

5. Better Insights

With open-loop cards, users and businesses access transaction information across several devices. Such data allows personalized user experiences because there is better user behavior and preference knowledge.

6. Employee Rewards

Open-loop cards make an excellent instrument for employee rewards. Companies can issue open-loop cards to winning employees so they can redeem their gifts at any retail store they prefer.

7. Wide Range of Application

Businesses can use open-loop cards to streamline payments for various purposes, like fuel expenses, travel, forex cards, B2B/B2C payment cards, gig-worker cards, campus cards, disbursement and payroll cards, expense management cards, and much more.

Robust Partnerships for Efficient Open-Loop Card Systems: Qwikcilver by Pine Labs

Brands must strive to enhance the value they offer to their customers and employees for better reach. Open loop cards make it possible to amplify the benefits of incentives that form the backbone of company culture. Customers feel more satisfied with a brand when they don’t feel “locked in” with its closed-loop gift cards.

You can now drive your open-loop card operation more smoothly through a partnership with Qwikcilver, a pioneer in gift card solutions. Qwikcilver open-loop cards run on Mastercard and RuPay networks, supporting multiple business needs and use cases.

Explore Open Loop Prepaid Cards?

Article written by

Qwikcilver Blogs

We are a fintech expert with a focus on corporate gifting, prepaid cards, and customer loyalty. As a key contributor at Qwikcilver, we share insights on how innovative solutions can help businesses strengthen customer engagement and drive growth.

Article written by

Kislay Keshari

I am skilled in all aspects of web design, from planning and development to design and testing. I also have experience in web development technologies.