What Is an Open Loop Prepaid Card and How Does It Work?
Customers today are more open to adopting prepaid cards as a means of transaction, especially for shopping or redeeming gift coupons.
Reports show that the prepaid card market is estimated to grow at a CAGR of 13.4% to a value of $41.57 billion by 2028. In response, companies are now considering deploying prepaid cards for a variety of use cases.
Read on as we take you through the fundamentals of open-loop prepaid cards, their benefits, and how they can be effectively utilized to enhance your business strategy and customer engagement.
Understanding The Basics
Open loop cards can be defined as general-purpose charge cards that customers can use at any POS where that brand is accepted. Some popular examples are Visa and Mastercard cards. These cards often also show the brand names of the issuing authorities.
Open-loop cards can be prepaid, credit, debit, or gift cards. In a more generalized sense, a card that is accepted at most retailers, merchants, and locations can be considered an open-loop card.
Open-loop cards can be prepaid, credit, debit, or gift cards. In a more generalized sense, a card that is accepted at most retailers, merchants, and locations can be considered an open-loop card.
How Does Open Loop Prepaid Card Work?
Payments on open-loop networks can be concluded using debit, credit, prepaid, or gift cards. These payments are made on a shared network. Let’s understand this with an example.
A customer is browsing the internet to purchase a digital camera. They find one they like on an overseas website. The brand supports international shipping, so the customer decides to pay using a Visa credit card.
Since Visa is an open-loop card, the brand can process the payment in the standard way, despite the customer’s location seven seas away.
A customer is browsing the internet to purchase a digital camera. They find one they like on an overseas website. The brand supports international shipping, so the customer decides to pay using a Visa credit card.
Since Visa is an open-loop card, the brand can process the payment in the standard way, despite the customer’s location seven seas away.
How Can Your Business Use Open Loop Prepaid Cards?
There are many ways in which your business can utilize prepaid cards. Five major use cases are discussed below:
1. Loyalty Rewards
Prepaid cards are an excellent way to give your customers more spending freedom with your brand as a gesture of loyalty. They are significantly easier to redeem as compared to the point system, which isn’t standardized and differs with each brand, creating confusion for the customers.
Additionally, businesses can explore various prepaid card applications, including travel cards, food cards, payouts, and reimbursements, to further enhance engagement and meet diverse customer needs.
Additionally, businesses can explore various prepaid card applications, including travel cards, food cards, payouts, and reimbursements, to further enhance engagement and meet diverse customer needs.
2. Client Disbursements
Prepaid cards provide advertising space for your brand when client disbursements are taking place. In addition to being an easy way to avoid check fees, prepaid cards become one-time investments that get your brand noticed at the point of purchase by whoever is using them.
3. Employee Recognition
Prepaid cards are redeemable on the spot, making it easier for employees to enjoy their rewards whenever they like. They are a great alternative to check-based rewards, which may take at least five business days to process. Businesses can experiment with open- or closed-loop prepaid cards for employees.
4. Virtual Events or Meetings
For brands that support a work-from-home culture, employees’ work-life balance could easily become out of line and demotivate them. In such cases, it is important to offer certain incentives to employees whose work hours extend beyond official business hours using open-loop prepaid cards.
5. Local Business Incentives
n order to promote local businesses and the tourism industry, brands can leverage prepaid cards that can be issued to visitors to spend within the city limits. These cards connect various businesses in hospitality, shopping, and restaurants for the mutual benefit of all.
Truthfully speaking, there are endless use cases that businesses can create from open-loop prepaid cards. Businesses can explore travel cards, food cards, payouts, and reimbursements, as well as any other innovative use where a prepaid card can boost business.
Truthfully speaking, there are endless use cases that businesses can create from open-loop prepaid cards. Businesses can explore travel cards, food cards, payouts, and reimbursements, as well as any other innovative use where a prepaid card can boost business.
Experience the Best of Open Loop Prepaid Cards with Qwikcilver by Pine Labs!
Creating use cases out of open-loop prepaid cards isn’t difficult because a majority of transactions today are digital, and customers are on board with it. What really matters is partnering with the right platform that can provide open-loop cards that serve multiple purposes, such as Qwikcilver.
Qwikcilver by Pine Labs is a complete solution for issuing open-loop and prepaid cards for your business. We provide a certified Rupay and Mastercard issuing platform with omnichannel acceptance. Additionally, with us, you get multiple KYC options and plug-and-play APIs for quick integration. This way, we help you seamlessly integrate prepaid cards into your business strategy.
