Prepaid MasterCard cards: what merchants accepting MasterCard need to know

MasterCard Prepaid Cards Fact Sheet

• A MasterCard Prepaid card operates on the following premise: a positive balance is loaded into an account associated with a card and drawn down through purchase activity (note: the value is not literally loaded ‘on the card’).
  
• Prepaid programs can be open-loop or closed-loop:
  
  • In an open-loop program, cards are accepted and processed at any location that accepts MasterCard
  • In a closed-loop program, acceptance is limited to specific locations. An example is a gift card that is issued by merchants for use only in their store(s)
  • In hybrid “semi-closed” programs, a prepaid card may be accepted by a wider range of merchants, such as within a specific shopping mall
• Prepaid cards may or may not carry the MasterCard brand. Those used in open-loop programs — in which the cards are accepted wherever MasterCard is accepted — usually carry the MasterCard brand. Cards in closed-loop programs, such as a store gift card, tend not to carry the MasterCard brand but rather feature the brand of the issuer.
  
• Prepaid cards can be reloadable or non-reloadable:
  
  • Reloadable accounts offer the cardholder the ability to replenish the value on the card as needs arise;
  • Non-reloadable or single use cards are used until the balance is drawn down to zero dollars and then discarded.
• Prepaid cards look and function like a credit card at the POS. Merchants handle the card just as they would a MasterCard credit card.
  
• Card issuers also have the option of issuing non-personalized prepaid cards. The card issuer needs MasterCard’s approval to issue the card in this fashion. A Security Plan must be submitted for review by the Security and Risk function of MasterCard. All procedures must meet MasterCard requirements and MasterCard Security and Risk function has ultimate approval.

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