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Serve more members with reloadable, prepaid cards

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Believe it or not, many credit union members don’t have a traditional debit card.

Some find it difficult to maintain balances, while others simply choose not to use a traditional debit card linked to a share draft account. Still others need budgeting tools to avoid overspending on credit cards.

Enter reloadable, prepaid debit cards. While they tend to have more fees than debit or credit cards, according to NerdWallet, reloadable debit cards don’t have the same strict federal regulations, the high interest rates of credit cards, or the overdraft fees of checking/share draft accounts. They offer the safety and security of a Visa product with fast access to funds, without using credit cards or money orders.

“Prepaid, reloadable debit cards allow consumers to stay within their means, while still living their dreams,” says Jamie Conrad, assistant vice president of sales for LSC.

The cards function like ATM or debit cards, but they’re reloadable—removing some of the risk while maintaining convenience. This has been particularly helpful for members of $4.8 millionasset Las Vegas UP Employees Federal Credit Union. About 80% of its members are Union Pacific Railroad employees, who travel with the railroad across the country, says Nektaria Felecos, manager.

“Because our members travel a lot and we don’t have a regular debit card, this card works for that purpose,” she says. In the past, members had to rely on money orders or checks to access their funds while away from the branch. Now they have the convenience of a Visa card for purchases, free bill payment, and access to cash at ATMs.

Features and Functions

Most reloadable debit cards are accepted worldwide at Visa merchants, PIN point of sale (POS) network merchants and ATMs. In addition, generally, they’re:

  • Safer than cash: Visa’s Zero Liability consumer coverage applies to prepaid cards;
  • Secure, and not linked to personal account information at the credit union;
  • Convenient, providing free 24/7 access to balances and transaction history on the member website or mobile app;
  • Easy to load at the credit union, on the member website, the mobile app or via an auto-funding feature;
  • Reloadable on the fly at 50,000 Visa ReadyLink locations;
  • Helpful, offering free member text and email alert notifications; and
  • Time-saving: They remove the need for money orders by offering free bill-pay to members.

How the cards work:

  • A member applies for a card in person at a participating credit union.
  • The credit union is responsible for knowing the member before issuing the card.
  • The credit union orders the card.
  • The card is embossed with the member’s name and shipped directly to the cardholder via U.S. mail, and the member receives it in about seven business days.
  • Themember loads funds onto the card by visiting the credit union or the member website.
  • Members can re-use the same card, which expires within a set timeframe for added security.

“The great thing is, cardholders—no matter what their economic situations—can reload the cards whenever they want, but they don’t pay overdraft fees because they can only spend the amount that’s loaded on the card,” says Conrad.

“It’s very convenient for members,” says Felecos. “Everybody is excited about the card!” Las Vegas UP Employees Federal members receive their cards directly via U.S. mail, so the credit union doesn’t need to maintain inventory on-site.

Often, vendors set all the fees on the cards and handle back-office operations. In many cases, credit unions can earn additional revenue by charging a retail fee for issuing each card. Credit unions don’t have liability or fraud exposure, although custom programs allow the credit union to take on the fraud risk, determine the fees, and earn interchange income. In most cases, standard cards carry a vendor logo, although credit unions have the option to brand cards with their credit union’s name and logo.

Reloadable debit cards allow consumers to shop securely online since they aren’t linked to share draft accounts.

“I see these prepaid, reloadable cards, like our own Everyday Spend card, becoming even more popular in the future,” says Conrad. “They offer members convenience and security while staying within a budget.”

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