What credit unions need to know about virtual prepaid cards

We’ve all heard about it, most of us have done it. Purchasing items online that before 2020 we would have just run to the store to pick up is a new American habit that we’re not likely to break. According to Forbes, the year-over-year growth of ecommerce in the U.S. and Canada was at 129% in late April and demographics who had rarely or never made online purchases transitioned to online shopping. 

This means cashless payment methods are becoming more important. Virtual prepaid cards are a particularly good fit with Americans’ new buying habits since these cards offer an easy way to stay in control of a budget while shopping online. Below are some ins and outs of virtual prepaid cards that can help you decide whether they are right for your credit union and your members.

Characteristics of Virtual Prepaid Cards

Virtual prepaid cards work much the same way as physical cards. Virtual cards include card numbers and must be activated and registered before use. They also can provide the same protections as physical cards but with greater convenience for both credit unions and their members. Issuing these cards is faster and more cost-effective than producing physical cards. The buyer provides the recipient’s email address and phone number, and the loaded cards are delivered by email immediately.  

How They Are Used

Virtual prepaid cards lend themselves well to online use and can be used to make purchases over the phone. They register as card-not-present transactions and are generally not usable for in-store purchases or at ATMs. 

With current social distancing practices and a growing trend towards online shopping, virtual prepaid cards make sense. They give users the budgeting convenience, value, and account privacy of physical prepaid cards while being easier to issue. With virtual prepaid gift cards, people can easily and quickly share the perfect gift for special occasions, say thank you, or show support within their communities even when they can’t be there in person.

As a leading provider of payment processing services, LSC is here to serve your credit union. We can help you offer members the ease and convenience of virtual gift cards along with traditional physical prepaid cards. If you have any questions about prepaid cards or need help setting up a prepaid program, please contact us today.