Prepaid Debit Card Reviews, Complaints, Etc

Author: Chris Warren

Qantas Lets Fliers Earn Miles With Prepaid Card

The marriage of airline miles and plastic has lasted for a long time. For years carriers like Southwest Airlines, American, and United have aggressively marketed their own branded credit cards, using the promise of free trips to exotic locales to encourage travelers to charge everything from their rent to a cup of coffee on their credit cards.

Given that prepaid debit cards have traditionally been the domain of the unbanked – not exactly a group of frequent fliers – airlines have not pushed their use as a way to earn points. In Australia, however, that has changed. Qantas Airlines, that country’s major carrier, is now pushing its Qantas Cash card, a prepaid debit product.

The way the card works will be familiar to anyone who has used a prepaid debit card. Like similar products in the U.S., the Qantas Cash card requires users to load money upfront before they start spending. Once cash is in the account, consumers can use their Qantas Cash card wherever MasterCard is accepted. Because it serves as the membership card for Qantas frequent fliers, it can sometimes even serve as a boarding pass.

But the big attraction with Qantas Cash is that, like a branded airline credit card, it allows users to rack up points, which they can redeem for travel or other products. For purchases Qantas Card holders make in Australia, for instance, they earn one point for every $2 they spend. For purchases made internationally – or even from websites outside of Australia – cardholders earn one point for each $1 spent. For really serious travelers, the Qantas Card has another perk. Anyone planning a trip can purchase currency to be loaded onto their Qantas Card at a currency rate that is locked in when they buy it.

A quick search of U.S. carriers did not turn up any similar points-earning prepaid debit cards. With prepaid cards becoming more mainstream each day, it seems only a matter of time before demand for them here takes off as well.

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May 14, 2014
Job Corps Debit Card Use Squanders Millions

A new report from the Department of Labor’s Office of Inspector General concluded that prepaid debit cards issued by the Job Corps were misused to the tune of millions of dollars. The Job Corps is a federal agency that provides vocational training and education for young people, especially those deemed to be disadvantaged.

As part of the mission to better prepare young people for employment, the Job Corps picks up the tab for certain travel expenses, including checked baggage fees and meals. In order to cover those expenses, the Job Corps issues prepaid debit cards to the young people it assists. In the period between July 2011 and June 2012, the Job Corps purchased over $21 million via prepaid cards in order to pay for travel and other expenses for young people traveling to and from 125 Job Corps centers across the country.

The Office of Inspector General’s report details widespread misuse of the cards distributed by the Job Corps. In particular, the audit found that the prepaid cards were being used to purchase personal items and to pay for unnecessarily expensive travel. In addition, the report found that hundreds of thousands of dollars were squandered because the government paid excessively high fees associated with prepaid cards and because numerous cards had balances that remained unused. In total, the Office of Inspector General determined that $5.1 million in Job Corps funds had been misused.

The investigation was launched in May of 2012, after allegations surfaced that a Miami Job Corps employee had used hundreds of prepaid cards meant for young people to make personal purchases. The audit was launched in order to answer this question: Were all student travel expenses claimed by Job Corps centers allowable and in accordance with applicable policies and requirements?

The answer to that question was a resounding no. The Office of Inspector General report recommends that the Labor Department’s Assistant Secretary for Employment and Training, who oversees the Job Corps, require new internal controls to ensure that public money is no longer misappropriated.

May 9, 2014
Data Breach Forces Target CEO Out

It was just too much to recover from, in the end. On May 5, Target announced that Gregg Steinhafel, the company’s president, CEO and chairman of the board of directors, would resign immediately. The move ended a three-decade-plus career at the retailer as well as a months-long effort to lead Target beyond the many problems that crept up after a data breach impacted tens of millions of customers last December. Target’s chief financial officer, John Mulligan, was appointed interim president and CEO.

In a statement that lauded Steinhafel’s long tenure at Target, the company’s board made it clear that it was time for a change. “After extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target,” says the statement. In its statement, Target also said that Steinhafel not only led the response to the data breach but also held himself “personally accountable and pledged that Target would emerge a better company.”

Some observers believe that, even though his continued leadership proved unworkable, Steinhafel has done just that. In an article on MarketWatch, writer Philip van Doorn said it was ironic that Steinhafel was being ousted because of the ongoing impact of the data breach even though Target is “leading the way in upgrading payment security for consumers.”

Indeed, as van Doorn points out, Target announced last month that its efforts to implement far superior chip-and-PIN technology for its store-branded credit cards will be completed by early 2015. “In addition to implementing chip-and-PIN verification for its store-branded cards, Target will complete the installation of devices for the use of chip-and signature and chip-and-PIN verification for non-Target credit cards in September, with the software in place in early 2015,” writes van Doorn.

May 6, 2014
Bitcoin Debit Card Launched

The digital currency bitcoin has been an object of fascination, skepticism and confusion. That confusion (What is it? How do you use it? What’s it worth? Who accepts it?) has been a huge hurdle to more widespread acceptance and use of bitcoin.

In an effort to help the currency make that jump into the mainstream, last week bitcoin storage company Xapo launched a debit card. “In the spirit of bringing bitcoin to the masses, we are proud to announce the Xapo Debit Card – the first bitcoin debit card that allows users to spend bitcoins just like cash all over the world, right from their Xapo Wallet,” the company declared on its blog.

In theory, it sounds like an interesting idea. By releasing a debit card, Xapo lets bitcoin enthusiasts move from the realm of online purchases to actually buying dresses and cereal in brick and mortar stores. On a practical level, it works like this: every time someone makes a purchase with their Xapo Debit Card, a certain amount of bitcoin the cardholder already has in their account is sold off in order to cover the purchase. How much bitcoin has to be sold depends on the current value of bitcoin and what currency the purchase is being made with.

When this story was initially reported by Gigaom.com, Xapo claimed that it had inked a deal with MasterCard. That would have been a major development because it would have meant that bitcoin could be used wherever MasterCard is accepted – which is a lot of places worldwide. The story was updated with the news that Xapo actually had not secured any sort of partnership with MasterCard.

Observers quickly noted other problems with the new Xapo Debit Card, which the company said would be available in two months. One blogger, Dan Seitz, noted the absence of any fee information, which is obviously a big problem for any consumer thinking about getting a debit card. Seitz also noted the issue of bitcoin’s fluctuation in value. “Considering bitcoin’s tendency to whipsaw wildly in value, there’s a very real chance that you might not be able to cover some purchases,” writes Seitz.

May 1, 2014
Prepaid Card Use Continues To Grow

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April 30, 2014
Plastic For Pot Purchases

In the beginning, it was all about green. Yes, when Colorado legalized the sale and use of marijuana for recreational use at the beginning of 2014, most people immediately thought of the leafy green plant that had previously been illegal to smoke or eat.

But once the reality that the availability of recreational marijuana presented a multi-billion dollar industry sunk in, a different kind of green became just as important: money. And that turned out to be a problem. Although marijuana sales were deemed legal in Colorado, the federal government maintains its prohibition on the sale and use of pot. Because of that, and because of the reluctance of big financial services companies like Visa and MasterCard to anger the feds, cash became king for marijuana purchases. But the green for green transactions have undoubtedly put a damper on business; customers who have to carry dollar bills frequently buy less than they would if they could use a credit or debit card.

But the use of plastic for pot purchases seems to be gaining momentum. Earlier this year The Denver Post reported that Visa and MasterCard were leaving it up to local merchant banks to decide whether or not to process marijuana purchases using credit and debit cards bearing their logos.

Then on April 15 MJ Merchant Solutions, a Denver-based provider of electronic payment processing services to businesses, announced the release of an end-to-end solution for recreational and medical marijuana dispensaries to accept credit, debit and prepaid debit cards. According to MJ Merchant Solutions’ director of marketing, Kenneth Cade, this new rollout will be a boon to marijuana retailers. “Credit card processing will reduce the number of cash transactions, saving dispensaries in labor costs, reducing the risk of theft and loss, as well as automating, expediting and making the check-out process more convenient for the consumer,” he says.

Not coincidentally, this move is also about green. According to Cade, medical marijuana dispensaries conducted $2 billion in cash transactions, an amount that doesn’t include recreational pot use. MJ Merchants Solutions expects there will be $50 billion in legal marijuana sales over the next six years. By making a move to become the payment processor of choice in the marijuana world, the company undoubtedly hopes that a lot of that green will be coming its way.

April 18, 2014