Prepaid solutions:
- Provide consumers, businesses and governments with the efficiency, security and flexibility of electronic payments without involving a credit card
- Do not have to be tied to a bank account, improving financial inclusion
- Are a less expensive and more secure option than cheques
Open - Loop
A prepaid solution tied to a payment network
Closed - Loop
A prepaid solution that can only be used at certain retail or commercial locations
Open Loop Prepaid Characteristics
Large Acceptance Footprint
Flexible Use
Regulated
Protected
Can be accepted online and in store – anywhere the payment network is accepted
Can be single load or reloadable
Adheres to all applicable consumer protection, AML and privacy requirements
Maintains the same fraud and loss protections offered by credit card networks
Canadian Prepaid Value Chain
Card Holder
- Corporate Card
- Personal Card
Card Acquisition Point
- Canadian Tire
- CIBC
- Loblaws
Program Manager
- Berkeley
- Blackhawk
- InComm
- Karmic
- Stack
Service Providers
- Carrot
- Mint
- Paytm
Issuing Processor
- Carta
- FIS
- Galileo
Issuing Bank
- BMO
- Peoples Trust
- RBC
- Scotiabank
Payment Network
- Amex
- MasterCard
- Union Pay
- Visa
Merchant Processor
- Desjardins
- Moneris
- TD
How do open loop prepaid solutions work?
Open-loop prepaid solutions are loaded with funds before the consumer needs them.
Open-loop prepaid solutions look and function like traditional credit and debit cards at the point-of-sale and offer the same fraud and loss protections offered by the payment network with a significant difference — they access funds that have been pre-loaded for a consumer by a consumer, by a government or by a business.
The funds are immediately available to the consumer to make purchases at stores or online, and in many cases funds can be withdrawn from an ATM. A financial institution holds the funds until accessed.
What are single-use versus reloadable prepaid solutions?
Single-Use Versus Rreloadable
Single-load prepaid solutions are purchased and loaded with funds for one-time use. The most common examples include an open-loop gift card or a rebate or promotional card. Once the funds are spent the payment solution is discarded. No consumer information is collected to purchase or use a single-use, open-loop prepaid product.
Reloadable prepaid solutions are a financial tool that can be purchased and loaded with funds on a recurring basis. Funds can be reloaded through a direct deposit, online transfer or “top-up” of cash at a retail location. Reloadable prepaid solutions require registration of personal information from consumers to adhere to banking regulations. Registering also ensures that the prepaid solutions can be replaced if lost or stolen per the payment network’s zero liability policies.
