About Open-Loop Prepaid Payments

Prepaid solutions provide the familiarity, security, and flexibility of traditional payment instruments at a lower cost and less risk than other forms of payment.

Prepaid solutions:

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



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
Card Acquisition Point
Program Manager
Service Providers
Issuing Processor
Issuing Bank
Payment Network
Merchant Processor

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funds are immediately available to the consumer to make purchases at stores or online, and in many cases funds can be withdrawn from an ATM.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.

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