Do you really need cash cards?: Business Line,

Cash cards are useful if you have no debit or credit card or even Internet banking.

In an age where we already use credit or debit cards and even Internet banking for online transactions, of what use is a prepaid cash card?

Given the restrictions on such cards, they come in handy only if you are wary of security breaches in online transactions or when you want to restrict spending habits of, say, your kids. It is hardly necessary in any other case.

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WHAT THEY ARE

A prepaid cash card is a card on which you load some amount of money. You then use it to make payments much as you would with a debit or credit card. Once this amount is exhausted, you either discard the card, or top it up with more money and continue.

Cash cards come in specific denominations such as Rs 50, Rs 250, Rs 500 and so on, up to a maximum of Rs 10,000. They can be one-time use only, or for multiple payments. Recharging of cards can be done online or by visiting the relevant service centres.

USAGE

These days, cash cards are usually meant only for online transactions. These can take the form of bills such as electricity and water, mobile and dish connection recharges, booking railway, flight or movie tickets and so on. Some allow you to shop at specific portals.

Among the more popular cash cards around are the Itz Cash Card, Done Cash Card and Oxi Cash Card. The noQ24x7 card from Itz Cash, for example, is a payment mode for bills ranging from ICICI Lombard insurance premiums to travel bookings on Cleartrip. This card cannot be used at shopping Web sites, unlike the Done card. But it can be used to shop at select shopping portals.

PROS AND CONS

The biggest advantage of a cash card is that you don’t need a bank account to buy one. And if the card allows only utility payments, you don’t even need to complete Know Your Customer norms.

Since none of your bank or card details are provided, a security breach and stolen identity ceases to be important. You can block these cards too. Validity is also only for six months from date of first usage, further reducing the fall-out in case you lose the card.

On the negative side, this short period requires you to make frequent top-ups. Upper limits on the cards also restrict the number of times you can use it before you run out of money on the card. You cannot also automate payments with these cards.

Each card has tie-ups with specific companies and can be used only with them. For instance, most cards allow electricity payments only for the Mumbai or Delhi regions. So if your bill or shopping requirement falls outside this list, its back to queues or Internet banking. These cards cannot be used to withdraw cash at ATMs, or swiped at physical merchant outlets.

WHEN TO USE

Go for a cash card only if you are suspicious of security online. The extent of misuse is limited since cash cards are distinct from your bank account, are of short validity periods and cannot go over Rs 10,000 in value at a time.

True, virtual credit or debit cards circumvent the security problem. But if you are wary of any and all online use of debit or credit cards, virtual cards aren’t of any help – you need to generate a virtual card using your existing card.

The other time to use it is when you want to restrict spending of say, your kids. So you can give them prepaid cash cards to buy movie tickets, recharge phones, take out magazine subscriptions, but prevent them from over-indulgence. Finally, unlikely as it might be, cash cards are useful if you have no debit or credit card or even Internet banking.