According to SBP, Prepaid Card is a payment instrument built around a pay early, spend later model rather than the pay now and pay later models used in debit and credit cards respectively. They are considered ideal for giving unbanked segments of the population a flavor of formal financial products without the need of opening a formal banking account.
“Prepaid cards are being promoted as an alternative to a transaction banking account as its features resemble to those offered in transaction banking accounts. As a result, Prepaid Cards are considered to play an important role for enabling financial inclusion targeting not only at lower-income unbanked individuals but also conventional consumers of traditional banking services,” SBP stated in its press release.
The state bank added that Prepaid Card customers may withdraw cash and transfer funds from ATMs, pay exam fee, shop online and travel abroad without requiring or compromising the debit/credit card, thus limiting the risk associated with the payment cards usage.
“The regulations were developed in line with the international recommendations such as those issued by Financial Action Task Force (FATF) to minimize the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) risks associated with the prepaid cards by covering relevant aspects such as issuance of Prepaid Cards, permissible load limits, restriction on use, dispute resolution and consumer protection besides covering other operational areas. Further in order to promote card usage in the domestic market, financial institutions are allowed to offer prepaid cards through Authorised Agents,” the release read
SBP added that the regulations will enable banks in Pakistan to develop the prepaid cards market in the country in order to provide more payment options to the unbanked population, while at the same time take steps to ensure safety, security and customer protection as per international standards.