Single-source vs multi-source

Rowan —  July 6, 2011 — Leave a comment

If there was a prize for the industry with the most acronyms and buzz words it would go to the prepaid world. One of the common set of buzz words is “single source” and “multi source”. The difference is quite small, but the implications large.

A single source card is funded by a single entity and only that entity. An example would be an insurance replacement card. The policy holder receives a card from their insurance company. When paying out a loss, the insurance company loads value on the card. Nobody else ever loads value on the card and in particular the cardholder can’t themselves load any value on the card. Nearly all the time the payment channel is the same. In this case EFT. Single entity. Single source.

A multi source card can be funded by multiple entities and through multiple channels. A consumer prepaid payroll card can work in this way. The cardholder’s employer can EFT funds onto the card. The cardholder can go to a retail outlet and deposit funds onto the card. A friend of the cardholder could transfer money onto the card to pay for dinner. Multiple entities. Multiple channels.

It is the compliance issues that make for the biggest difference between the two. Single source cards have a lower fraud and money laundering risk. There are seldom any cash deposits with all value loaded on the card coming from an electronic, trackable, KYC’d channel. Multi source cards on the other hand have a higher fraud and money laundering risk as funds can come from anywhere, sometimes in non-electronic channels and the funder is seldom the programme owner.

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