Why isn’t it easy to close your MasterCard/Visa prepaid card to work at certain stores?

Rowan —  April 23, 2012 — Leave a comment

A prepaid MasterCard/Visa card is an attractive product to issuers, corporates and retailers. The reason for this is because these cards can be accepted at any merchant’s point of sale that accepts debit and credit cards. This means the retailer or acceptance points don’t have to perform any system changes to accept these cards.

The difficulty that issuers of prepaid cards face is that the prepaid MasterCard/Visa cards cannot be closed or ring fenced to be accepted at specific merchants. The reason for this is two fold; firstly from a regulatory point of view ring fencing is not allowed on all prepaid cards. Both MasterCard and Visa only allow specific prepaid products to be ring fenced. In a retailing environment these cards are not allowed to be ring fenced. However in insurance or a specific corporate instances the cards are allowed to be ring fenced to work at specific merchants.

The second reason prepaid MasterCard/Visa cards aren’t so easy to ring face is on a technical level. Merchant categories are not always the best way to do this. While you might be able to close off the card to a specific merchant type eg only petrol stations, you cannot use this to close it further to work at only a few petrol stations eg petrol stations in one area. Other methods can be used to ring fence including using the point of sale terminal numbers and names. This however doesn’t work unless there is a proper naming convention used for the terminals. Not all banks follow the same naming convention for terminals and therefore it is extremely difficult to try and ring fence on terminal names.

While it might be difficult to implement, it’s not impossible. Ring fencing is possible for a prepaid MasterCard/Visa card. If it’s necessary, make sure the processor you choose is able to guide you on how best to ring fence the card.


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