How does a prepaid card work?
Money is loaded onto the card before it is used, and the card can spend only that balance. Visa describes its prepaid cards as pre-loaded with funds, with spending limited to the loaded value. Reloadable cards can be topped up when the balance runs low, while disposable ones work like an electronic gift voucher and are discarded once spent. The EU Interchange Fee Regulation defines a prepaid card as a payment instrument on which electronic money is stored. At checkout, a prepaid card looks like any other card of its brand.
Why does it matter?
Prepaid cards reach customers that other cards do not. Visa lists travel cards, gift cards and convenience cards for people who may not qualify for a traditional debit or credit card. Cardholders are not always sure of their balance, and Visa’s Partial Authorization Service is meant to address declines due to insufficient funds by letting issuers approve part of the amount. Visa says all its prepaid issuers must support it. As an illustrative example: a customer with 35 euros on a prepaid card places a 50 euro order. Without partial approval the payment is declined. With it, 35 euros is approved and the customer pays the other 15 euros by another method.
What are the limits?
Prepaid cards suit one-off payments more than repeat billing, because a renewal fails once the balance is spent. Stripe lets merchants block the prepaid funding type in its Payment Element, but notes that Apple Pay does not support filtering prepaid cards and that the funding type can be unknown. Blocking also turns away genuine customers, so it works best when limited to specific flows.
Where does Omno use it?
Omno routes card payments to eligible PSPs, with card attributes such as issuing country among the routing conditions. The hosted checkout lets a customer choose another method after a decline, and whether partial authorization is available depends on the provider.