Viseca currently has over 200,000 active prepaid cards in circulation and PostFinance services more than 70,000 prepaid cards. Other major Swiss payment card issuers including Cornèrcard, Cembra Money Bank, Bonuscard, Swisscard, UBS and Swiss Bankers also offer prepaid cards.
What is a prepaid card?
A prepaid card is a debit card which is attached to a special prepaid card account. This account must be “loaded” by deposits paid into the account. When the card is used to pay for purchases or to withdraw money at automated teller machines (ATMs), the money is debited directly from the prepaid account.
Unlike conventional debit cards which combine ATM card and checking card functionality and (in Switzerland) run on the Maestro, Postcard or V Pay payment networks, prepaid cards run on credit card networks, and can be used to settle payments at any point of sale (POS) terminal attached to the corresponding credit card network. Prepaid cards also have a card number similar to the card numbers emblazoned on credit cards. This lets you use them to make card-no-present purchases online, in-app, via eligible mobile wallets, over the phone, by mail or by fax.
How are Swiss prepaid cards different from credit cards?
Unlike credit cards and charge cards, which are used to make purchases or cash withdrawals on credit that must then be settled at a later date, prepaid cards are attached to accounts from which money is debited as the card is used.
Because prepaid cards are debit cards and not credit cards, they do not come with a line of credit and you cannot carry a balance on a prepaid card. A prepaid card can only be used as long as there is sufficient money in the account to cover the cost of a transaction.
Some prepaid cards are only issued to individuals who hold bank accounts, while others can be used as a stand-alone solution without an additional bank account. Card issuers which do not require prepaid cardholders to have bank accounts include Cornèrcard, Viseca, Paysafecard (Yuna To Go), Bonuscard and Valora (ok.- Prepaid Mastercard).
What do Swiss prepaid cards cost?
Swiss issuers generally charge annual fees for prepaid cards, as they do for credit cards. Typically, the annual fee for prepaid cards does not exceed 50 francs per year, although there are exceptions to this rule. The annual fee is often waived for young adults and students, which may not be eligible for credit cards.
In addition to the annual fee, prepaid card issuers charge a fee (known as a loading fee or upload fee) every time money is deposited into the prepaid card account. This loading fee makes using prepaid cards expensive compared to using conventional debit cards and credit cards. Loading fees vary between issuers and may be charged as a flat fee or as a percentage of the amount deposited into the prepaid account:
- Swiss Bankers Travel Cash: 1.5% of deposited amount
- Cornèrcard: 2 francs per deposit
- Credit Suisse: 1% of deposited amount
- Viseca: 1% of deposited amount (minimum fee of 5 francs per deposit)
- Valora ok.- Prepaid Mastercard: 4% of deposited amount (minimum fee of 2 francs per deposit)
- wow Visa Card by Swisscard: 4% of deposited amount (minimum fee of 5 francs)
- Yuna To Go: 6% of deposited amount
- PostFinance Mastercard Value: No loading fee
Depending on the prepaid card, funding prepaid card accounts can be expensive. The credit card and prepaid card comparison tool on moneyland.ch lets you enter the number of times that you expect to load your card every year. Simply select the “Prepaid” filter to limit results to prepaid cards. Loading fees are clearly shown in the “Upload fees (prepaid cards)” field in the cost breakdown corresponding to each card.
Foreign currency transactions and cash withdrawals
Prepaid cards have cash withdrawal fees which match the cash advance fees applicable to credit cards – which is ironic considering that you are simply withdrawing your own money and not getting a loan (as is the case with credit card cash advances). Cash withdrawal fees apply in Switzerland as well as abroad. Avoid using prepaid cards to withdraw money at ATMs if at all possible, as doing so is expensive. The cash withdrawal fees of Swiss prepaid cards range from 2.5% to 3.75% of the deposited amount, with minimum fees of between 5 and 6 francs per withdrawal (in Switzerland) and up to 10 francs per withdrawal performed outside of Switzerland. Conventional debit cards (Maestro, Postcard) provide a much cheaper alternative for cash withdrawals, with all Swiss banks offering free withdrawals at in-network ATMs and many offering free withdrawals at out-of-network ATMs in Switzerland as well.
When you use Swiss prepaid cards to make payments or withdraw money outside of Switzerland, you pay foreign transaction fees just like you do when you make foreign currency transactions using credit cards. Depending on the card issuer, foreign transaction fees can be as high as 2% of the transacted amount. In addition to the foreign transaction fee, the currency exchange spread represents another significant cost (as much as another 2% of the transacted amount). The moneyland.ch prepaid card and credit card comparison accounts for both foreign transaction fees and currency exchange spreads.
The comparison tool does away with the commonly heard claim that prepaid cards are fundamentally cheaper than credit cards. On the contrary: depending on the user profile, there is almost always a credit card that is cheaper than the cheapest prepaid card.
Contrary to popular belief, using prepaid cards can be more expensive than using credit cards, as the credit and prepaid card comparison shows. Annual fees, loading fees, foreign transaction fees, cash withdrawal fees and other possible fees must all be considered when comparing cards or choosing the cheapest way to pay.
What are the advantages of prepaid cards?
Prepaid cards provide somewhat less than the average credit card. Prepaid cards are generally not embellished with bonus and insurance services. You can see a performance overview of the cards on the results page of the moneyland.ch card comparison tool, where you can sort the prepaid cards according to their services as well as their costs.
The primary advantage of prepaid cards is that they can be obtained without a credit check because they are debit cards rather than credit cards. This makes them accessible to adolescents, young adults and people who do not meet the income or creditworthiness requirements necessary to obtain a credit card.
Another benefit of prepaid cards is that they provide greater security because in the event that the card is appropriated and misused, the theft would be limited by the amount of money in the prepaid account. They also provide a solution for individuals who do not want to use credit but need a payment card which works when credit card payment is required.
Additionally, some Swiss prepaid cards come with rewards programs, complimentary insurance coverages and other benefits which you typically get from credit cards but do not get with debit cards. The benefits are often more limited than those which you get with credit cards, although there are exceptions.
What are the disadvantages of prepaid cards?
In addition to the added cost posed by the loading fee, there are other incidental disadvantages if using prepaid cards rather than credit cards. If you rent cars when you travel outside of Switzerland, it is important to note that some rental car agencies in some countries may not accept prepaid cards in place of credit cards for payment of the car rental deposit. Prepaid cards may also be rejected for payment of subscriptions (online subscriptions or memberships, for example) because they do not provide a guaranteed source of ongoing payment for merchants.
Prepaid cards for young people and students
Prepaid cards are particularly popular among young adults and students, partly because many banks offer prepaid cards with no annual fee to customers aged 12 or 14 years old. Credit cards are only available to adults aged 18 years old or older and require credit checks.
By targeting teenagers and young adults with prepaid card marketing, financial services providers hope of converting them from away from cash (which is anonymous and free of fees) to using payment methods which generate revenues by way of fees and harvested data.
Even school teachers have participated in the marketing of prepaid cards, advocating them as a means of protecting young people from living above and beyond their means. According to prepaid card advocates, parents can more easily control their children’s spending by gaining the ability to remotely load or freeze accounts as they deem necessary.