Question

What are stored-value cards and how they are used in electronic commerce

Answer 1

Stored-value cards are a type of cards where the amount is stored directly on the card itself, not in a financial system i.e it is like a repaid card. People purchase such cards having a specific amount on the card already. These are available at most stores and since they have a magnetic stripe, they can be used anywhere credit or debit cards are swiped.

In addition to making general purchases, stored value cards are commonly used for gifting purpose(gift cards) or to ensure that the spender has a limit.

Similar to gift cards and prepaid cards, once the value on the cards are exhausted it can simply be discarded or reloaded with more money. Stored-value cards has a strong expense control method. Some stored-value cards can be monitored with online technology, as a result it makes them solid options for guardians who want to give their children the freedom of cash but also want the to be able to track their spending.

But these stored value cards are riskier than other options.