Sometimes a mistake, an accident, or forgetting something can also lead to some interesting discovery or invention. There are several things which have been invented due to these reasons. The invention of payment cards is one such interesting story.
Once, Frank McNamara, a famous businessman went to dine at a New York restaurant. After enjoying the meal, he realized that he has forgotten to carry his wallet. This was a major embarrassment for him. Though his wife was with him, who paid the bill and saved further embarrassment, McNamara was not able to get over this. He decided to do something about it so that no one ever faces a similar situation. He thought of creating a multi-purpose charge card.
In 1950, a year after that incident, McNamara went to a restaurant with his partner. When the waiter brought the bill, he paid the bill with a small card, made out of cardboard with some words printed on it. That card is what we know today, as Diners Club Card. That was the first card transaction, which paved the way towards the plastic currency.
Since that incident (or, accident), multi-purpose cards have come a long way. This method of payment through a card became a fashion statement and quickly adopted by others. The first year saw over 10,000 people opting for the card, which grew to over 42,000 by the end of 1951. And by the mid-1960s, the Diners Club had over 1.3 million members.
But the story does not end here. Soon IBM launched the first magnetic stripe credit card, again on cardboard. The next milestone was in the year 1970 when American Express launched the first plastic magnetic stripe cards, which could be used to transact directly with the banks and airport kiosks. This created a big boom. Within no time, the bank issued 2.5 lakhs cards.
By 2003, people started to prefer making payments through magnetic stripe credit and debit cards, as compared to cash. The evolution process continued, and magnetic stripe cards were replaced with chip cards, which are more safe, secure, and quick. These cards also comply with the EMV (Europay, MasterCard, and Visa) norms. Companies like Visa and MasterCard are leading the way to develop standard guidelines and protocols to enable CNP (card not present) transactions, which has further fuelled this growth in the last decade.
The prepaid cards benefit the business in more ways than one.
Prepaid cards are not beneficial only to the companies. They offer several benefits to the employees as well. Some of these benefits are listed below
When a company transfers some funds to an employee’s account or gives them cash or credit cards, it creates a debit entry in the employees’ imprest account. When the employee makes a payment on behalf of the company, he has to produce bills or receipt of the same to get a reimbursement or get credit balance in his imprest. For this, the employee has to keep all the bills carefully. Losing a bill can result in a personal loss for the employee.
But with a prepaid card, since all transactions are recorded automatically, there is no need to keep the receipts. The employee can visit the dashboard, take a print of expenses and submit a travel report.
Travelling with cash can be really risky. The cash may get lost or stolen. And cash once gone, is gone forever. This creates an undesired burden on the employee. Also, using cash for making large payments can create audit problems.
But with prepaid cards, there is such risk. In case, a prepaid card gets lost or
stolen, the card can easily be blocked and a new card issued.
Since all prepaid cards come with a pre-set limit on daily expenses and total; expenses, there is no risk of overspending. As soon as the limit is reached, the person is not able to make any further transactions. This helps him limit the expenses. However, if required, the employee can request the company to increase his limit anytime.
The prepaid card can easily be used to make a purchase at retail outlets or even while shopping online. It can also be used to withdraw money from ATMs. And funds can be transferred easily and anytime. If there is any sudden requirement of cash, funds can be transferred quickly so that the employee does not have to use his personal funds or borrow money from someone.
While using prepaid cards, the person does not need to have a bank account. The employee is just using the company funds in a safe and secure manner.
Prepaid Cards can significantly impact the sales and marketing efforts of telecom companies. The various ways by which prepaid cards help boost revenue are given below:
To a customer, it gives an impression that the company values them and their business. And it’s important that the company also gives them something meaningful in return. And a prepaid card is a good idea. The customer also realizes that they are receiving a quality reward.
Many companies incentivize and reward their employees for achieving their targets by issuing prepaid cards. They prefer to load cash in their prepaid cards, rather than giving them some gifts, which may not be of any value to them. Loading money gives the employees the flexibility to use the amount, the way they want.
The story of prepaid cards may have started with an embarrassing experience, but it has changed the way companies manage their expenses. Using a prepaid card makes things much simpler, quicker, convenient, and transparent for the companies. Even the employees benefit a lot, as they don’t have to worry too much about carrying cash or worrying about safely keeping the receipts of all expenses. A prepaid card makes things better for both parties.