Prepaid card users warned on higher costs

By Charlie Weston Personal Finance Editor
Wednesday March 21 2012

CONSUMERS who use pre-paid debit cards to make online purchases have been warned about high charges for using them.

Cardholders can end up paying as much as €11.80 to buy a card, load €100 on to it and use it four times.

Prepaid debit cards are pre-loaded with cash and used like a credit or debit card. They are increasingly popular among cash-strapped consumers who have turned their back on credit cards, but they usually have four or five different fees for using them to make purchases.

These include fees for signing up for the card, charges for topping it up, and transaction charges each time it's used to make a purchase.

The number of firms offering prepaid cards has begun to mushroom, according to a survey by comparison website Bonkers.ie.

It is estimated that there are around 200,000 prepaid card holders, who mainly use their cards to buy flights, download music and book cinema tickets. Simon Moynihan of Bonkers.ie said the different charges mean that the cost of buying something on a pre-paid can be expensive.

The Swirl card emerged as having some of the highest charges.

It costs €5.95 to buy, and there are fees of between €2.99 and €3.99 each time you load money on to it through a retailer.

There is also a transaction fee of between 70c and €2.95 every time a purchase is made.

This means someone who buys a card, loads it with €100, and makes four purchases could end up forking out up to €11.80 in fees.


The card can be loaded through some 800 retailers, but not online, according to Sean O'Mara, managing director of Smart Transfer Ltd.

Mr O'Mara, whose company also issues the Swirl and Payzone cards under licence, said the charging structure reflected the convenience aspect of the card.

The card could be bought and loaded and then reloaded in retail outlets without the need to have a bank account or without having to go online. Mr O'Mara said: "A prepaid card is available to anyone.


"You don't need online access or to have a Laser card. Unlike a credit card there is no high interest rate but we do have pay processing charges to banks."

He stressed that consumers were taking up pre-paid cards in large numbers as they could only spend what they have loaded on the card and could not engage in impulse buying.

The Moneybookers pre-paid MasterCard emerged as one of the cheaper cards. There is a €10 annual fee but no top-up fee and no transaction fee, according to Bonkers.ie.

Some 250,000 credit cards accounts have been closed by consumers since the downturn began in 2008.

People who have Laser debit cards often find that they do not work online. This is why most banks are slowly replacing these with Visa debit cards. With a debit card you can only spend what you have in your bank account.

Other cards are issued by O2, Payzone and by Ryanair.

- Charlie Weston Personal Finance Editor

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