The Application of Prepaid Cash Cards for Consumers

Are you worry that you will get yourself into debts for using credit cards? That will not be a problem now because there are two good alternatives for credit cards, which are debit cards and prepaid cash cards. Both of these cards offer the same ability as credit cards to purchase products and services.

Many people might think that prepaid cash card is the same as debit card. However, there is a major difference between them. Prepaid cash cards can be loaded with money and used as a debit card, but it is not linked to a bank account with an overdraft facility. We cannot borrow money with a prepaid card; we can only spend the money we have loaded onto it.


Therefore, by using prepaid cash card, there is no risk of running into debt as it has no credit or overdraft facility. Money can be loaded onto a prepaid card by cash at a bank, Post Office, at Payzone or PayPoint terminals or via a bank transfer. However, not all prepaid providers offer all of these loading options, and users need to find out when choosing a prepaid cash card.


Prepaid cash cards can be used for the following purposes:

1) Shopping

It can be used to shop and purchase items as long as the card is accepted at the retail shop. It can also be used for internet shopping and telephone purchases. Prepaid cash card is safer to be used compared to carrying cash around. It also enables us to spend according to our budget.




2) Bill payment

It can be used to pay for our rental, utilities expenses, insurance payment, car payment, and mobile phone’s bill. shop & pay bills online, make hotel & car rental reservations, and purchase goods & services wherever Visa or MasterCard is accepted. Besides that, it is more secure to use prepaid cash card rather than carrying cash around and it enables the person to start spending according to a budget as well.

3) Cash withdrawal from ATMs

Prepaid cash card can be used to withdraw cash from ATM at anytime.



4) Transfer of Money

Some prepaid cash cards provide the service of sending or receiving money via bank wire transfers, between two cards.

5) Toll payment

For example, Touch and Go card can be used at all highways in Malaysia, major public transports in Klang Valley, selected parking sites and theme park.


6) Replacement for travellers’ cash

Carrying prepaid cash card as we travel is much safer than carrying around large amounts of cash.


Here are the websites relevant to prepaid cash cards:

• Advantages of Prepaid Cash Cards

• MasterCard Gift, Travel and General Purpose Prepaid cards

Electronic Currency

What is electronic currency?

Electronic currency can be known as e-money, electronic cash, digital cash, digital currency and digital money. In other words, electronic currency is referring to money or scrip which is exchanged electronically with the use of computer network, the internet and digital stored value systems. Examples of the systems used to transfer electronic currency are Electronic Fund Transfer (EFT).

Electronic Fund Transfer (EFT)
This is a computer-based systems used to perform financial transaction electronically. It is a system that transfers money from one bank account directly to another without any paper transaction being done. The most common program that use electronic funds transfer is direct deposit where the payroll of an employee’s is deposited straight into their bank accounts. Besides that, the transfer of funds is done through an electronic terminal, including credit card, ATM, Fedwire and point-of-sales (POS).

Advantages of electronic currency:

Convenience

With the development of E-currency, it makes customers' life more convenient as there is no need for cash to be drawn out for any payment. Now, it is convenient to load the cash into a credit card size like “smart card” which is easy to be carried anywhere. Besides that, it also provides privacy for customer to shop online using credit card rather than original bank account. Banking industry has now adapted this program, which offers customers the ability to transfer funds, purchase stocks, contribute to their retirement plans ( for Canadian) and various services without the need to hand over physical cash or checks. It also makes it more convenient for the customers where they do not need to wait in line for hours and hours.

Security

With the use of E-currency, it makes it safer in this unpretictable world. As mentioned previously, users do not need to bare the risk of being robbed for carrying physical cash. With highly developed technologies such as security codes, the users' personal information is protected. As the E-currency is transfered in the internet, it is impossible to crack the digital sign with those developed technologies. Besides that, the electronic currency information is encrypted so it is impossible for the digital data to be read by unauthorised people.

Disadvantages of electronic currency:








Fraud

Although digital cash have some benefits, yet; it have disadvantages too. One of the disadvantages is fraud, such as incidents like bank accounts being hacked and illegal retrieval of banking records which can lead to a widespread invasion of privacy and identify theft.

Technology failure

Technologies may be very advance but they will definitely have some weakness. Reliance on technologies may lead to loss of record due to the power failure or incompetent software. All these problems may cause a major setback in the introduction of e-currency.

Privacy

Users may fear to use electronic currency such as debit card. This might be due to the reason where they are afraid that their privacy will be interfered and their private information will be widely spreaded.

Examples of those websites that allow people to do e-currency tradings are MG E-currency and JT GOLD.com.

Reference:

http://www.businesspme.com/uk/articles/trade/90/Electronic-money---advantages-and-disadvantages.html

http://www.iit.edu/~peacjen/cs485/ecash2.htm

Credit Card debts : Causes and Prevention

Credit card is a plastic card with a magnetic strip or embedded microchip that is connected to a credit accout and can be used to buy goods or services. It provides extra financial freedom. If it is used properly, it is a convenient and great budgeting tool. If credit card is being used inappropriately, it can be a start of your nightmare and cause stress in your daily life.


Causes of Credit Card debts

1. Unemployment
High credit card debts can happen when main breadwinner of household losses his job but monthly expenses are not being cut down. The family will be forced to use credit card to pay utilities, groceries, and etc.It then leads to a rise in debt.

2. No saving cushion
We often hear the phrase of “having enough savings for a rainy day is always a worthwhile investment”. People should save at least 4-6 months of living expenses to use it when unfortunate tragedy happens. For example, if you lose your job on 1st June, you shall have enough money to maintain your current lifestyle until 1st December of that year. Therefore, during these unfortunate events, people without any saving need to use credit card to pay for their daily expenses.

3. Poor money management
A poor money management plan causes many people to accumulate lots of debt. They may not have monthly spending plan or do not keep track of their monthly expenses. Thus, they are unaware of where their money has been spent. They may spend hundreds of dollar to buy unnecessary items but they do not realise it, thus leading to high credit card debts.

4. High medical expenses
When family members suffer serious illness, credit card may be the only source of fund to pay off the unpaid balance of medical expenses when health insurance cannot cover the whole medical bill.

Prevention of Credit Cards debts

1. Manage your finance
Credit card users should determine their monthly income and needed expenses. As part of these monthly expenses, they should figure in 5%-10% of their income for emergencies. They can save this money in short term saving. Having some saving can avoid using credit card for emergency payments.

2. Always pay on time
Paying on time is one of the best solutions to avoid debt. People who can control their finance, their money and manage their card payment schedules are rarely to incur high credit card debt.

3. Cut your cards
Credit card users should cut their extra cards so that they are not tempted to use them. They should only keep the one with lowest interest rate for emergency usage.

4. Shop for the right card
This is an important initial step regarding credit card use. We should choose the credit card with no or very low fees and low interest charge.

5. Self control and discipline
People who use credit card should have good self control and self-discipline in spending. They should control themselves by limiting their credit card amount to avoid overspending.

Mobile payment systems in Malaysia: Its potentials and consumers' adoption strategies

Mobile payment systems in Malaysia: its potentials and consumers’ adoption strategies

Mobile payment (M-payment) is a point-of-sale payment made through a mobile device, such as cellular telephone, smartphone and personal digital assistant (PDA). The mobile payment can be used to purchase digital goods and physical goods.
There are four primary models for mobile payments:
• Premium SMS based transactional payments
• Direct Mobile Billing
• Mobile web Payment (WAP)
• Contactless NFC (Near Field Communication)

For more explaination about these four models of mobile payments, you can visit the website below:
http://en.wikipedia.org/wiki/Mobile_payment

The use of mobile payment in Malaysia has been increasing. This is because it provides convenience to users such as reducing the need of coins and cash in small transactions.
For Premium SMS based transactional payment, users use premium SMS to download wallpaper, music, ring tones and mobile games. Each SMS sent is being charged. It is a convenient way to make payment.

Nokia and Visa have teamed up to provide credit card users in Malaysia a chance to buy items using mobile phones. The system allows consumers to swipe a phone accross a credit card scanner, which then read the credit card information on a microchip that is embedded in the handset. Consumers then authorise the purchase by pressing a butoon on the handset. Adoption of mobile payment system helps users to save their time queuing up for bill payment at the counter .

For more information about mobile payment, you can refer the website below:
http://www.mobile-money.com/index.html



Mobile Money is a PIN-based Mobile Payment Solution to address the limitations and bottlenecks created by cash, cheques and credit cards. It allows registered users to pay for goods and services at anytime, anywhere using only a mobile phone with 6-digit security PIN via SMS. In order to pay using Mobile Money, a shopper must have either a saving, current or credit card account with participating banks. It functions like a credit card if shoppers apply for a “Pay by Mobile Phone” credit card account. For example, Hong Leong Mobile Credit Card. Shopper will receive the bill from bank by end of the month.

For more information about the PIN-based Mobile Payment, you can visit the websites below:
http://www.neowave.com.my/mobilemoney_overview.asp
http://www.hlb.com.my/mm/ptrans1.html

Maybank and Maxis launched a Mobile Money to allow shopper to transfer money and pay bills by using mobile phone. The services that they offer include electronic cash transfer to other Maxis users, purchase downloads form myzone, pay for Maxis bills, top up Maxis prepaid card and purchase products and services such as cinema tickets and pizzas.

This website is about M2uMobile which was launched by Maybank and Maxis.
http://www.maxis.com.my/personal/mobile/vas/m2u/m2u.asp

In order to encourage consumers to use mobile payment system, there are several strategic ways can be implemented:

1. Educate consumers about mobile payments, how to use it and introduce its functions ( e.g bill payment, mobile purchase)

2. Provide more security collaborate solutions for mobile payment to increase consumers' confidence and satisfaction in using mobile payment.

3. Collaborate with more banks and companies to widen the ability to pay via mobile. It can also increase customers' loyalty and satisfaction.

4. Companies reward the consumers by giving gifts at certain level of purchase or by points redemption. For example, Hotlink gives extra credit and redemption points to active customers who made certain amount of calls. Customers can also accumulate the points to redeem free air time or SMS.