Prepaid Card Negative Balance?

bery_451

Hi,

Just want to know is it possible to go on a negative balance on a prepaid card? If yes how is it possible when its not a credit card or debit card with a overdraft facility?

If the customer goes negative on a prepaid card then can the card issuer have the right to chase up the debt by using debt collectors/filing a default or ccj against the customer?

Or is the card issuer does not have the right to chase the debt when the customer did not sign any credit agreement?

Is the customer obliged to pay the negative balance or does the customer has the right not to pay and ignore the negative balance?

What are the rules and regulations regarding Prepaid Cards set by the authorities?

Thanks,

eskbanker

Theoretically it shouldn't be possible to go negative on a genuine non-credit prepaid card but the tone of your post suggests that this probably doesn't cover the full story, in which case it would probably be better to post some facts rather than all the cryptic hypothetical stuff!

reclusive46

It is possible to into a negative balance on a prepaid card for two reasons. A merchant could post through a transaction months after they got authorisation and some merchants in the US will process cards offline (without contacting the issuer) even if the magnetic stripe tells them their not allowed to. Both of these are very unlikely though and the second is impossible if your not going to be using it in the US.

Yes it has to be repaid though, it will say that in the terms and conditions. Yes they will also be able to send debt collectors.

bery_451

reclusive46 wrote: »

It is possible to into a negative balance on a prepaid card for two reasons. A merchant could post through a transaction months after they got authorisation and some merchants in the US will process cards offline (without contacting the issuer) even if the magnetic stripe tells them their not allowed to. Both of these are very unlikely though and the second is impossible if your not going to be using it in the US.

Yes it has to be repaid though, it will say that in the terms and conditions. Yes they will also be able to send debt collectors.

So who is liable? Merchant or the Card holder?

redcard

eskbanker wrote: »

in which case it would probably be better to post some facts rather than all the cryptic hypothetical stuff!

Some people only want advice based on the facts they want you to know.

redcard

bery_451 wrote: »

So who is liable? Merchant or the Card holder?

Cardholder.

eskbanker

redcard wrote: »

Some people only want advice based on the facts they want you to know.

Or in this case, absolutely no facts at all, not even the name of the company! There's obviously nothing to stop people asking 'how long is a piece of string?' but the value of the answers will be proportional to the quality of the question!

Gromitt

redcard wrote: »

Cardholder.

and they'll likely want the card bringing back into credit ASAP, so I would be expecting snotty letters any time now. I'd also read your T&Cs to see if they can enforce interest on the debit balance as well.

bery_451

This is crazy. Lets say I bought a £10 prepaid visa/mastercard. You saying that that I can buy a £350 PS4 on that £10 card?

And if the transaction (offline/online) goes through then its my fault? Isnt the merchant suppose to do checks to see if theres sufficient balance?

What is the true purpose of prepaid cards? If people can in debt on prepaid cards then that explains why huge debt the people of this country are in.

Theres no regulators/rules monitoring these type of card issuers?

reclusive46

bery_451 wrote: »

This is crazy. Lets say I bought a £10 prepaid visa/mastercard. You saying that that I can buy a £350 PS4 on that £10 card?

And if the transaction (offline/online) goes through then its my fault? Isnt the merchant suppose to do checks to see if theres sufficient balance?

What is the true purpose of prepaid cards? If people can in debt on prepaid cards then that explains why huge debt the people of this country are in.

Theres no regulators/rules monitoring these type of card issuers?

You've got to remember these card companies are like global companies operating under different regulations. Its extremely unlikely a merchant would process £350 offline and it would never happen on a prepaid card here in the UK as all machines check to see if its allowed on the card.

zerog

The most common way to get a negative balance would be if you spend in a foreign currency, which then appreciates before the transaction posts. Or if there are foreign transaction fees.

The authorisation will just check whether your available balance covers the foreign currency amount using that day's MC/Visa rate, but the transaction may end up costing you more in a few days.