Can You Send Money With a Prepaid Card?

Prepaid cards function as a convenient alternative to traditional bank accounts or credit lines. Unlike debit cards, they are not linked to a checking account, and unlike credit cards, they do not involve borrowing money. Instead, these cards are pre-loaded with funds, which users can spend or, in certain circumstances, send to others. The ability to send money directly from a prepaid card varies significantly depending on the card type and the services integrated with it. This article explores how prepaid cards can be used for money transfers, detailing common methods, associated costs, and regulatory considerations.

Prepaid Card Basics and Sending Capabilities

For money transfer purposes, General Purpose Reloadable (GPR) cards are the most relevant. GPR cards are designed for ongoing use and can be repeatedly loaded with funds, making them distinct from limited-use cards like gift cards, which are typically not reloadable and generally do not support money transfers. GPR cards often carry network logos such as Visa or Mastercard, enabling their use at a wide range of merchants and ATMs, similar to a traditional debit card.

Once a GPR card is registered and identity verification is completed, it gains enhanced functionalities that can facilitate certain types of money transfers. While direct card-to-card transfers between different card issuers are uncommon, GPR cards can frequently serve as a funding source for external money transfer services. Financial regulations play a significant role in determining a prepaid card’s capabilities and necessitate identity verification for broader financial transactions.

Common Methods for Sending Money

Direct card-to-card transfers between different prepaid card issuers are not a universal feature and depend on the specific card issuer’s offerings. Some card programs, particularly those designed for families, may facilitate transfers within their own closed system via online portals or mobile applications. These internal transfers typically involve entering the recipient’s card details and confirming the amount, but this functionality is not widespread across all prepaid card products.

The most common way to send money using a prepaid card involves leveraging third-party money transfer services, including peer-to-peer (P2P) payment applications and traditional money transfer operators. To initiate a transfer, the prepaid card must first be linked to the chosen service. This preparatory step involves accessing the service’s settings, selecting an option to “add a payment method,” and then accurately entering the prepaid card’s details, such as the 16-digit card number, expiration date, and security code (CVV). It is important to note that not all prepaid cards are accepted by every money transfer platform.

For popular P2P payment applications like PayPal, Venmo, or Cash App, the process involves linking the prepaid card as a debit card. While PayPal allows linking prepaid cards for making payments, directly transferring funds from a prepaid card to a PayPal Balance is not always possible. To move funds from a prepaid card to Cash App, an indirect route may be necessary: the prepaid card is linked to PayPal or Venmo, funds are transferred from that platform to a linked bank account, and then the money can be added from the bank account to the Cash App balance. Venmo, like PayPal, accepts prepaid cards as a payment method.

Traditional money transfer services such as Western Union or MoneyGram also allow the use of prepaid cards as a funding source for sending money. Users create an account and select their linked prepaid card as the payment method for a transaction. The process then involves specifying the recipient’s details, the amount to be sent, and confirming the transfer. Some prepaid cards are even co-branded with these services, such as the Western Union Netspend Prepaid Mastercard, which integrates money transfer capabilities directly into the card’s features, allowing users to send and receive funds globally.

Navigating Fees, Limits, and Verification

When using a prepaid card to send money, understanding the associated fees is important. Various charges can apply, including activation fees when acquiring the card, monthly maintenance fees, or per-transaction fees for purchases or transfers. Money transfer services impose their own fees for sending funds, which vary based on the amount, destination, and delivery method. Other potential costs include ATM withdrawal fees if cash is needed to facilitate a transfer, or foreign transaction fees for international transfers. Cardholders should consult their cardholder agreement and the terms and conditions of any money transfer service to understand the full fee structure.

Prepaid cards and money transfer services also impose limits on transactions for security and regulatory compliance. These limits restrict the amount of money that can be loaded onto a card, spent, sent, or withdrawn within a given daily, weekly, or monthly period. Such limitations mitigate the risks of fraud and money laundering. The specific limits differ significantly between card issuers and service providers, so checking these details beforehand is advisable.

Identity verification, often referred to as Know Your Customer (KYC) compliance, is a standard requirement for most reloadable prepaid cards and money transfer services. This process is mandated by federal regulations, including the USA Patriot Act and Bank Secrecy Act, which require financial institutions to establish Anti-Money Laundering (AML) programs. Verification involves providing personal information, such as name, address, date of birth, and Social Security number, and may require submitting copies of identification documents. Completing this verification is necessary to unlock full card functionalities, including higher transaction limits and the ability to send money through third-party services, as anonymous prepaid cards face stricter limitations.