Here's how a prepaid gift card works

Posted by: Girija Gadre on Feb 20, 2017, 06.30 AM IST

The recent demonetisation has brought about a change in the way we carry out our daily transactions. Even while gifting near and dear ones, we are seeing the birth of alternate gifting arrangements that work as well as cash gifts. One such way of gifting is through a prepaid gift card.

A prepaid gift card is a pre-loaded card which can be used by the person to whom it has been gifted to carry out any expenses as he or she wishes, limited to the balance on the card.

The recipient of the gift card need not be a customer of the issuing bank. Some banks also do not require the gift giver to be an existing customer of the bank.

How to obtain?
Gift cards can be obtained at the bank branch by filling up a gift card form. Existing bank customers also have the facility to obtain gift cards on their Net banking portal or through phone banking.

Name and address of the donor and the recipient must be mentioned on the form. The amount to be gifted and account details for debit (if the donor is an existing bank customer) or payment instrument (cheque/DD) must be included. Purpose of gifting also should be mentioned on the form.

Once the bank receives the completed form and payment, a loaded gift card is issued in the name of the beneficiary. A PIN is generated and dispatched to the recipient for using the card or viewing balance on the card.

Banks usually do not charge customers for obtaining gift cards. However, the recipient might have to pay service charges for viewing balance on the card at the ATM of the bank.

Points to note
Gift cards are typically single load cards and cannot be topped up later.
Cash withdrawal is not allowed on a gift card. This article appeared in Economic Times dated Feb 20, 2017, 06.30 AM IST