American Express Prepaid: Reloadable w/MoneyPak
American Express introduced a prepaid debit card that has nearly no fees and is reloadable using MoneyPak.
A Green Dot MoneyPak is a payment method in the U.S. that uses cash, clears instantly and is irrevocable. These properties make it one of the payment methods preferred among those selling bitcoins through the #bitcoin-otc marketplace.
Those who wish to buy bitcoins but don’t have a Dwolla account have been frustrated as the few remaining options to purchase bitcoins with PayPal have all but disappeared due to chargeback risk. With the ability to accept MoneyPak and load that cash into a prepaid debit card, sellers will likely see this option as a suitable alternative to accepting PayPal. The prepaid cards can be used not just for spending but also for cash withdrawal at an ATM.
To load or reload the prepaid debit card with cash, a MoneyPak can be purchased at a retailer such as at a Wal-Mart (including their new automated MoneyCenters) or at a 7-Eleven. Purchasing MoneyPak usually costs $4.95, paid at the time of purchase.
Those selling bitcoins are able to treat the MoneyPak as digital cash because the MoneyPak number from the buyer is all that is needed for the seller to be able to load funds to the American Express reloadable prepaid debit card.
The prepaid debit card can also be funded using a linked bank account, similar to how bank funds are transferred to a PayPal or Dwolla account.
The card has no activation or maintenance fees, nor are there any fees to make purchases, balance inquiries, or to replace a card.
The funds on the card do not expire, and a balance of up to $2,500 can be loaded to the card. Using the card at an ATM does incur a $2 charge though the fee is waived for the first ATM withdrawal each month.
Obtaining A Card
To obtain a card, the signup process requires the following information: Name, Address, Date of Birth, Social Security Number, a Mobile Phone Number and an email address. Also available is the American Express PASS prepaid debit card which is also reloadable. PASS was created for parents to be able to provide and monitor a card provided to their teen.
The MoneyPak number should only be transmitted through a secure channel. Because email is sent in “clear text” over the Internet, sending the MoneyPak number through e-mail is not recommended.
The MoneyPak is irrevocable so there is no risk to the seller that the buyer will be able to issue a chargeback following the sale.
While sending a MoneyPak number directly to a seller is not against Green Dot’s terms of service, their fraud-prevention recommendation warns against doing so. To help ensure a safer over the counter (OTC) transaction, the buyer will likely only want to only send a MoneyPak number to a seller who uses ClearCoin escrow should the seller’s OTC trust rating be not well established yet.
At the same time, the seller has no way to know that the buyer will provide a valid MoneyPak number, so sellers may be wary of committing bitcoins to even a 30-day escrow if the buyer has no history.
Those sellers preferring to not trade on OTC can get a reloadable prepaid debit card directly from Bitcoin Morpheus. On a related note, coming soon will be the Bitcoin branded prepaid Mastercard though whether or not that is a reloadable cad has not yet been established.
This option from American Express sellers does increase the ability for sellers to offer bitcoins to buyers who are new to Bitcoin or to those who are repeat customers who don’t use a bank (referred to in the financial industry as the unbanked).
American Express’ entry is not the first with a reloadable debit card though. The UPside Prepaid VISA card is similar in that it too can be reloaded with MoneyPak but UPside incurs a $3 monthly fee. Green Dot itself offers a reloadable card though their monthly fee is even higher.
There will likely be more options coming in the future as well. According to an article in TIME more major financial institutions are expected to launch prepaid debit cards of their own.
If the financial industry wishes to refer to those who reject their system as “the unbanked”, perhaps we refer to those who do participate in their scam as “the overbanked”. Ughh. Who wants to be one of them?