Why pre-paid debit cards can sometimes work against you

April 23, 2015 Updated: April 23, 2016

Have you ever traveled to a distant country totally reliant on your pre-paid debit card, only to discover that for some unexplained reason, the ATM’s in that country refuses to honor your request for cash?

Well if you are not part of the bunch, then you should ask the more than five thousand travelers, who have experienced this dilemma so far for 2015.

While traveling with a debit card is in most cases a safe way to move around with cash abroad, global overhauls of the financial system to tackle money laundering and terrorism have often placed innocent card carriers in the firing line.

But according to William Anderson, a financial Analyst at Chase Morgan, the problem with pre-paid cards abroad are sometimes caused by the traveler themselves who often take short cuts to obtain a pre-paid debit card.

For example, many people sign up for a nameless card or a virtual card from various online card resellers that issues and reload even branded cards without knowing the identity, address or trade of the card user.
This he said may be a recipe for money laundering or terrorism financing, thus placing the issuing card under an automatic microscope.
In other cases, an ATM that identifies a nameless card is often system programmed to refuse payment request even though the issuing bank or financial services provider may be a genuine member of the financial services network.

“Lots of banks would simply not honor the transaction because they do not want to be answerable for a potentially unlawful process by which the card was obtained”, he stressed.

Anderson’s take is that almost every genuine card issuer would require ID information and address information at least before you can use their card.
He also suggests that if for example you are living in New Zealand or Australia, it might be better to secure a card from an institution that is based in that territory.

While he has not expressed any endorsement of any bank or particular card issuer, he agreed on a list of five card issuers that may be certainly safe to use, among several dozen more that came to mind.

Some examples are; –

1 – American Express – reloadable cards

2 – Bank of America – CashPay® Visa® Payroll Card

3 – Gem Visa card – with the GE Debit Card Features

4 – WestPac – Travel Money Card

5 – Payoneer – prepaid mastercard

So the next time, you travel abroad and is in a debit card jam, ask yourself why you never took Anderson’s advice and take the genuine route to get your card.

After all, he is the expert on these matters. Not me.