Your Ultimate Guide to Virtual Prepaid Reward Cards

According to a report by GlobeNewsWire, the global market for Prepaid Cards is projected to reach US$2.7 Trillion by 2026.

Sorry to break this to you, but even though gift cards are still widely used for rewards, they are losing their touch. According to a report by CNBC, 51% of the total population in the US have unused gift cards lying about their houses. That’s $15 billion in unused money!

There might be many reasons for this, but one of the most obvious ones is that gift cards don’t give recipients the freedom to buy whatever they want from wherever they want. Virtual prepaid reward cards are capturing this gap. Virtual prepaid reward cards are widely accepted; they offer freedom of choice, can be reloaded, and more. Now, this sounds cool.

Diving a bit into their history, the first prepaid cards were the same old gift cards with slight changes. According to a report by Moorwand titled “The History of Payments: The rise of Prepaid Cards”, the telecom industry first adopted them to incentivize employees, followed by big retail chains. However, with time and a rise in popularity, these prepaid cards have evolved into smarter, much more beneficial versions of themselves called virtual prepaid cards.

Virtual prepaid cards have been mass adopted by corporates, businesses, etc., simply because they are convenient to issue and easier to use by the end customer. And yeah, they are miles ahead of their primitive gift card ancestors.

What is a Virtual Prepaid Reward Card?

A prepaid card issued by a financial institution allows a person to spend a pre-loaded/pre-deposited amount of money, which can be reloaded again once used.

Just like a regular debit or credit card, a prepaid card has a unique 16-digit number, a CVV, and requires a PIN to operate. The only difference is that a prepaid card is not directly linked to a bank account and has to be reloaded with money separately, which makes it more secure. Also, unlike a gift card, a prepaid card can be used everywhere a standard debit/credit card transactions work. So it is more convenient as well.

The virtual version of this prepaid card is a digital counterpart of the physical prepaid card that you can email to the recipient or add to the recipient’s mobile wallet. The recipient can use it just like a debit card online or in a physical store at their convenience.

When it comes to rewarding, prepaid cards are a great choice. Think about it; who wouldn’t like a reward that gives them the freedom to purchase whatever they want, instead of a gift card that works who knows where? A virtual prepaid reward card is just like a cash reward but is much more secure and convenient.

Most virtual prepaid cards are enabled by Visa or Mastercard, offering worldwide acceptance. However, when you want to send virtual prepaid cards as rewards or payouts to hundreds or thousands of recipients across the globe, you need a partner like Xoxoday.

Types of Virtual Prepaid Cards

Based on the senders’ requirements and budget, there are various types of virtual prepaid cards. These vary in features and benefits, and one can pick a type that best suits their needs. However, with many companies offering loads of options, it might get tricky to understand the main differentiating factor. So let us solve that for you.

There are broadly five types of virtual prepaid cards:

Open-loop
Closed-loop
Semi closed-loop
Reloadable
Non-reloadable

Open-loop Virtual Prepaid Cards

Open-loop cards are the most flexible virtual prepaid cards with the broadest appeal. They are general-purpose charge cards with universal acceptability (everywhere the issuing card network is accepted - Visa, Mastercard, etc.). As a result, virtual open-loop prepaid cards open up a comprehensive gateway for e-commerce; it’s like giving the recipient the freedom to buy whatever they want from the world’s largest shopping mall.

Some examples of open-loop prepaid cards are Visa Card, MasterCard, American Express, Rupay Card, etc.

When incentivizing employees, customers, sales teams, channel partners, or gig workers, deploying open-loop virtual prepaid cards is a dependable route. If you run a multi-national company with employees working across the globe, these open loop cards are a real savior for rewarding. As they save you the hassle of selecting different gifts across geographies.

Besides rewarding, open-loop virtual prepaid cards offer a couple more promising use cases for businesses:

When employees travel abroad, you can give them virtual prepaid cards to manage their day-to-day expenses. Your finance team can issue cards with a limited amount; once exhausted, the team can reload the cards (if reloadable) with an additional sum.
You may like to issue such cards to your sales and marketing teams on a monthly budget basis. Virtual prepaid cards highly reduce the chances of misuse or fraud, which is quite a possibility with credit cards.

Closed-loop Virtual Prepaid Cards

Close-loop virtual prepaid cards, also known as single-purpose cards, can be used to make payments digitally at a single retailer/company or in a physical store. A business generally offers these cards by partnering with a financial institution for issuance. Most of the time, such cards bear the company's logo for brand awareness.

Businesses issue closed-loop cards to bring in new customers and, simultaneously, build customer loyalty. For this, they offer various discounts to customers using their closed-loop card so that they keep coming again and again. Offering a closed-loop prepaid card is a good strategy for small businesses in the customer-acquiring phase.

A closed-loop card might sound attractive from a business perspective, but it is not that good of a choice while rewarding. There’s a chance that the recipient is not a fan of the brand, which means that the reward will not be of much value to them. The constricting nature of a closed-loop prepaid card makes it an unpopular gifting option.

However, not all store-branded prepaid cards are entirely closed-loop. An excellent example is the Gap Mastercard, offered by the clothing brand Gap, which gives discounts and rewards when used at a Gap store. Other than that, it can be used at all locations that accept cards on the Visa network, making it a kind of open-loop card.

Other examples of closed-loop prepaid cards are the Shell Card, the Starbucks Card, the Target RedCard, the Walmart Gift Card, and the Apple Card.

Semi Closed-loop Virtual Prepaid Cards

Semi closed-loop virtual prepaid cards, also known as multi-merchant reward cards, allow the recipient to spend on a specific category or group of merchants. They are network-branded, which means they are affiliated and accepted by numerous merchant/chain outlets digitally as well as in physical stores. This feature also gives them the name ‘restricted open-loop cards.’

They are issued directly by retail chains or brands and can be used to purchase from all the affiliated merchants. However, sometimes, instead of particular brands, these semi closed-loop cards are accepted for specific categories like groceries, accessories, etc.

Rewarding someone with a closed-loop prepaid card is a good option if the recipient often spends on a specific group of brands or a category. It’s like saving them extra cash to spend on everyday things. It’s cherry on top if you know what they spend on. The card’s virtual appeal lets the recipient pay for whatever they like from the comfort of their homes.

Some examples of semi-closed-loop prepaid cards are Sodexo Cards, Discover Cards, etc.

Knowing all the rewarding options available in your rewards program manager is always better for getting the best results. You may have a selection of pre-filtered, themed card options, or you may be able to create your brand-personalized card. The latter gives you much more creative latitude and adds a personal touch.

Based on the frequency of usage, virtual prepaid cards are divided into:

Reloadable Virtual Prepaid Cards

Reloadable prepaid cards, also known as general-purpose prepaid cards, allow the issuers/users to reload money onto it once it gets over. This means users don’t have to worry about getting a new one once the previous card finishes up.

A reloadable virtual prepaid card is not linked to a bank account and must be ‘loaded up’ separately with a certain amount of money. This feature ensures that the user spends within a given limit. You can track your expenses on the virtual prepaid card’s dashboard and load it once the balance finishes up.

Reloadable virtual prepaid reward cards are suitable when you have to reward the same person often.

Non-Reloadable Virtual Prepaid Cards

Non-reloadable prepaid cards don’t allow the issuer/user to reload them once the money gets over. It is more like a gift card that can be used everywhere the card network is accepted. It makes a good one-time reward but is not a part of the long-term game.

It depends on the businesses and users to choose which card fits their requirements. So, naturally, each of them has its own benefits. However, a virtual prepaid card definitely has some unmissable advantages under its belt, which we shall discuss now.

Virtual Prepaid Reward Cards vs. Physical Prepaid Reward Cards: Which are Better?

Area of Difference	Virtual Prepaid Reward Cards	Physical Prepaid Reward Cards
Delivery Turnaround Time	They are issued instantly and received immediately via email or mobile wallet.	They take time to get issued, and one has to wait a long time for card delivery via post.
Disbursal Time	Disbursal is instantaneous as the recipient's geographical location isn’t a factor in delivery.	Disbursal is inconvenient for a recipient living in a remote area.
Ease of Carrying	Since they are available virtually, the card cannot be misplaced.	The chances of a physical card getting misplaced is comparatively very high.
Extra Costs	No additional production or delivery cost is required.	Production and delivery charges are added to the total cost.
Convenience	A virtual card is convenient to use by the sender as well as the recipient.	Usage of a physical card is less convenient and more time-consuming.
Bulk Delivery	Virtual cards can be quickly sent to many recipients in bulk at once. In fact, one can request discounts for a bulk purchase.	Batch processing and delivery of physical cards is a hassle.
Security	The chances of fraud are significantly reduced with a virtual card.	There’s a high chance of fraud with a physical card.
Burden on Environment	Virtual cards are environment-friendly.	The production and transportation involved in the making and delivering a physical card make it unfriendly to the environment.
Automated Payrolls	Virtual cards are great for sending out remote payrolls to gig workers, contractors, freelancers, etc. It can be automated as well.	It’s not possible to swiftly reward gig workers and freelancers as they achieve the day’s goal or submit a project.

Benefits of Virtual Prepaid Reward Cards

Now that we have seen how virtual prepaid reward cards make a much better rewarding option than their physical counterparts or regular gift cards, we look at the benefits. From convenience to implementation to branding, virtual prepaid cards make an excellent choice for businesses and recipients.

Benefits for you

Benefits for your recipients

Convenience

All you need is a list of email addresses of your recipients and a good rewards partner (tip: check out Xoxoday), and your rewards can be sent out in a matter of minutes.

Easier To Use

The recipients can tap these virtual cards just like regular debit/credit cards using their mobile phones at the payment receiving instrument.

Reward Any Value

Unlike rewarding gift cards, where there’s an amount set for gifting; you can load the amount of your choice on a virtual prepaid card. And that’s not it! You can develop different programs for other recipients without compromising your budget.

Faster to Use

Recipients find virtual prepaid cards much faster to use than their physical versions because they are digitally convenient.

Financial Inclusiveness

Virtual prepaid cards don’t require the recipient's bank account details or credit history. This makes them financially inclusive and saves you from worrying about rewarding those not eligible otherwise.

More Secure

Virtual prepaid cards, compared to physical cards, are much more resistant to fraud as they cannot be duplicated or cloned. These cannot be stolen like physical items. Non-reloadable cards even expire after one-time use.

Quicker Implementation

While it may take weeks to set up other kinds of reward programs, a virtual prepaid reward program can be set up and sent out to the recipients in under 24 hours. The entire production and delivery hassle are thrown out of the window.

Immediate Support

All the card-issuing companies guarantee immediate support if something is wrong on the cardholder’s end. As a result, the solutions are streamlined, adding to the recipients’ reward experience.

Easy Branding

Adding your brand’s touch to your virtual prepaid reward card campaign is a great feature to utilize for brand awareness. You can add a logo, tagline, brand colors, and more.

Controlled Spending

With a virtual prepaid reward card in possession, the recipients can’t spend more than what’s loaded on the card is not possible.

Campaign Analysis

You can also analyze the performance of your campaign by looking at the detailed key metrics sent to you by partners like Xoxoday so that you can recalibrate the campaigns for the future.

Web and App Support

Virtual prepaid reward cards come with web and app support, both of which recipients can use to check their balance and monitor their accounts.

How Can Companies Use Virtual Prepaid Reward Cards For Incentivization?

After understanding all the benefits in the above points, it becomes evident that companies/businesses can extensively utilize virtual prepaid cards for incentivization. They benefit both the business and the recipients in many ways.

Here’s a small guide on how to incorporate virtual prepaid reward cards in your incentivization program:

1. Employee Incentives

There is an excellent possibility that employees would be happier to receive virtual prepaid reward cards as incentives. Moreover, It is a quick and convenient way to express care and gratitude. Additionally, the unique tracking feature with a virtual prepaid reward campaign is a great way to track campaign performance and corporate expenses. One can give rewards on multiple occasions:

You can organize quizzes and contests for team-building and award these virtual prepaid cards to the winners.
Monthly or yearly employee bonuses can very easily be transferred using virtual prepaid cards.
A certain amount can be rewarded for every employee referral made using the prepaid card.
To ensure your employees are upskilling and upscaling, you can transfer specific amounts to their prepaid cards when they achieve a performance milestone.
Employees can be incentivized to achieve specific targets in industries focusing on goal-based work using virtual prepaid cards.
To develop a feeling of belonging amongst your employees, you can give out rewards on special occasions like birthdays, wedding anniversaries, work anniversaries, etc.
You can reward them to your old employees for their long service to the company.

Usual Budget Range: Employee incentives usually range from $10 to $1000, depending on the occasion they are being given.

2. Customer Incentives

Giving out customer incentives is a widely used marketing and customer retention strategy. Adding a touch of virtual prepaid reward cards can work out well. These rewards will give the customers more freedom and convenience while spending, ultimately attaching them to your brand.

Here are a few ways in which you can use virtual prepaid cards for customer incentives:

You can utilize virtual prepaid cards in your consumer promotions strategies and watch your businesses grow!
They make great options for sweepstakes/giveaway rewards.
Customers’ virtual reward cards can be loaded with a certain amount for filing customer surveys or giving reviews and feedback, enhancing your business portfolio.
Virtual prepaid cards are a fantastic way to garner customer referrals.
Account Managers can guarantee that the revenue stream is incoming, develop strong relationships with customers, and ensure that the potential is maxed out by running ABM campaigns with the help of virtual prepaid cards.
They can be sent out as a part of email marketing campaigns to your top customers.
Virtual prepaid reward cards are an excellent way to send out rebates and rewards as a part of your loyalty programs.
You can also be a part of the customers’ life by sending them virtual prepaid cards on special occasions like birthdays, festivals, anniversaries, etc.

Usual Budget Range: "What you’re willing to spend often ties heavily into who you’re trying to move and what behaviors you’re driving with your target audience. That number can often be drilled down to between 1% and 3% of the gross revenue of the target market or product."

3. Sales and Channel Partner Incentives

A virtual prepaid reward system is a great way to incentivize your sales and channel partners. They are the backbone of your business, and compensating them so they are happy will only benefit you. Therefore, building a robust channel sales reward model is very important, efficiently using the virtual prepaid rewards system.

These virtual prepaid rewards systems in the following ways:

Sales partners can be incentivized when they achieve their monthly or yearly targets. Giving out rewards regularly will keep the sales partners motivated to work.
Your reseller partners are essential to your business. You can incentivize them using virtual reward cards to maintain better relationships and utilize your partnership to the fullest potential.
Very often, businesses have many affiliates who are bringing in the traffic. In such cases, it becomes challenging to maintain a rewards program. However, you can easily set up and maintain a virtual prepaid rewards program for all your affiliate partners.

Usual Budget Range: These incentives can range from $100 - $10000, depending on their performance and how important a role they played in growing your business.

4. Gig Worker Incentives

It’s quite possible that not all your employees work full-time with you. Businesses tend to have part-timers, gig workers, or people on a contract basis. These unconventional employees with smaller salaries can be quickly paid using virtual prepaid reward cards. As they aren’t part of a regular payroll, their salaries can be sent out in the reward cards whenever required.

Gig workers can be paid using a virtual prepaid reward card when they:

Complete an assignment
Achieve Performance-based KPIs
Take a step ahead by driving business ideation
Go an extra mile with their projects, and perform exceptionally well

Usual Budget Range: Gig worker incentives depend on the task size and how well it has been executed. However, it usually ranges from $5 to $500.

To understand how you can streamline your gig workers’ incentive program, check out Xoxoday’s Gig Economy Rewards.

Step-by-Step Guide to Send Virtual Reward Cards to your Recipients with Xoxoday

Sending your recipient's virtual reward cards using Xoxoday is a simple, mapped process. Follow this step-by-step guide to roll out an effective campaign:

1. Have clear goals

Before deciding on anything about the virtual reward program, decide on the goals. Allow these goals to steer your campaign. There can be multiple goals like expressing gratitude & care, consumer promotions, incentivization, or more.

2. Study the recipients’ persona

The recipients of your virtual reward card program can be your employees, customers, sales teams, channel partners, gig workers, etc. You may want to look closely at what can help you orchestrate their behaviors.

3. Set a budget

No one wants their reward program to become a liability; it should be beneficial in the long term. Having an idea about the reward program's scale and the resources available to one can set a budget accordingly.

4. Find a virtual prepaid reward card partner

Finding the right rewards partner is a crucial step in the process. One can look at multiple factors - convenience, GDPR compliance, promptness, support, bulk discounts, easy-to-use platform (pro tip: check out Xoxoday’s virtual card programs)

5. Select the prepaid cards

The most common confusion at this step is which network to choose: Visa, Mastercard, or any other. Good partners shall make it easy to make the right choice.

6. Prepare a media toolkit

Picked out a virtual prepaid card? It’s time to let everyone know. Prepare an impactful media toolkit to let your employees/customers/partners know about the reward system. This makes the program look more professional and inviting. It also generates excitement amongst the recipients and motivates them to work better!

7. Create the campaign with your Rewards Card Partner

Your rewards card partner can assist you with the campaign. For example, Xoxoday ensures that you don’t feel stuck at any point of your reward campaign and is there with you through every leg of the process.

8. Roll out the program

It’s time to implement it all! However, don’t be in a hurry and send the virtual reward cards without any message. To make the reward more thoughtful, write an email and tell the recipient why they are receiving it, add a compliment and make them happy. This little touch of personalization goes a long way.

9. Analyze the program

After launching the campaign, it’s important to analyze its performance. This data is instrumental when you plan future campaigns.

Parting Thoughts

Prepaid cards have evolved into virtual versions of themselves, making them one of the best rewarding and incentivizing choices.
They are available in various types, giving the rewarder a wide range to choose from suitable to one’s requirements.
Virtual prepaid cards are big motivators for recipients because they allow more freedom to buy and transact.
Virtual prepaid cards have tremendous advantages over their physical versions in terms of ease of use, convenience, implementation, support, and security.
A virtual prepaid reward program is easy to design and easier to track and analyze if you have a compatible rewards program manager.
Xoxoday offers a variety of virtual prepaid cards via its catalogue for businesses to choose from. We also help you design your rewards campaign as per your requirements. Xoxoday offers you complete support once the program kicks in and ensures you don’t face any problems during the length of the program. You can also look at Xoxoday’s virtual prepaid reward program to get more details.

We can read the questions spawning in your mind about Xoxoday; hence we have prepared the following section to address the most frequently asked questions by our prospects and clients.

FAQs About Xoxoday’s Virtual Prepaid Reward Cards

1. Is Xoxoday's virtual reward card single-load or reloadable?

Xoxoday’s virtual reward card is one-time reloadable.

2. Xoxoday has partnered with which payment processors?

Xoxoday has partnered with Visa & Mastercard (US), Bitbns, Sodexo, and Visa (India).

3. How long does it take for the recipients to receive the virtual prepaid reward card? The recipients receive the card via email within minutes after issuing it.

The recipients receive the card via email within minutes after issuing it.

4. How long does it take for the recipients to receive the virtual prepaid reward card?

Once you set up and launch the campaign on the Xoxoday platform, it's almost instantaneous.

5. Can the Xoxoday virtual prepaid reward cards be restricted to a chain of stores?

Since Xoxoday’s virtual prepaid cards are associated with Visa and Mastercard, they are accepted in all stores.

6. Is there any cashback offer available on Xoxoday’s virtual prepaid reward cards?

No, Xoxoday doesn’t give any cashback offer on its virtual prepaid reward cards.

7. Can my Xoxoday virtual card be used in physical stores?

Since it is a virtual card, it can only be used for online transactions.

8. Can I withdraw the amount from my card?

Your Xoxoday virtual card does not allow you to withdraw the amount available on your card.

9. What is the monthly limit of Xoxoday’s Visa card?

The Xoxoday Visa card is powered by the State Bank of Mauritius (SBM) and has a monthly limit of INR 10,000.

You must be at least 18 years of age to be eligible to sign up for Xoxoday’s virtual prepaid card.

11. How does the recipient receive and use Xoxoday’s virtual Visa or Mastercard?

The recipient receives an email to claim the prepaid card and get it registered. Once the registration is complete, their Visa or Mastercard number is ready to use immediately.

12. Can I use my Xoxoday virtual prepaid card more than once?

You can use the virtual prepaid card as often as possible until the balance finishes up.

13. What is the expiration date of the card?

6 to 12 months, depending on the type of card you choose.

14. Do I get invoices for my transactions?

Xoxoday provides invoices for each of your transactions. You can also check them by logging in to your account.

15. Should I use a Visa or Mastercard Prepaid Card?

Both cards work similarly. You should decide which one to pick based on the currency you want to issue the reward. Can’t decide whether to use a Visa or Mastercard Prepaid Card for your project? Get in touch with our expert, and we’ll help you figure it out.

16. Is there any fee associated with my virtual prepaid card?

No, Xoxoday doesn’t charge any fees on your virtual prepaid card.