Prepaid Debit Cards for Global B2B Payments

Payment Method Guide

Prepaid debit cards (also known as “cash cards”) are transactions that are conducted over a debit card provider network. Funds are drawn from the payer’s managed Tipalti account and transmitted to the payee’s debit card account.

The payee can then use those funds directly to pay for goods and services that accept the debit card (usually in a partnership with Visa or Mastercard). Funds are usually received immediately, but if there are issues may be held by the debit card provider.

In exchange for this service, the debit card provider may charge an annual fee to the payee plus a percentage that payees withdraw through ATM (automated teller machines).

• “cash card”

• “debit card”

• “prepaid card”

• “Intercash”

• “Payoneer”

• Strong adoption in countries with limited banking infrastructures

• Convenient for payees to use funds in daily transactions

• Requires unique account setup

• Potential high annual fee for payee

• Potential fees for ATM withdrawals

• Uncertainty as to how funds are managed

• Challenging reconciliation processes

• Exempt from federal consumer protection laws that apply to bank debit cards

• Limits for high transaction volumes and amounts

Requires payer and payee set up an account through prepaid debit card vendor (in some cases with an email address) and a mailing address (if they do not already own a card).

Best Use Case for Prepaid Debit Cards

Prepaid debit cards are popular in countries with limited banking infrastructure or unfavorable banking infrastructures. They also can be active in digital communities, such as online marketplaces, ad and affiliate networks and crowdsourcing networks. Many of these payees have existing card accounts.

Worst Use Case for Prepaid Debit Cards

Paying exclusively with prepaid debit cards may not be preferable when working with larger, more established partners. This would require them to create separate accounts with the provider and be subjected to those fees. In a B2B environment, prepaid debit cards create one more point of management for the payee.

How Tipalti Works with Prepaid Debit Cards

When payees select a prepaid debit card during the onboarding process as their chosen method of payment, Tipalti ensures they provided a suitable account information, which may include their email address and account number. This information is verified on the spot to ensure deliverability. The payer can decide if a prepaid debit card is an option based on country of origin. Tipalti also allows the payee to choose certain payment thresholds so they can decide when payment is sent. Payers can also determine how much or if any fees related to a debit card transaction are passed to the payee.

To streamline communications, Tipalti directs all payments at once through various payment method interfaces. The payer does not have to directly communicate with the card provider or access the provider account. To prevent overdraft, only adequately funded accounts will enable payments. As a courtesy, an email is sent to the payee indicating that payment has been sent to their debit card account.

Should issues arise (such as a failed transaction), Tipalti reports the error and sends a new message to the payee. If the payee can correct the condition, they are automatically sent a branded email on behalf of the payer with information for remedying the situation.

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