Prepaid Cards = Electric Money & Not Protected by FSCS
Warning on prepay card protection as millions of pounds of holidaymakers' money may be at risk
By Jo Thornhill
Holidaymakers, students and others who use popular prepay cards are being warned that they are not covered by the depositor protection scheme and are at risk if the issuing company goes bust.
Consumers are expected to load £50 million on to cards this summer. This would be twice the sum spent last year and indicates the dramatic increase in the use of the cards.
They typically allow a maximum of £3,500 to be loaded, although some, including IDT Prime and Cashplus MasterCard Gold, accept far more. The Payzone Worldwide Money Master-Card allows cardholders to load up to £10,000.
Once loaded, the chip-and-pin cards --usually Visa, MasterCard or Maestro --are used to buy goods and services or withdraw cash. They are especially popular with holidaymakers as cash can be loaded in foreign currency. Parents also use them to give children pocket money or emergency cash and the cards are widely promoted by the Post Office, among others.But prepay cards are not covered by the Financial Services Compensation Scheme so the money stored on them is potentially at risk.
The FSCS views the card as electronic money, not as deposits, and therefore outside its remit.
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