# Prepaid Card - What It Means in Payments

Source: https://payneteasy.com/glossary/what-is-a-prepaid-card

_Learn what a prepaid card is, how loading and spending a fixed balance works, and how prepaid differs from debit and credit cards online and in stores._

A prepaid card is a payment card loaded with a fixed amount of money in advance. You can spend only the amount available on the card, making it different from credit or [debit cards](https://payneteasy.com/glossary/what-is-debit-card) linked to bank accounts.

## What Is a Prepaid Card?

A prepaid card carries its own balance rather than drawing on a bank account or a credit line. It is issued by a bank or licensed institution under a card network brand, so it works wherever [cards are accepted](https://payneteasy.com/solutions/gateway) - in stores and online.

## How Prepaid Cards Work

The cardholder - or an employer, or a gift-giver - loads funds onto the card. Each purchase reduces the balance; when it reaches zero, the card stops working until it is topped up. Reloadable cards can be refilled; non-reloadable gift cards cannot.

## Prepaid vs Debit and Credit Cards

A debit card spends money from a bank account; a [credit card](https://payneteasy.com/glossary/what-is-credit-card) borrows from the issuer; a prepaid card spends only its preloaded balance. That built-in cap makes prepaid cards useful for budgeting, gifting, payroll, and users without bank accounts.

## Prepaid Cards in Online Payments

For merchants, prepaid cards process like any other card, though some issuers restrict [recurring charges](https://payneteasy.com/glossary/recurring-payments) or cross-border use. Payment platforms handle them through the same [card acceptance rails](https://payneteasy.com/solutions/orchestration-payment-platform) as debit and credit cards.

## Frequently Asked Questions

### Can a prepaid card be used online?

Yes - network-branded prepaid cards work like any other card at online checkouts.

### What happens when the balance runs out?

Transactions are declined until the card is reloaded (if it is reloadable).

### Is a prepaid card the same as a debit card?

No - a debit card draws on a bank account, a prepaid card only on its loaded balance.

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