Introduction to virtual credit card

A virtual credit card is a credit card that every-time when one wants to make an online purchase on enters the actual credit card information and a new number is generated to facilitate the online purchase. This virtual credit card number generated will be temporary and expires immediately the online purchase is successful.

 Advantages of virtual credit card.

• One of the advantages of the virtual credit card is that the number generated is only valid for the one time online purchase and transaction. Once the online transaction and purchase are successful the it expires.
• Another advantage of virtual credit card is that one can set a limit for the particular online purchase and transaction they want to make. This advantage of the virtual credit card ensures that the merchant does not charge more for the online purchase and transaction. Therefore virtual credit cards help the one take control of their finances by ensuring that they stay within their financial budget.
• Virtual credit card has another advantage in that they are widely recognized and can be used by anyone online to make any online transactions and online purchases. Most merchants accept the virtual credit card giving the online shopper freedom. Therefore virtual credit card allows for online purchase from all over the world.
• Data safety and security is another advantage of virtual credit card in that the actual account number of the credit card is not visible to the merchant or on the online payment system. Therefore this information cannot be used by fraudster to make any other fraudulent online purchases and transactions. This makes online transactions and online purchases using the virtual credit card safe and a great advantage.
• Another advantage of the virtual credit card is that it gives the online purchaser freedom as they are not worries that their actual credit card information would be used fraudulently.
• Another advantage of using virtual credit card is that there is flexibility in the use of this virtual credit card as it can only be used when there is a need to make online purchases. Since the number generated for the virtual credit card is temporary then the online purchaser uses it only when they are ready to make any online purchases.

 Disadvantages of virtual credit card.

•  One of the disadvantages of the virtual credit card is that the transfer of funds from the online purchasers account to the merchant account takes time and at times the goods are delivered before the actual payment to the merchant is made.

• Another disadvantage of the virtual credit card is that even though the virtual credit card is widely accepted, some merchants are still skeptical and have not fully accepted the virtual credit card.

What is a virtual terminal

A virtual terminal is a terminal that can be used for processing any credit card transactions from any computer with internet access anywhere in the world. Virtual terminal can also be referred to as an online version of what is traditionally known as Point of Sale (POS) terminals for example the ones in the supermarkets, hotels and restaurants, retail clothing outlets and many other places.

Due to the increase in use of credit cards on online shopping and in order for these outlets to be competitive, it would be very important that they acquire the virtual terminal.

Competetive advantages of acquiring a Virtual terminal

• A virtual terminal enables the merchant to reach a wider market and therefore increase their sales. The merchant is able to increase sales volume when they acquire a virtual terminal as they are able to make online transaction for a wider market.
• Acquiring a virtual terminal makes the merchant have a competitive edge over their competitors. This is because the merchants are easy to access because of the online accessibility to their customers and potential customers.
• By acquiring a virtual terminal a merchant is able to grow in business by increasing sales, reducing the costs and growth in the profits of the merchant company. the merchant becomes more efficient and effective.

 Requirements for merchants who aspire to acquire a virtual terminal

1. The merchant acquiring the virtual terminal must have the capacity to handle  online transactions. The capacity will include computers and human resource. The question that will be raised is if the merchant acquiring the virtual terminal has the ability to securely and efficiently handle a series of tasks. These tasks that the merchant acquiring the virtual terminal will be able to handle include verification of each transaction, documentation of the transaction and processing of the credit card transaction.
2. The merchant acquiring the virtual terminal must have a very efficient data security system. The system should be secure and safe for the merchant to be able to acquire the virtual terminal.
3. Virtual terminal can also be acquired by the merchant if the merchant has a good reputation financially. This is to say that the credit rating of this merchant is good so as to be able to purchase the virtual terminal.
4. A merchant can also acquire a virtual terminal if the merchant has a wide network of outlets. It would not be prudent to acquire a virtual terminal if the merchant has only  one outlet.

Chase Bank Kenya prepaid cards

The bank is known for its relationship banking. it has scooped many banking industry in Kenya awards in past years. Chase Bank has fifteen branches in Kenya.

Chase bank launched it suite of prepaid cards on the 24th of October 2011. The bank had full page advertisements for these products in both the Nation newspaper and the standard newspaper.

Chase Bank Kenya prepaid cards that were launched are:

Zawadi Chase Bank Kenya prepaid cards

Zawadi meaning gift, is an apt description of how the cards will be sold. These cards can be given to people as gifts. They offer good gifts as the person receiving the gift of the card can purchase what they want.

 Incentive Chase Bank Kenya prepaid cards

These cards may be given as incentives to staff who have performed well in their jobs. these cards could replace the cash bonus that are given to staff at the end of each month.

Traveller Chase Bank Kenya prepaid cards

These category of prepaid cards is targeted for people who travel alot. The account holders can purchase the card either in Kenya shillings or dollar denominated cards. the cards can be used over the Internet.

Chase bank Kenya prepaid cards are MasterCard branded. chase bank is the first bank to offer the MasterCard Chase prepaid cards in Kenya. other banks that offer prepaid cards are Visa branded. These banks are Kenya commercial bank, I and M bank and Bank of Africa.

Advantages of Chase Bank Kenya prepaid cards

• one does not have to be an account holder to purchase a chase prepaid card
• the cards can be purchases on Kenya shillings or dollars
• the cards are MasterCard branded cards so have a wide acceptability
• the cash or funds are held in the card not a bank account, so the risk affects funds only held in the card not a bank account
• they can be used in many outlets both in Kenya and the rest of the world, that accept MasterCard cards

Chase Bank has joined the world in availing customers with prepaid cards. Prepaid cards have become popular especially after the economic crisis in the western world from the year 2008. Credit rating for many people especially in America was affected and so they cannot qualify for credit cards, and prepaid cards is the solution.

Chase Bank Kenya prepaid cards have been introduced into the market at the right time when the growth is expected to double in the next two years.

Types of debit cards

Proprietary debit cards

what are debit cards

Debit cards given by a bank to access just that banks accounts and are known as proprietary card. The cards are sometimes also called ATM cards since they are used just at the banks ATMs. Is the bank has merchants or outlets where they have connected their systems, then these ATM cards can be used to access those merchants. In some instances the banks come together and form a common network of ATMs especially. After membership, the proprietary cards from various banks can be used in these common outlets. Charges are agreed amongst the members.

Co-branded debit cards

When a bank works with another company and they come up with a card that would suit both the institutions members and customers, these are known as co-branded or affiliate cards. The cards may be proprietary or they may be association debit cards. Co-branding is usually done with hotels, clubs, malls and airlines. Both institutions work together to give their customers more convenience and to grow their customer base. Both institutions gain from the partnership.

Association debit cards

Banks may sign up with associations like mastercard and visa to give out their branded cards. The association debit cards are widely used globally. The networks for associations are very well networked and use modern and sophisticated technology to ensure cards so branded are acceptable and create convenience for the financial institutions and their customers. There are stringent rules and regulations for those financial institutions wanting to join associations. Joining fees, annual fees and transactions are some of the charges levied by members. The associations have rules not just for joining, but after joining there are rules of engagement between the associations and other members.

Prepaid debit cards

The prepaid debit cards are used by financial institutions to collect funds before the funds are used. Unlike many other cards, the prepaid cards are paid for before the money is used. There are many kinds of prepaid cards like: gift cards, travel cards, store cards, and payroll cards. The prepaid cards are used as a way to control funds and help in financial management.

The choice of which debit cards financial institution or potential cardholder should get depends on which card is most convenient for them.

Advantages and disadvantages of debit cards

Advantages of debit cards

• Use only what the cardholder has as it debits the bank current or savings account. The cardholder does not go into debt since they can only use as much as they have in the account.
• A debit card can be used in the same outlets as a credit card and acceptability is higher than for cheques. Getting debit cards is faster than credit cards and for those with bad credit ratings are not affected by getting debit cards.
• One may use the cards at numerous ATMs that have the logo of the association branding their cards in many countries.
• Goods and services can be purchased online. When goods and services are not received as per the order given, the cardholder can get a refund or cash back for the merchant.
• With a debit card, the cardholder does not have to physically visit their bank to get cash but can use the card at a merchant outlet
• When debit cards are used, the merchant gets refunded fast by their bank accounts being credited. They do not have to keep cash in their tills and so can save on security costs and bulk cash banking costing.
• It is easier for the merchants to balance their accounts since they are using reports from the Point of sale machines.
• The merchant does not have to struggle to get change, especially in small denominations when a card is used. When cash is used, the merchant must have the change in small denominations to give customers. It also takes more time to count the coins to balance the days work.

Disadvantages of debit cards

• The cards debit the accounts immediately as the transaction happens. This gives no grace period like in a cheque transaction or credit cards.
• It is harder for the customers to make their reconciliations on transactions since receipts’ are not kept by the cardholder for long. The statements for many current or savings accounts are given to customers quarterly or twice a year. For a customer to receive the e statements they have to pay a fess for the service.
• If the account has no money, the card cannot be used unlike for a credit card. If the card is allowed to overdraw the account, the charges are hefty
• when fraud is commited, the insurance in the card is less than the amounts on the credit cards

It is important for all holders of debit cards to consider both the advantages and disadvanages of debit cards.

Reasons why people get into credit card debt

credit card debt

Many people at one time or another get into credit card debt. There are many reasons why people get into credit card debt among them:  job redundancy, shopping sprees, illness in the family and unplanned spending due to peer pressure.

11 steps to get out of credit card debt

1. Consolidate thecredit card debt especially if you have more than one credit card. This makes it easier to pay off the debt.
2. Do not carry your card with you if it is to be used as an emergency card.
3. Do not continue to use the credit cards but use cash. If possible, cut up the credit cards to remove temptation. Cash is easier to monitor than when a credit card is used.
4. Pay off all the small credit card debt. This will consolidate more money to be paid off in higher amounts to credit card debts which are more.
5. Get a loan from your bank to pay off your credit card debt. It is cheaper to pay off the loan than credit card interest which is usually very high. Sometimes the credit cards companies assist the cardholder to repay the debt by rescheduling the debt. Rescheduled repayments sometimes attract less interest, but the card account has to be declared delinquent.
6. Avoid all unnecessary fees and charges levied on the credit cards. There may be fees for making late payments or paying less than the minimum required. These should be avoided since these fees and charges carry compounded interest
7. Make a payment plan for all your credit cards. When one card is fully paid, close the account. Do not use the money that was being paid to this card as extra spending funds but add it to pay off the next card.
8. The cardholder can consider getting a credit card that charges less than the card they have. This option may mean moving from one credit card Company to another to get out of credit card debit
9. One should consider getting out of credit card debit by getting a debit card. The debit card may be mapped to only one current account and no access to the savings. This helps the cardholder to save up the money in a separate bank account and this will be paid to the credit cards.
10. Make payments that are more than the minimum requirement from the card company. Avoid making just the minimum payments and reduce the interest charges.
11. Make payments the day after the statement has closed. For example, if the statement closes on the10th monthly, make payments as soon after this date as possible. This reduces the daily interest charged on the amounts that are outstanding in the account.

Though it seems like the credit card debt will never end, the cardholder with a credit card debt must exercise patience and never miss a payment.

What are Prepaid cards in Kenya

Prepaid Cards in Kenya

Prepaid card is a debit card that is loaded with funds before the funds are required. The money is not debited from your bank account but from the funds that are held in the card account that has been made available by you.

After the financial crisis in the world, in 2008 and years following, the prepaid cards are being used more as a way to manage personal finances. Many previous credit card holders had their credit scores and ratings affected when they were unable or missed to pay for their credit cards or loans. Though these former credit card holders have repaid their loans, their scores are still low. The prepaid cards are able to assist many people who cannot meet the required scores to get other cards and are able to access the convenience of plastic money.

Prepaid cards in kenya as a personal financial management tool

Many people have a problem trying to live within their means. Prepaid cards in Kenya are being used as a way for managing financial challenges. The prepaid card holder loads the card with the amount they require for the month and this is all the money they will use. The card is reloaded monthly and so the cardholder cannot spend what they have not preloaded or planned to use.

The card issued determines the minimum and maximum amounts that cardholders can load to their prepaid cards at any one time. The cardholder determines what they will require for the month an they load this amount. The prepaid card will allow the holder to access the same outlets that they would if they had a credit card or a debit card.

The prepaid cards are used more and more by many people throughout the world. Cardholders can plan for an activity and save for the expense that is required. When the savings are reached, the cardholder can purchase a prepaid card for the amount saved. This is especially good for holidays and leisure activities that can be planned for without using monies put aside for other necessary expenses.

Though prepaid cards have been in use in the western world, they are still new in the Kenyan market. The cards will assist Kenyans plan their expenses better and manage their finances especially in this hard economic times. Prepaid cards in Kenya should be a card that all Kenyan should use to manage their finances.

prepaid cards in Kenya

What are prepaid cards in Kenya

They are a type of debit cards. They differ from the usual debit cards in that they are prepaid while a debit card uses the money in your bank account. They are sold or given out mainly by banks and also by some individual stores or shops, especially in the western world. The cards are called prepaid because the amount to be used is predetermined by the cardholder and paid for in advance. This is convenient to the bank because it is able to collect and mobilize funds before it has to pay for the cardholders spend. Prepaid cards may be used as gift cards, salary cards, store cards and travel cards, to name but a few.

Features of prepaid cards in Kenya

A unique feature on some prepaid cards in Kenya is that they do not necessarily have to have a name printed on the cards. As the banking industry in Kenya evolves and the card business moves to a higher level, cards may be sold to customers from supermarkets and through Agency banking agents. They will be sold like the mobile phone top-up cards. They will be availed to all who need them especially as gift options. The prepaid cards in Kenya can be used in stores that accept the credit and debit cards across the globe.

The prepaid cards may be magnetic strip meaning they have to be swiped at a Point of sale machine. The alternative is to have the prepaid cards as chip cards, which means the information is held in a chip. Chip cards may be used on merchants that are not yet Chip because the default for these cards is the magnetic strip.

Prepaid cards may be denominated in local currency or in foreign currency depending on the financial institution that is issuing the cards.  The cards may be for local use only or they may be used internationally. The prepaid cards are usually re-loadable. Whenever more money is required on the card, the cardholder deposits more money in his card account.

Banks giving prepaid cards in Kenya

Not many banks in Kenya have started on this business line yet. There are three banks who currently give this service. The banks are Kenya commercial bank, Investment and mortgages bank and Bank of Africa.

As the prepaid cards continue to grow in popularity in most parts of the world, the banking sector in Kenya has to be involved. We should prepare ourselves for the competition that will be witnessed in the financial institutions as they get into the prepaid cards in Kenya.