An “open loop” prepaid card is a type of prepaid debit card that can be used at multiple merchant locations (as opposed to “closed loop prepaid cards” that can only be used at certain merchants). An open loop debit card typically has a network brand on it, such as Visa, MasterCard, American Express or Discover. As a result, these cards are also referred to as “network branded prepaid debit cards”.
As described by the industry association responsible that promotes these cards, open loop debit cards have the following advantages for consumers:
Network branded prepaid cards provide flexibility to set aside funds to be used later for purchases, recurring bills, or cash access through ATMs. For some consumers, network branded prepaid cards complement the payment cards they already carry. For others, network branded prepaid cards are an alternative to a cash-based lifestyle.
Open loop prepaid cards can generally be used for withdrawing cash at ATMs, purchasing goods online and offline (wherever the network brand is accepted), and often for other bank-related activities. On GetDebit.com, the cards in the “prepaid debit card” category are generally open loop prepaid cards, while the “gift cards” are closed loop prepaid cards.