E-money: What is prepaid value?

• Financial: as it is not yet sales, it must be segregated and accounted for separately from normal operations.
• Legal: as electronic money, it is subject to the provisions of the French Monetary and Financial Code.
• Technical: the flows managed between the participants in a network of issuers and beneficiaries of this value require an agile and perfectly secure IT environment.
• Secure: prepaid value requires precise monitoring, as it can be used for fraudulent purposes, either without the owner’s knowledge, or for money laundering or terrorist financing.

But then, what is prepaid value? How does it work? What are its different forms? All the answers, just below.

All you need to know about electronic money

In the French Monetary and Financial Code, prepaid value is classified as electronic money. This corresponds to an amount that is paid in advance, before being credited and therefore available to the payer by means of a tangible medium (card) or not (e-wallet).

The prepaid value therefore corresponds to the monetary value available on the support. There are two types:

• Open prepaid cards (prepaid payment cards)
• Closed-ended prepaid cards (restricted-use prepaid cards)

These two prepaid value solutions both work on the same principle, but there are some major differences:

Similar to a credit or debit card, a prepaid payment card can be used to pay for purchases (in-store or online) and withdraw cash. The main difference with a traditional card is that it does not require you to open an account with a bank.

In order to use it, the cardholder must pay a monetary value onto the card, which can then be used for various expenses, up to the limit of the funds previously paid in. This is known as “prepayment” in electronic money. The card is then either rechargeable and can be used over and over again, or disposable.

• Maximum ceiling: 2,000 euros on average
• For use in France and abroad

The restricted-use prepaid card can only be used in certain places (a store or a network of stores, for example). What’s more, it can take a variety of forms: vouchers or gift cards, credit cards, transport cards, season tickets, etc.

This card is issued by a merchant, then credited with the corresponding value in electronic money by an Electronic Money Institution, before being used in a store network. The prepaid value of this type of card is associated with its unique identification number.

There are 2 types of restricted-use prepaid cards:

• One-time restricted use prepaid card : This is a card that is purchased and paid for, then used until the available funds are exhausted. In this way, once the money on the card has been spent, it becomes obsolete and unusable (vouchers, gift cards, credit cards, etc.).
• Limited-use reloadable prepaid card : This is a financial tool that customers purchase and pay for periodically. The card is “topped up” by automatic transfers, online transfers or directly with the retailer (transport cards, season tickets, etc.). In the event of loss or theft, the card is replaced.

At CentralPay, we offer closed-loop prepaid value management for chain stores, franchisees and independent operators. This is subject to accounting, technical and regulatory constraints that can only be overcome by issuing a countervalue in electronic money.

We are making the system fairer by offsetting the costs of prepaid management between the different parts of the network. Wallet-to-wallet fund transfers give the network real-time traceability of transactions, ensuring control and simplifying accounting.

With CentralPay’s Easy Wallet solution, you can reduce management costs by automating clearing between parties, track all transactions in real time, and maintain a high level of compliance and security for prepaid vouchers.

¹ Article L. 525-4 of the French Monetary and Financial Code excludes vouchers that take a dematerialized form: luncheon vouchers, volunteer meal vouchers, volunteer meal vouchers, pre-financed CESU (chèque emploi-service universel) vouchers, personalized support vouchers, vacation vouchers, culture vouchers, gift vouchers and vouchers issued by works councils or companies where there is no works council…