Many United States Citizens are in debt up to their eyeballs.  I’m sure this trend is mimicked in countries throughout the world, but I’d be willing to bet that the U.S. is the worst.  If you can’t pay for it now, just charge it and pay for it later, right?  Well, that’s gotten many people, companies, and our own country into trouble, hasn’t it?

Prepaid is defined by Open-Loop and Closed-Loop.  Open-Loop means you can buy a card at Wal-Mart with a Visa, MasterCard, American Express, or Discover logo on it, pay an extra fee above what the card is actually worth, and use that card anywhere that accepts Visa, MasterCard, American Express, or Discover.  Open-Loop would also include Payroll cards.  Closed-Loop is buying a McDonalds’ gift card and using it at other McDonalds locations or affiliates like Chipotle.  Most every major company offers Prepaid Closed-Loop gift cards, but Open-Loop is becoming very popular as well.

As of 2007, 90% of U.S. consumers had either purchased or received a gift card in the prior year according to a 2007 U.S. Gift Card Consumer Insights Survey.  In New Zealand, gift cards are sold through the post office and bank branches.  South Korea uses prepaid smart cards for public transportation and grocery shopping.  As of 2006, Italy’s prepaid cards represented 12% of the total card base including credit and debit cards according to the Mercator Advisory Group.  Many Australians carry general purpose prepaid cards that foreign workers can also use to transfer money back to their native countries.

Companies rely heavily on the sale of their Closed-Loop prepaid cards as guaranteed sales.  Those without access to credit/debit cards are using their reloadable Open-Loop prepaid cards for online purchases from airfare, to monthly debits such as TiVo.  It offers them privacy, and the comfort in knowing they’re not being charged overdrafts and they will not have to pay the money back later.

GO-Tag won 2nd Place for the CTIA Emerging Technology (E-Tech) Award at the 2009 International CTIA Conference among entries in the “Mobile Applications & Widgets – Mobile Payments” category.  GO-Tag is a contactless payment solution started in 2008 as an innovated hybrid of mobile and prepaid technology.  Attaching a GO-Tag to a common hand-held item (not just mobile phones) offers a fast and easy way to pay using a prepaid “card.”  By waving or tapping the GO-Tag in front of the contactless reader at the point of sale, the funds are directly removed.  Sodexo is a company currently offering GO-Tag payments.

Perhaps we will rely on prepaid payment solutions more in the future for their ease of use.  Credit seems to be harder to come by with the recession staring us straight in the face.  Logically, it is a smarter way of spending our money, to insure we’re not living outside of our means.  I know we all want that big screen TV, but sometimes our mortgages come first.