In the 1990s, credit card companies incurred heavy losses because of many credit card users defaulted on their payments. Thus, credit card companies had to come up with a new way to collect debts. It was during this period that credit card companies began offering secured credit cards and prepaid debit cards. Today, most credit card companies such as Visa, Mastercard and American Express issue prepaid debit cards.

Prepaid debit cards are also known as stored-value cards. Prepaid debit cards are reloadable (add money repeatedly) that allow you to only spend up to the amount you have pre-deposited into the account. If you tend to overspend or would like to control your spending then prepaid cash cards could be a good card for you. Other than that, prepaid cash cards will be helpful if you are having trouble getting approved for a credit card due to poor or no credit, and allow you to build or re-build your credit. You can only spend the amount you deposit into your account. Typical applications of stored-value cards include ATM cards, transit system, telephone prepaid calling cards etc.

The Concept
A prepaid debit card works similar to a prepaid phone card. You purchase a prepaid debit card by paying the amount you want as your limit. You can add funds to your prepaid debit card at a retail location or an online bank. You use the prepaid debit card like you would use a credit card. The only difference is that the transaction amount is deducted automatically from your prepaid debit card. You can keep using the prepaid debit card until the balance reaches zero.

In Malaysia, we have Touch N' Go cards, mobile phone prepaid cards such as Hotlink,Celcom, Digi etc. These card services had attracted attention of many users and are being popular as method of payment rather than paying cash on every purchase.

Advantages:

1.You do not need to carry a lot of cash with you every time you go out.
2.If you travel frequently, you can use your prepaid debit card in countries where your card's issuing company provides this service. Mastercard, American Express and Visa all issue prepaid debit cards that you can use in many countries. Banks have also started issuing prepad debit cards to their clients.
3.With it, you won't have to worry about monthly credit card bills and missing credit card payments each month.
4.You can easily reload or add funds to your prepaid debit card. You can do this by calling the issuing company and authorizing them to transfer funds to your prepaid credit card or getting online and doing the transfer yourself.

Related links:
http://www.credit-card-surplus.com/prepaid.php
http://en.wikipedia.org/wiki/Octopus_card#Types_of_cards
http://ezinearticles.com/?What-is-a-Prepaid-Debit-Card-And-What-Are-Its-Advantages-and-Disadvantages?&id=333602

Benefits
1. High efficiency of Money Exchange
Market swings could be magnified if consumers and businesses could send their money around the globe with the touch of a button on a PC.

2. More Privacy Protection
Consumers shopping on the Internet will find some forms of electronic money which sports greater privacy than using ordinary credit cards.

3. Save time
Waiting in lines at the bank counters have become an obsolete means of transaction nowadays. Lessening of paper work and immediate transfer of money and funds are the other advantages of electronic money.

4. Access to Global Markets
For the merchants, E-Cash allows access to a global market not restricted and controlled by local currencies. The integration of ordering and payment collection systems also offers enormous operational efficiency.




Limitations
1. Counterfeits
Counterfeiters could create their own personal mints of E-cash that would be indistinguishable from real money.

2. Lack Customer Protection
E-cash may be less secure than bank money, given that money stored on an electronic wallet could be lost forever should the card is damaged.

3. Lack of Regulations
Governments need to monitor money flow and trace criminal activities. These problems need to be addressed and resolved in order to gain consumers and government "trust." If computer hackers or other criminals were to break into E-cash systems, they could instantaneously filch the electronic wealth of others.

Related links:
http://en.wikipedia.org/wiki/Electronic_money
http://www.iit.edu/~peacjen/cs485/ecash2.htm
http://www.sellingonnet.net/online-means-payment/various-types-electronic-money/

Mobile payment is new and rapidly-adopting alternative payment method especially in Asia and Europe. Instead of paying with cash, check or credit cards, a consumer can use a mobile phone to pay for wide range of services and digital or hard goods.

One of the mobile payment systems in Malaysia is Mobile Money (MM Wallet). It is a PIN-based Mobile Payment Solution designed by Mobile Money International Sdn Bhd. It allows those registered users to pay for goods and services at anytime, anywhere using only a mobile phone coupled with a 6-digit security PIN via SMS. This gives the freedom to shoppers to buy products online and pay the merchant using mobile phone without being physically present at the store.

Other than Mobile Money, many other companies are also equipped with this concept to cater for their customer’s convenience, such as Maxis, Celcom and many more.

Potentials

There is tremendous promise in mobile telecommunication networks as an electronic payment channel since mobile phones are already in the hands of most Malaysians, with 88% of the Malaysian population subscribing to mobile phone services. Thus, Payments via text messaging have the potential to grow in importance.

Besides, there are immense opportunities to leverage on mobile phones to accelerate the migration to electronic payments, to widen the reach and appeal of electronic payment services, to deliver innovative mobile payment products that offer speed, simplicity and convenience at minimal cost for the public, as well as to provide an efficient and cost-effective method of delivering financial services even in the remote areas.

Also of significance is the high level of financial inclusion in Malaysia. When it comes to online selling, selecting a payment gateway is one of the major obstacles faced by the merchants in Malaysia. There are too few choices available. There is, therefore, a significant untapped and potentially lucrative market for mobile payment and banking services.

Consumers’ adoption strategies

Relative advantages of mobile payment systems

Mobile payments provide consumers with ubiquitous purchase possibilities, timely access to financial assets and an alternative to cash payments. Advantages of mobile payments compared with traditional payment instruments are thus likely to pertain to time and location independent purchase possibilities.

Compatibility

Compatibility captures the consistency between an innovation and the values, experiences, and needs of potential adopters. For payment systems, consumer ability to integrate them into their daily life is an important aspect of compatibility. The compatibility of mobile payments with consumers’ purchase transactions, habits, and preferences correspondingly influences the diffusion progress.

Complexity

Complexity and problems with usability have contributed to the low adoption of a variety of payment systems, including smart cards and mobile banking. Mobile payments are commonly expected to increase consumer convenience by reducing the need for coins and cash in small transactions and increasing the availability of purchase possibilities. Mobile technologies should be usable and user-friendly.

Network externalities and creation of critical mass

Payment systems exhibit network externalities as the value of a payment system to a single user increases when more users begin to use it. Consumer decision to adopt a payment system is therefore significantly affected by the amount of other consumers and merchants using it.

Costs

The cost of a payment transaction has a direct effect on consumer adoption if the cost is passed on to customers. As shoppers in electronic channels are attentive to price, the transaction costs of mobile payments should be low enough to make the total cost of the purchase competitive with physical world prices.

Payment system security and trust in payment systems providers

In a mobile environment, lack of consumer perceived security and trust in vendors and payment systems is one of the main barriers to electronic and mobile commerce transactions. The key requirements for secure financial transactions in electronic environment include confidentiality, data integrity, authentication, and non-repudiation. Other security factors important for consumer adoption are anonymity and privacy, which relate to use policies of customers’ personal information and purchase records.

Related links:

http://www.neowave.com.my/mobilemoney_overview.asp

http://project.hkkk.fi/helsinkimobility/papers/Mobile%20Applications_2_3.pdf

Credit cards are almost a necessity, rather than a luxury, which has caused many people to have a huge problem with credit card debt. Many people now have more than one credit card with a balance and you may even be one of those people.

If you are one of the millions of people wanting to get out of credit card debt, then you should understand what caused the credit card debt problem and try to prevent it starting from today!

Causes:

No equilibrium between expenses and income.

People keep on spending regardless the reduction in income. Too often we delay bringing expenses in line with a reduction in income and let debt fill the gap. By doing this, you are increasing credit card debts. The credit card debt cycle just continues to increase, especially if spending habits are not controlled, which causes credit card debt to increase even faster. What started off as a small credit card debt rapidly becomes a large amount that can seem impossible to pay off.

Poor credit management.

As the saying goes, money likes to be counted. When it comes to credit cards, it would be better to say, they like to be handled carefully and responsibly. A monthly spending plan is essential. Without one you have no idea where your money is going. You may be spending hundreds of dollars unnecessarily each month and end up having to charge purchases on which you should have spent that money.

Poor money communication skills.

Keep the lines of communication open and discuss financial goals and spending styles with your spouse and children. You and your spouse should promise to each other that you will not hide your spending habits. Many couples undergo divorce is because they rack up huge credit card debts without the other spouse's knowledge.

Saving too little or not at all.

Having enough savings for a rainy day is always a worthwhile investment. Do it and you shall be better off! You should save for at least 4-6 months of living expenses incase an unfortunate tragedy happens. With a savings cushion in place, a job layoff, illness or divorce will not cause immediate financial strain and increase debt.

Prevention:

Establish a budget and then follow that budget exactly.

In other words, don't be tempted to charge that plasma TV to your credit card on a whim when you haven't budgeted for it this month.

Pay double the minimum payment.

Pay double the minimum payment if you can afford it. The minimum payment usually pays just enough to cover the interest and a little more that pays down the balance. Paying extra will pay your balance more quickly.

Repay Sensibly.

Think of your credit card balance as a snowball that grows larger as it rolls downhill. Small steps can make a big difference, and the sooner you start, the sooner you'll be debt-free. Pay off smaller balances first. It will take less time and you will feel a sense of satisfaction when you have actually completed your goal. This will boost your confidence and make it easier to tackle the higher balances.

Cut up your cards.

Cut up your cards so that you are not tempted to use them. Ask yourself what do you want those credit cards for? Save one card for emergencies. Remember: Prevention is always better than cure.

Related Links:

http://www.bankrate.com/brm/news/debt/debt_manage_2004/top-10-causes.asp

http://ezinearticles.com/?Credit-Card-Debt---Prevention-Is-Better-Than-Cure&id=226244

http://www.mozdex.com/prevent-credit-card-debt/