Prepaid Visa Gift Cards: What You Need to Know

Every year many millions of Americans are buying, giving and using prepaid Visa gift cards. It is a convenient and easy way to get around the purchaser’s gift shopping dilemma, even as the outsourcing of the real shopping decision works out just fine for the gift recipient, who gets to buy something he or she actually likes. For their part, merchants also love gift cards, not least because a substantial portion of the funds are never used up by the cardholders.

It makes perfect sense then that gift cards, and prepaid cards in general, have long been the fastest-growing non-cash payment type in the U.S. Still, much loved as they are, gift cards are not exactly risk-free.

Buyers often see them as little more than a convenient way to get through their shopping lists quickly and painlessly and end users are spending someone else’s money, so no one is nearly as cautious with gift cards as they are with their credit or debit cards. Yet, it’s still money and common sense dictates that both the gift card’s buyer and user should ensure that they are getting a good deal for the money.

Now let’s see exactly what gift cards are, how they work and how to manage them correctly.

What Is a Visa Gift Card?

Visa gift card is a prepaid Visa card, which can be used for purchases at merchants worldwide that accept Visa debit cards. Note that, if the front of your gift card states “Valid only in the United States”, your bank has issued a Domestic Use Only card. In this case, though your gift card will not be accepted at locations outside of the United States, it would still be welcome at millions of locations within the U.S., wherever Visa Debit cards are accepted.

In the industry jargon, gift cards are known as a “general-use prepaid card”, which means that it is:

• Issued on a prepaid basis for personal, family or household purposes to a consumer in a pre-defined amount, which once used up in Visa’s case may not be increased or reloaded; and
• Redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or is usable at automated teller machines (ATMs).

The value of the prepaid Visa gift card is determined at the time of its purchase and the spending limit is the amount of money placed on the card by the buyer.

How to Get Started with Visa Gift Cards

Using a prepaid Visa gift card is simple — just follow these steps:

1. Activate Your Visa Gift Card

Many Visa gift cards are activated at the time they are purchased and ready to use. However, if your card requires activation, you will usually see a sticker with instructions and a toll-free phone number to call.

2. Where to Use Your Gift Card

You can use your prepaid Visa gift card anywhere Visa is accepted, including at your supermarket, gas station and online. Remember that you can make purchases up to the amount limit that’s on the card (there are exception, as we will see below).

3. Using Your Prepaid Visa Gift Card in Stores and Online

In a brick-and-mortar store, you would just slide or insert your gift card to pay. For an online checkout, you would enter your Visa gift card number, expiration date and CVV in the appropriate form field, as you would do with any other card.

4. Making Returns with Your Visa Gift Card

Hold on to your Visa gift card, even when there is no balance left on it. In case you ever need to make a return, you would need to show the card to the merchant.

Prepaid Visa Gift Cards Frequently Asked Questions

Do You Need to Do Anything Before You Use the Card?

Before using the card, store its information in a safe place, in case your card is lost or stolen. Sign the card on the back signature panel. It is also a good idea to register the card with the issuer, where available.

How Does Your Prepaid Visa Gift Card Work?

When you make a purchase, ensure that you know the remaining balance on the card, then select credit and sign for your purchase. Note that the debit option requires a PIN, in order to work. If your card does not come with a pre-set PIN, you will have to set one prior to making the purchase for the debit payment option to work.

How Do You Select Your Card’s PIN?

You can go to your issuer’s website and login with your Visa gift card number and the 3 digit security code on the back of the card. Alternatively, you can also choose your PIN by calling the toll free number on the back of your card.

What Type of Purchases Can You Make with Your Gift Card?

You can use your card to make purchases anywhere Visa debit cards are accepted, either as PIN-based or signature merchant transactions.

Can You Use the Card, Even Though Your Name Is Not Embossed on It?

Yes, you can use your gift card. Just make sure to sign the back of the card. Merchants will compare the signature on the back of the card to the one on the sales receipt that you sign.

How Can You Check the Balance on Your Gift Card?

Every time you use your Visa gift card, the purchase amount is deducted from the available balance on the card. You might want to keep track of your purchases and know your remaining balance, before making a payment, to ensure that your card will be accepted.

As your gift card is similar to a debit or credit card, merchants cannot see the remaining balance on your card. To check your balance, you may call the toll free number on the back of the card or check online, where available. You will need your 16-digit Visa gift card number and the 3 digit security code from the back of the card.

Is There a Limit on Transaction Frequency or Number of Stores?

There is no limit either on how frequently you use your gift card to make purchases or the number of merchants where you use it. The only limit is on the amount of funds available on your Visa gift card.

Can You Use Your Prepaid Visa Gift Card to Make a Purchase for a Greater than the Remaining Balance on the Card?

Most merchants will allow you to use your card for part of the purchase price and pay the remainder by cash, check or another card. This type of payment is known as a split tender transaction. Tell the merchant that you will be using two payment methods. Let them know precisely what amount is to be applied to the gift card, then pay the remaining amount with your second type of payment.

What Happens when You Have Used up the Balance on Your Card?

Your prepaid Visa gift card is non-reloadable and can no longer be used. However, as already noted, it is still a good idea to keep your gift card, in case you need to return merchandise for credit.

Can You Use Your Visa Gift Card Internationally?

If your gift card carries the statement “Valid only in the United States” on the front, your issuer has issued a Domestic Use Only card. Otherwise, your card can be used at any merchant that accepts Visa debit cards. Note that transactions made in currencies other than U.S. dollars will be converted to U.S. dollars, plus any issuer international transaction Fee, if applicable.

Can You Get Cash from Your Gift Card?

Yes, your gift card can be used to withdraw funds by ATM or to receive cash advances. You will need to enter your pre-selected PIN (login to your issuer’s website or call them to set a PIN) and follow the ATM instructions. There may be a maximum limit of the daily amount you are allowed to withdraw, including any fees that the ATM owner may charge per transaction.

Can Your Visa Gift Card Be Used at Gas Stations?

Yes, you can use your card at gas stations.

Do You Get Monthly Statements?

No monthly statements are generated. You may check your card balance by calling the number on the back of your gift card or online at your issuer’s website, where available.

How Long Can You Use Your Visa Gift Card?

You can use your prepaid Visa gift card until the funds are fully used up, or until the last day of the expiration date on the card. Note that if any balance remains on the card after the expiration date, it is forfeited.

What if You Need to Return a Product that You Purchased with Your Gift Card?

Different merchants have instituted different return policies. Yet, returns on your Visa gift card will be handled by the merchant in the same way that returns are handled with any other Visa card. As already noted, you should save your sales receipt and the card, even after its balance has been fully used up, in case the merchant’s policy is to credit the amount back to your card. (See below for further details.)

Can You Use Your Visa Gift Card to Make Reservations for Car Rentals or Hotels?

No, your prepaid Visa gift card cannot be used to reserve any balance that has not yet accrued, including for hotel rooms or rental cars.

Can You Use Your Visa Gift Card at Restaurants and Beauty Salons?

Yes, you can, but note that many restaurants, hair salons and nail salons will add in an automatic 20-percent tip to the purchase price. If this amount exceeds the available balance on your gift card, the transaction authorization may be declined.

Notify the merchant that they should only deduct a specific amount from your gift card and make payment for the remaining balance by another payment method. Once the transaction has been processed you cannot use the card to make a tip.

Can You Use Your Visa Gift Card for Internet or Phone Purchases?

For security reasons, most internet, mail order, and telephone order merchants require that the billing address for your order match the billing address on your card. With that in mind, register your card before placing any orders, if your issuer supports the option. Note that when making payments online, the information on the card must match exactly the information provided to the merchant.

What if Your Gift Card Is Lost or Stolen?

If your card is lost or stolen, notify your issuer immediately by calling the number on the back of your card or go online on their website. (See below for further details.)

You may be issued a replacement card for the remaining balance, less a reissue fee, which your issuer may charge you. You will be asked to provide the issuer with your 16-digit Visa gift card number to cancel your lost or stolen card and receive a replacement card. That is another reason to keep your card number in a safe place in the event this should happen.

Can You Cancel a Purchase?

If you change your mind and ask a merchant to cancel your purchase, you should know that, if the merchant has already obtained an authorization for your payment, you may need to wait 3 – 7 days for your funds to be added back to your card’s balance.

What if Your Purchase Is Declined?

In most cases where a payment is declined, your Visa gift card’s remaining balance is not enough to cover the purchase amount. Note that some merchants, such as restaurants, beauty salons, cruise lines or mail order companies require that your card must have a greater remaining balance than the purchase amount, in order to allow for tips or incidental expenses.

Can Your Prepaid Visa Gift Card Ever Have a Negative Balance?

If a merchant submits a transaction for processing without prior authorization, and sufficient funds are not available on your gift card, you may be liable for the amount greater than your available balance and be required to make payment to cover that amount. So, pay close attention to the transaction amount and make sure you know whether it is applied to your Visa gift card.

Is There Any Maintenance Fee on Your Visa Gift Card?

Your prepaid Visa card issuer may charge a monthly maintenance fee, if you haven’t used your card for a certain predefined time period. If applicable, that inactivity fee would be deducted from your balance at a predefined time. Check the terms of use and make sure you understand whether and when such a fee is assessed, and at what amount.

What if You Dispute A Purchase on Your Visa Gift Card?

In case you have a question about, or are disputing, a certain transaction, you should contact the merchant directly to settle the transaction in question. If you are still unsatisfied with the outcome, contact your card issuer by phone or on their website, where available.

What if You See an Error on a Transaction?

In case of a transaction error, contact your card issuer by phone or online.

Can You Use Your Prepaid Visa Gift Card to Make a Payment for a Recurring Monthly Bill?

No, your gift card cannot be used for pre-authorized, regular transactions, including recurring payments.

Is Your Prepaid Visa Gift Card the Same as a Credit Card?

No, your card is not the same as a credit card. The difference is that you can only spend the amount of money that was originally loaded to the card.

Is Your Prepaid Visa Gift Card the Same as a Debit Card?

Similarly to a debit card, you can spend only the funds available on the gift card. However, the difference is that a bank account is not associated with a gift card.

Can You Use Your Visa Gift Card to Buy a Money Order?

Yes, you can, as long as the business selling you the money order accepts Visa cards.

How to Protect Yourself from Gift Card Scams

Since 2018, consumers have been defrauded of $245 million on gift cards, which they used to pay scammers for a wide variety of scams, according to data analysis by the FTC. The median individual loss was $840.

Most often, the victims are taken in by an imposter scam. These scams can take on various forms, but the ones most likely to include gift cards as a payment method were government imposters, family imposters, business imposters, and tech support scams.

Note that scammers always have some reason why you need to buy gift cards. These might try to convince you that you are in serious trouble of some form or other with the government and must therefore buy “electronic vouchers” to avoid arrest.

Some people on the receiving end have reported scammers posing as businesses promising special promotional pricing for things like phone or TV service, as long as they paid for the first three months with a gift card. Others were scammed into buying gift cards to evaluate a retailer as a “secret shopper.”

If someone asks you to pay for something by putting money on a gift card, like a Visa gift card, and then giving them the numbers on the back of that card, they are trying to scam you. No real business will ever insist that you pay them with a gift card. Anyone who demands to be paid exclusively with a gift card is a scammer.

How to Recognize a Gift Card Scam

Gift cards are popular with scammers, because they are easy for people to buy and have fewer protections for buyers, as opposed to some other card payment options. Prepaid gift cards are more like cash in that once you use the card, the money on it is gone. And scammers love this.

If someone calls you and demands that you pay them with gift cards, you can be certain that you are dealing with a scammer. Once they have your gift card number and PIN, they will have your money. Scammers can be incredibly inventive and may tell you all kinds of stories to get you to pay them with a gift card, but here is what typically happens:

• The scammer says it’s urgent. They say that you have to pay right away or something bad will happen. But you don’t have to do it and nothing terrible will take place. In fact, quite the opposite is true — not paying them with a gift card will protect you.
• The scammer tells you exactly which gift card to buy. They might guide you to put money on, say, a MasterCard or Visa gift card. They might even direct you to go to a specific store, typically a big one like a Walmart, Target or Walgreens. They may even tell you to buy cards at several stores, so that the cashiers don’t get suspicious. Moreover, the scammer might stay on the phone with you while you are loading money onto the card. All these are clear signs of a scam.
• The scammer asks for your gift card number and PIN. Remember that your gift card number and PIN will let the scammer to immediately get the money you loaded onto your card.

Tactics Scammers Employ to Trick You into Paying with a Gift Card

Scammers will pretend to be someone else to trick you into paying with gift cards. They will want to scare or otherwise pressure you into taking immediate action, so that you don’t have the time to think it over or seek advice. Commonplace gift card scams include:

• The scammer claims to be from the government — the IRS or the Social Security Administration are often used government agencies. They will attempt to pressure you into paying taxes or a fine, but it is invariably a scam, as such communications do not take place over the phone.
• The caller claims to be some kind of tech support, insisting that there is something wrong with your computer, which needs immediate action. Once again, they are lying to you.
• A person you met on a dating website tells you he or she needs money and asks you for help. This type of scammer can be incredibly imaginative in creating a story, solely designed to trick you into sending him gift cards.
• The scammer asserts that he or she is a friend or family member in an emergency and attempts to convince you to send money immediately, asking you to not tell anyone. It is a common scam tactic and you should hang up right away and call your friend or relative to make sure that everything is alright.
• The scammer informs you that you have won a prize but before you could claim it, you would have to pay certain fees with a gift card. Note that no real business or governmental organization will ever make you pay with a gift card. Then again, did you even enter this particular game of chance?
• The fraudster claims to represent your gas company or some other utility service and threatens to disconnect your service, that is unless you pay immediately. Note that utility companies don’t operate that way and it is all simply a scam.
• You receive a check from someone for a much greater amount than you anticipated. The scammer asks you to deposit the check and give them the difference on a gift card. However, invariably, the check in question will be fake and you will lose all the money after it bounces, along with the fee your bank will charge you for it.

What Should You Do if You Paid a Scammer with Prepaid Visa Gift Cards?

If, even after your best efforts to protect yourself, you still find that you paid a scammer with a gift card, call the company that issued it immediately. You will find the issuer’s phone number on the back of your card.

In case you no longer have access to your card, do some research online to find out how to reach the card issuer. If you cannot find their contact information or the issuer isn’t helpful, report the incident to the FTC.

How to Safely Buy and Use Visa Gift Cards

It’s even in their name, so remember that gift cards are for gifts, not for payments. With that in mind, whenever you buy gift cards as a present or to donate:

• Buy from stores you know and trust. Do not go to online auction websites, as the cards there may well be fake or stolen.
• Examine the card out before you buy it. Ensure that the protective stickers are on the gift card and that they do not seem to have been tampered with (see below for details). Also make sure that the PIN number on the back of the card isn’t showing. If there is a problem, get a different card.
• Keep the sales receipt. Either the receipt or the gift card’s number will help you file a report, in case you lose the it.

How to Recognize a Valid Visa Gift Card

Each prepaid Visa gift card issuer uses their own unique design. To ensure the card’s authenticity, look for the standard features in the image below:

• Front of card.

• Back of card.

Prepaid Visa Gift Card’s Key Elements

Electronic Use Only

The statement “Electronic use only” appears on all unembossed Visa cards to indicate that the card must be swiped and authorized through an electronic point-of-sale (POS) terminal. The reason is that unembossed cards have no raised letters or digits and so can’t be used with manual imprint machines.

Note that merchants, which accept only manual imprints must request an alternate payment form to avoid risking the transaction being charged back for a “Missing Imprint” or “Card Not Present” reason.

When Is Additional Payment Required?

If the sales amount is greater than the remaining balance on your Visa gift card, the POS terminal will automatically deduct the amount left on the gift card from the transaction total and show you the additional amount you need to pay.

If it’s a stand-alone POS terminal (meaning that it’s not integrated with the cash register), it will generate a partial authorization request for the remaining amount on your gift card. Then you will use another form of payment to complete the sale.

How to Do Returns on Your Gift Card?

When requesting a return, you will need to present your prepaid Visa gift card, along with the original transaction receipt. The credit will be applied to your Visa gift card, which may take three to seven business days.

How to Void Visa Gift Card Transactions?

You can void a purchase on your Visa gift card the same way you would any other Visa payment card purchase. Once again, the credit transaction may take three to seven business days to complete.

Where to Report Gift Card Fraud

Whenever someone requests that you to pay them with gift cards:

• First contact your gift card’s issuer by calling the number on the back of the card.
• Report it to the Federal Trade Commission here. File a report, even if you didn’t end up paying, as that would help law enforcement fight scams.
• Report the incident to your state attorney general.
• If you did lose money, also file a police report. That may also help in your dealings with the card issuer.

The Takeaway

Gift cards have been highly hugely popular in the United States for as long as they have existed, so much so that in 2006 they were ranked as the second-most given gift by consumers, including the most-wanted gift by women, and the third-most wanted by males, according to the Journal of Consumer Affairs.

Perhaps the biggest reason for their popularity is that gift cards relieve the donor of the necessity to select a specific gift. The gift card recipient, for their part, can use it at their discretion to buy whatever it is they want for themselves.

In 2012, close to 50 percent of all U.S. consumers claimed to have bought a gift card as a present during the holiday season, according to Consumer Affairs. In Canada, $1.8 billion was spent on gift cards, while in the UK that spending total is estimated to have reached £3 billion in 2009, according to The CPA Journal, whereas in the United States about $80 billion was spent on gift cards in 2006. These amounts are only likely to keep growing.

Image credit: Visa.