PayPal launches pre-pay debit card

PayPal has launched a new pre-paid card for use in the UK, which it hopes will help cash-strapped Brits manage their finances more sensibly.

The PayPal top up card can be used wherever a VISA sign symbol is displayed throughout the world, but has to be loaded with cash first, which can be done either online or with real cash at the Post Office. As you can only spend money you’ve put on the card and cannot go overdrawn, the company hopes the card will be ideal for those people who want to closely manage their budget, who don’t want to carry cash abroad and those with a poor credit history.

"Over one in 10 of our customers told us that they’re looking for ways to manage their spending," says Carl Scheible, managing director of PayPal UK. "The PayPal top up card allows people to control their spending and stick to a tight budget by loading up a set amount of money each week."
The PayPal card costs £4.95 to get started, but although loading cash from your online PayPal account is free, cash top-ups at the Post Office carry a £1 fee. All withdrawals from an ATM cash machine will also cost £2 a time.

PayPal’s venture into the pre-paid card market follows similar moves from the likes of Barclaycard, Virgin and the Post Office to help customers keep control of their spending. And according to independent research from FairInvestment, around 2.3 million Brits currently use pre-paid cards for their everyday spends, and predicts this figure to rise. It predicts the pre-paid credit card market to be worth approximately £4.5 billion in two years' time.

Andrew Hagger, a spokesperson for Moneynet believes that there is a place for pre-paid cards in the current market. "Those customers who may be having difficulties getting a credit card will find a pre-paid card allows them to manage their money better, allowing them to shop online or abroad without having to worry," he says. "However the flipside are the charges and fees associated with the card - but if you have a poor credit history it is well worth paying for the privilege."

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