Launching No-KYC Prepaid Card Programs - What Rules Apply
- Verestro
- 5 days ago
- 3 min read
Updated: 55 minutes ago
You've been wondering about launching a prepaid card program, perhaps for your cafeteria or as gift cards, without the burden of extensive Know Your Customer (KYC) procedures. It's a question we've heard frequently, and navigating the landscape of prepaid cards and gift cards can indeed be tricky. Misinformation often arises from the discrepancies between legal frameworks and the rules set forth by major payment schemes like Mastercard and VISA. Let's delve into what's truly possible when it comes to launching prepaid card programs with simplified or no KYC.
Table of Contents:
What Are the Regulatory and Scheme Requirements for Prepaid Card Programs?
To understand the possibilities, we must first dissect the key rules governing prepaid card programs:
The Legal Landscape (Europe - PSD2 & AML): European regulations, particularly the Payment Services Directive 2 (PSD2) and Anti-Money Laundering (AML) laws, generally mandate that payment institutions identify their customers through comprehensive KYC processes. However, some countries may allow for limited KYC in specific scenarios, such as for non-reloadable gift cards with predefined spending or transaction limits. In Poland, for instance, our legal framework permits the issuance of anonymous cards under strict conditions:
The total value of monthly transactions cannot exceed €150.
The maximum value stored on the card is capped at €150.
The card can only be used for Point of Sale (POS) and e-commerce transactions.
Payment Scheme Rules (Mastercard & VISA): Interestingly, Mastercard and VISA have their own set of rules. For certain non-reloadable prepaid cards, they may grant approval for anonymous issuance. However, this is not a standard provision and necessitates a specific application and approval process for the program.
Business-Focused Solutions (KYB): A distinct avenue exists for specific use cases like expense management or lunch cards. In such scenarios, it might be possible to conduct Know Your Business (KYB) on the company purchasing the prepaid cards. The funds on the associated account remain the property of the company, which can then issue cards with simplified KYC to its employees or designated users.
How to Start Issuing Gift Cards?
Considering the interplay of the regulations and scheme rules, we can envision a couple of potential scenarios:
Scenario 1: Limited-Use, Non-Reloadable Gift Cards (up to €150)
It is feasible to launch card programs featuring non-reloadable gift cards with a maximum value and monthly transaction limit of €150, subject to approval from the relevant payment scheme. These cards would typically have restricted acceptance, aligning with the limitations imposed.
Scenario 2: Company-Issued Reloadable Cards for Specific Purposes
Another viable option involves companies launching reloadable prepaid cards linked to their business accounts (after undergoing KYB). These cards can then be distributed to employees or users for specific, company-related expenses or designated purposes, potentially with streamlined KYC procedures for the individual cardholders.
Ready to Launch Your No-KYC Prepaid Card Program?
Understanding the intricacies of legal and payment scheme rules is crucial for successfully launching a prepaid card program with simplified KYC. If you're considering such an initiative, we encourage you to reach out to Verestro. Our team can provide expert guidance on the most suitable scenario for your business needs and help you navigate the process to quickly launch a compliant and effective prepaid card program. Let's discuss how we can tailor a solution that aligns with your objectives.
