Prepaid Debit Cards and the Olympics

I always talk and write about the benefits of prepaid debit cards because I’m convinced they’re the “real deal” when it comes to money management tools. My friends have heard me extol the virtues of these reloadable cards for a long time now. They’ve also heard me say that, inevitably, these little plastic wonders will someday replace cash. Well, that day’s come just a little bit closer.

You see, I just read where the Royal Bank of Canada (RBC) is going to issue prepaid Visa cards to athletes at the Winter Olympic Games in Vancouver. These are going to be very special prepaid cards, in that they will be “contactless” cards. That means they don’t have to be swiped across a card device to be read. Rather, they only have to waved in front of the device. That, in and of itself, is pretty cool. But there are a couple other facts that make these cards even more interesting. You see, they’re actually really not cards.

By that I mean they’re not shaped like traditional plastic debit and credit cards. These are more like watch fobs – but watch fobs in the shape of tiny soft drink bottles. Yes, you read me right, soft drink bottles. You see in a move that would surely please the hearts of any marketing executive, the RBC is backing cards that are living breathing advertisements.

And these advertisements sort of have a mind of their own. That’s because they’re designed to work only at specially equipped vending machines. You guessed it; they’re designed to work at soft drink vending machines all across the Olympic venues.

It’s unclear at this time whether these non-card prepaid cards are being loaded up by the Royal Bank and donated to the athletes or merely provided to the athletes who must load them up themselves. My guess is the Bank is underwriting them because up until this innovation, all previous contactless payment instruments in Canada were linked to a credit card account. Having the backing of a bank will mitigate any fraud or loss from use of the devices.

Of course this is an “everybody wins” proposition. The bank makes out because they get bushels full of advertising. The soft drink makes out because they get the advertising and still sell their products. And I guess the athletes make out because they can have a cold, bubbly beverage any time they want one.

But my whole point in regaling you with this story is to report that prepaid debit cards are finally making some kind of penetration into the vending machine universe. Credit cards have made their way into this realm but not debit cards. That’s because vending machines just haven’t been that connected. They don’t have the computer brains to make a quick connection to a back end database that can tell them whether or not the debit card they’re reading indeed has enough of a balance on it to pay for that drink. Whereas credit cards, with all of their overdraft protection (sort of) were always good for the price of the drink.

All that’s lacking for vending machines to begin to embrace debit cards whole-heartedly is for technology to catch up. Once a generation of vending machines can be produced that can quickly scan your debit card, check your real-time balance, and spit out your selection when you have enough to cover the charge, people will think differently about carrying around change and cash. I know I will.

Once the technology is entrenched in vending machines, it will be a simple matter for it to expand into all other sorts of business situations. And everyone will have less reason to carry cash.

So don’t look now folks, but prepaid cards are taking over. It won’t be over night; in fact it will be so gradual that we won’t even truly notice it. It will just be that one day we wake up and realize that we haven’t gone to the ATM in several weeks and we haven’t asked for “Cash Back” with a card purchase in the same time span. It’s going to happen – you saw it first at the Olympics.

David T. Andrews has worked in the financial sector for over 20 years. Prepaid debit cards are great financial tools for all ages. Whether it’s a student debit card or a reloadable prepaid debit card [], they give you more control over your spending than most other financial instruments.