What are the Differences Between Prepaid Cards & Uses

BY Lucy Fang
Nov 14, 2023
Customer using one of several types of prepaid card

Most people know that prepaid cards are incredibly popular for various types of reward programs and more. However, you may not be aware of all the different prepaid card types and uses. Most cards either fall into Open Loop Cards or Closed Loop Cards. Open Loop Cards can be used nearly anywhere. Closed Loop Cards have restrictions on their uses.

Here are some of the most popular prepaid cards.

Popular Types of Open Loop Prepaid Cards

General Purpose Reloadable

General Purpose Reloadable, or GPR, prepaid cards are the most flexible prepaid card types. It is common to be able to load funds from multiple sources. The cardholder owns the funds and can use them with very few restrictions on how the money can be spent. These cards can also be either digital or physical. General purpose reloadable cards are ideal gifts because they offer recipients the freedom to purchase what they want and reload the card, if necessary.

Prepaid Gift Cards

Prepaid gift cards are the prepaid card types that you see on the hooks at various convenience stores. These cards are not reloadable and typically do not have access to cash. They may also have inactivity fees, which help close out the cards as the funds do not expire. These cards rarely allow for a load of more than $1000. There are no spending restrictions outside of cash access on prepaid gift cards.


In many ways, a payroll card acts very much like a GPR card. The biggest difference is that the cardholder receives the card from an employer. The only way a person can obtain a card is through their employer.

Popular Types of Close Loop Prepaid Cards

Prepaid Corporate Cards

Corporate prepaid cards are often issued to employees to cover work-related expenses as an alternative to using a corporate credit card or expense reimbursement form. Travel and expense cards are common prepaid card types and often restrict cash access and spending, limiting the card user to specific areas such as hotels, airlines, and restaurants. The employer typically has access to all purchase activity on these cards.

Benefits Cards

An example of a benefits prepaid card is a medical Flexible Spend Account or FSA prepaid card. These funds are heavily regulated and are not true consumer-owned funds. Instead of requiring an individual to submit a reimbursement for an expense, they are provided with a prepaid benefits card which they can use to purchase the eligible items. The funds usually expire at the end of the plan year, at which point the consumer loses access to them – depending on plan rules. These cards cannot be loaded by external parties. Closed-loop prepaid corporate cards usually have very strict spending limitations and no cash access.

Prepaid Incentive Cards – Open or Closed Loop

Person typing on a keyboard with one hand and holding one of many types of prepaid card in the other

Incentive cards are similar to prepaid gift cards. Unlike many other prepaid card types, however, incentive cards are corporate-owned funds. This means the Program Manager gives the cardholder temporary use of the funds for a predetermined period. If the cardholder does not use all the funds on the card by the expiration date, the remaining funds are removed from the card.

Typically, incentive cards don’t allow access to cash and are single-use. Just like with gift cards, the amount is usually restricted to less than $1,000.

To learn more about how different prepaid card types can benefit your organization, our expert team at All Digital Rewards is available to help you build a winning prepaid card strategy. Call today at 866-415-7703 or schedule a demo to speak with our team.