By Willy Staley  Posted on Wed Feb 15, 2012

The Virtual Gets Physical: PayPal Rolls Out its Prepaid Debit Card

 

The Virtual Gets Physical: PayPal Rolls Out its Prepaid Debit Card

PayPal, the payments service that is nearly ubiquitous on the Internet, has just launched its first real world, physical, plastic card — and it’s not a credit card. PayPal, in a partnership with NetSpend Corp. and MasterCard, opted instead to go the prepaid debit route.

Now, those with an existing PayPal account can get a card and spend their eBay-earned money anywhere MasterCard is accepted, or they may take money out of ATMs. It’s an interesting way to integrate an online payments system with brick-and-mortar retail. As always with prepaid products, there are bonus features to entice and fees to discourage adoption. The PayPal card has plenty of both.

How it Works

The PayPal prepaid card is only truly useful to those who already have a PayPal account. Those with PayPal accounts can go online to link their card with the account. This isn’t a seamless process; the accounts are siloed, in a sense (i.e., if you have $500 in PayPal and you put $250 onto your card, you’ll be able to access $250 from either, but not the whole $500). Users can also add funds onto their PayPal card using NetSpend’s reloading locations, direct deposit, and bank transfers.

Like the Mango Card before it, the PayPal card also comes with a savings account with a highly competitive APY: 5 percent. There is no minimum deposit to access the savings account, and at press time no indication whether the account has a deposit ceiling (a NetSpend spokesperson was uncertain, which could be a boon for rate chasers). Interest is paid quarterly, but the fine print notes that because users will be pulling their savings funds out through their card account, they might lose the interest to card fees.

What Are the Fees?

The card costs $4.95 a month, but doesn’t charge for transactions, like some prepaid cards do. It does charge $1.95 per domestic ATM withdrawal, which is less than competitive. As for loading the card, direct deposit is free, as are ACH transfers. Customers using Instant Bank Transfers will be charged $1.95 for transfers of less than $100. Those who use NetSpend’s network of reloading stations will be charged anywhere from $0 to $3.95 for using check or cash to put money on their card.

The card also allows for online bill pay, including scheduled payments, and has an online merchant-based rewards system.

“NetSpend’s mission really is to serve the underbanked and unbanked,” a spokesperson told MyBankTracker. While prepaid debit cards often invite skepticism, this card, used in conjunction with a PayPal account, actually does seem to provide an alternative to traditional banking services — users can receive payments, send payments, and earn an above-market interest rate.

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  • http://www.facebook.com/sunk818 sunk818

    Sad. PayPal has had a debit card for many years. Its just sad to see them get in to the prepaid debit market. Companies just have no shame.

    • SM032

      And banks don’t have predatory fees?  I made the choice to drop my bank accounts and simply using prepay debit and paypal.  I SAVE MONEY each month by avoiding the $8 to $15 monthly maintenance fee, the $5 debit card fee, and whatever other fees the banks can come up with.  I end up only paying around $3 to $5 a month on fees now with prepaid.  Extra gas money for me!

      • http://www.facebook.com/sunk818 sunk818

        Sure, banks have predatory fees. I was just disappointed PayPal decided to get in the game as well. I love my PayPal debit card (not prepaid). I get 1.5% back on purchases.

        • jerry

          I’d never recommend there service to anyone worst pre paid service rude customer service and think they are crooks at pay pal.

          • disqus_PkFl9PMmsD

            so I paid 4.95 for the card, then they charged me another 4.95 for the first month. right off the bat, they already charged 9.90. Wow, stay the hell away.

  • http://www.facebook.com/jamiealtman2 Jamie Altman

    If your using this card to spend funds from your Paypal account you are better off just getting the regular Paypal debit card from http://www.paypal.com period. Using this card means you still have to wait 3-5 business days for your Paypal account to withdraw fund to this card account, sign up for another account to begin with and if you need funds in your Paypal account to make purchases you are better off loading the funds using a GreenDot Money Pak card. At least then there are no required monthly fees.

    I have a Business Account with Paypal and thought I could simply withdraw the funds to this account but even though my name on the business account is my own name the card issuing financial bank refused to allow the any withdraws from Paypal making this card completely useless and loaded with ridiculous fees. Using the regular debit card from paypal means I have immediate and direct access to funds in my Paypal account without having to wait for that withdrawal period.

    I also attempted to contact customer care about the issue with the withdrawals not going through even though all the account information was correct and spent over two hours on the phone with them. When three reps simply refused to allow me to speak with a manager they each one simply rerouted my call back to the automated system and I had to start all over again. This is a very poor product with no customer support whatsoever. After one week of using the card I was so fed up with the fact that my withdrawals from Paypal to the card were refused by the cards bank I requested that I be refunded the lousy $4.95 monthly service fee and my account cancelled after spending 2 hours with three reps, having requested a floor manager, being redirected back to the automated system three times. I finally got a quote “supervisor” on the line and they couldn’t even have been bothered to look up my account and called me the wrong name. At that time the supervisor said he was placing me on hold to look up the account, rerouted me back to the automated system and was then told by the automated system the customer care department was closed please call back again later.

    • http://mybanktracker.com Willy Staley

      Interesting! That sounds like a pain. Thanks for the warning on this one.

    • Crystal Montgomery

      Paypal Prepaid is powered by Netspend and I have many years of poor experience with Netspend customer service. I too have a business Paypal account and thought this an easy way to get access to my direct deposit funds. Come to find out it is the same poor customer service! I have activated my card but will be closing it immediately now that I know the poor choice of a partner they chose.

  • Bruce

    Do not waist your money on this card. I bought two thinking I would use one for myself and give the other to my daughter. I paid $4.95 for each card in the store, and put $20.00 on each. When I registered my card they immediately charged $4.95 for activation. Then when I complained and asked for the $4.95 back since I already paid in the store they refused. I canceled my card and then they charge $5.95 to send you a check for the remaining funds. So the bottom line was I paid $14.85 for each of the cards and never used them for a single transaction.

    • bevG

      same thing happened with me.. very dissappointing

  • Justshakingmyhead

    I highly CAUTION AGAINST using your PayPal debit card for purchases, particularly online purchases. If you receive a faulty or damaged product or one with missing pieces then you will have to find an “expert” on the product to write a statement on their company letterhead stating that the product is faulty, damaged or missing pieces. Nothing less will do according to Paypal debit card services dispute department.

  • lmcclary322

    Like Jamie I too have a business as I am an independent contractor, the company I do business with does direct deposit, and have been doing direct deposit to other prepaid debit cards for years, I too thought using the paypal prepaid debit card would be seamless by have a paypal account for other payors that dont do direct deposit, however Paypal prepaid debit card is holding my direct deposit, because my business name is on the deposit. When I offered to send proof that the name of the business is me and I am the business, I was transferred, repeatedly, not allowed to speak with a supervisor for almost 2 hours, and when I got tired of arguing the point and told them to go ahead and send it back, I was informed they would not send it back for 6 business days WTF!?!?! Why are you holding my money??? if you are not going to post it then send it back immediately. Are they collecting interest on holding my money for 6 days. Also they pend authorizations that the merchants state unable to authorize your card. That has happened twice. The first time I thought it was the merchants fault as I was not really familiar with the merchant I blamed them called, them everything but a child of God. Paypal finally released the authorization 7 days later. after cancelling my order the same day and threatening to report them to the BBB. The next time it was a online pizza order, I, mistakenly entered my card number in the card field and then again in the name on card field. When I submitted the transaction, it came back unable to athorize your card, I noticed my mistake corrected it submitted again and it when throught. BUT WHY ARE THERE 2 AUTHORIZATIONS ON THE CARD!!!! same merchant same amount. one charge has gone through but I am still waiting for them to release the first pending authorization. I will defiantly be cancelling this card as soon as I am sure all of my money is back on the card, transfered back the regular paypal acct and all my direct deposits are safely back to my previous debit card.

  • Renee

    If you just need a prepaid card, you’re MUCH better off with Green Dot. Like other posters, I paid 4.95 for the initial activation, then was charged 4.95 even when I didn’t use it. Chase Bank charges 3.95 a month for full checking and has excellent, U.S. – based customer service. Hardly predatory.

  • bernicewright

    Panda research. Send payment to pay pal and thy rejuet my payment

  • guest

    http://www.youtube.com/watch?v=KVddTxlBpoc Check it out, Free $5, No credit Check, Paypal Prepaid mastercard

  • TooDisappointed

    STAY AWAY FROM THE PAYPAL PREPAID MASTERCARD!!!
    I am a freelance writer and have been receiving payments from my clients via PayPal for years with no problems. I have been so pleased with PayPal’s service that I was more than willing to give their prepaid card a try. The idea of getting my funds faster by transferring them from my online PayPal account directly to my PayPal prepaid card sounded great. However, my experience with this card was both short and traumatizing. First of all, after receiving my card, it took a 4-hour inquisition to activate it. The online activation would not work, so I was forced to call the notorious customer service hotline and hold on for a representative for over 20 minutes. The first representative informed me that my card could not be activated because they could not verify my identity. Therefore, I would have to fax them a photocopy of my birth certificate or passport! After refusing to do this, I spoke to another representative who ended up asking me several questions from my credit report to verify my identity. I eventually got my card activated, but I was never able to establish online access. Secondly, I confirmed my account with PayPal and set up my first transfer to my prepaid card. After waiting the appropriate number of days, I called the prepaid company to find out how much longer it would take to process the transfer. The representative then informed me that my account had been closed because of its “high risks.” Coincidentally, my account was closed the same day that I initiated my transfer, yet I was not notified of this. I immediately requested to speak to a manger and was placed on hold again. Fortunately, I thought to hang up the phone and call the better half of PayPal and get my transfer canceled. PayPal customer service took care of things in a matter of minutes. My funds are now safely back in my PayPal account, and I will NEVER consider using the PayPal Prepaid Mastercard again.