Legal Definitions - stored-value card

A stored-value card is a payment device that holds a specific amount of money directly on the card itself, rather than linking to a traditional bank account in the cardholder's name. The funds are loaded onto the card, and the card then becomes the sole way to access and spend that predetermined amount. It functions much like digital cash, allowing you to make purchases or access services up to the value stored on it, without needing a personal bank account or credit check.

• Example 1: Retail Gift Card

  Imagine you receive a $50 gift card for a popular online bookstore. When you use this card to buy books, the purchase amount is deducted directly from the $50 balance stored on the card. This illustrates a stored-value card because the $50 is held *on the card itself*, not in a bank account under your name, and the card is the only way to access and spend those specific funds at that bookstore.

• Example 2: Public Transit Card

  A commuter in a large city buys a transit card and loads it with $30 for bus and subway fares. Each time they tap the card to enter a station or board a bus, the fare is automatically deducted from the card's balance. This is a stored-value card because the $30 is physically stored on the card, separate from any personal bank account, and the card is the exclusive method for paying for rides using those specific funds.

• Example 3: University Campus Card for Specific Services

  A university student uses their campus ID card, which has a prepaid balance specifically for purchasing meals at the dining hall and using campus laundry facilities. The student or their parents loaded money onto this card at the beginning of the semester. This demonstrates a stored-value card because the funds are held on the card itself, are only accessible through the card, and are not linked to a personal bank account for general spending outside the university's designated services.