financial portal to launch prepaid credit cards

No-frills financial portal to launch prepaid credit cards in Malaysia
The Associated PressPublished: June 21, 2007

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KUALA LUMPUR, Malaysia: An online financial service company said Thursday it has obtained approval from Malaysia's central bank to issue prepaid cards, which are similar to credit cards but have a stored value.

Tune Money Sdn. Bhd. said its no-frills Prepaid VISA cards will be unveiled latest by November after another product, a low-cost insurance and unit trust sale on the Internet, is launched. The cards will be issued in collaboration with Visa.

Tune Money is 45 percent owned by Tune Venture Sdn. Bhd., a private company in which Tony Fernandes, the founder of budget airline AirAsia, has a majority stake.

The prepaid Visa cards, which will have a stored value of as much as 10,000 ringgit (US$2,900; €2,260), will be targeted at low-income earners who are unable to get regular credit cards because banks don't recognize their creditworthiness, said a Tune Money statement.

In Malaysia, credit cards are issued only to those who earn at least 1,500 ringgit (US$440; €340) per month. Many others don't get a card because they are afraid of falling into the debt trap.

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"Our card addresses both problems. Since you pay upfront, there is no credit risk and hence, no minimum salary requirement," Tune Money Chief Executive Officer Zafrul Aziz was quoted as saying in the statement. "And, since you pay upfront, there is no possibility of landing yourself in debt with our card," he added.

Tune Money says that people without a credit card — at least 70 percent of employed Malaysians — are deprived of all the cheap deals available online such as discounted tickets, holidays and hotel rooms.

"It's ironic that those who most need the savings you can get from the deals online have no access to it because they do not qualify for a credit card," Zafrul Aziz.

"Our card will essentially democratize the system. It will allow all sections of society to enjoy the benefits of the buying online," he said.

Bank Negara, the central bank, has also given Tune Money approval to allow transfer of funds overseas using the prepaid Visa cards.

The personalized card will look exactly like a credit card and be accepted at all locations that accept the Visa brand. This will differentiate it from the debit cards on the market which can only be used at a limited number of terminals, the statement said.