Definition of stored-value card

plastic card encoded with monetary value on a magnetic stripe. Stored-value cards are effective replacements for cash and have many applications for low-value retail purchases. There are two main categories: closed-loop cards, such as merchant gift cards, transit system fare cards, and prepaid telephone cards; and open-loop cards, which can be used at many retail merchants and for banking purposes, such as receiving direct deposits or withdrawing cash from automated teller machines. Open-loop cards can be reloaded with additional value. Banks have been offering stored value cards as a gateway to servicing the needs of consumers who have income from wages or benefits but lack access to conventional checking or savings accounts.