Do prepaid cards offer a legal loophole?

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Do prepaid cards offer a legal loophole?

25th October 2010

Of course, the World Cup is in South Africa during the Summer of 2010. More than 370,000 people from around the world are expected to come to Cape Town and surrounding areas in order to enjoy the vast array of excellent games and exciting football. However, with tourism can come rules on custom and excise, and with South African laws in place, this can get quite interesting.

Some people like to exchange money at the Airport into the currency of where they are flying – Rand in this case. However, South African laws mean that anybody who has more than £450 in Rand on their person in physical cash could have the difference confiscated. Recent research conducted by prepaid card financiers evidently demonstrated how UK tourists were not aware of this law, with nearly three-quarters of participants in a survey having no awareness of the laws in place by the country. Prior to this, 20% of those questions also revealed that they would have taken at least £1,000 with them to the country – over double the limit. Across the spectrum of football-goers who were planning their holiday spends for the World Cup, it is believed that many people plan to take £200 more than the legal allowance on average – and the same applies for when a person is leaving the country, too.

Reasons for this are crystal clear, with the foreign transaction fees making every expense that little bit more costly. However, another thing which people seem to be unaware of are prepaid credit cards, which can allow a person to load more than £5,000 onto a card in South African rand – bypassing both the Customs limit as well as the additional costs of using a car abroad.

There have been fears of security at the World Cup, also – as with the evident luxury and lavish surroundings of Cape Town and Johannesburg come the poverty and grief in sharp contrast. Muggings and burglaries are expected to be high, and tourists can certainly feel more secure with a card that can be cancelled over the telephone immediately after it is stolen in contrast to cash which can be difficult to recover. The recession it itself has meant that nearly 100,000 people who would have wanted to go to the World Cup now do not have the opportunity to because of the financial challenges that they are facing. It can make sense for those who are lucky enough to get the chance to attend to be financially responsible, particularly if dealing with substantial amounts of money that should last them for the entire duration of their journey.

In the economic news, it is believed that these prepaid cards are also going to be used far more than analysts first forecast. Sure, there might be less attendees going to the World Cup, but their stays and their average expenditure is expected to get a sharp rise – possibly because of how retailers are raising their prices and making their goods as inelastic as possible.

Posted in Prepaid credit cards

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