NatWest launches pre-paid payment cards

Partnership with O2 enables customers to check account balances on their mobile

Balance updates will be sent to prepaid card users via SMS

NatWest is launching two pre-paid cards that can be topped up from mobile phones in partnership with O2.

The cards under the "O2 Money" brand comprise one product for children – which cannot be used for services such as gambling, in shops or online – and another card for adults, which is pitched as a “cash manager” where customers can "ring-fence their disposable income".

When customers use the cards – accepted across the Visa network and available at the end of August – they will be sent text updates to their mobile so they know how much credit they have left.

“The strength of our brand and relationship with our customers gives us the ideal opportunity to take O2 into a completely new market,” said O2 UK chief executive Ronan Dunne.

“By bringing a fresh, transparent and customer-focused approach to pre-paid cards, we plan to drive this market and take a significant share," he said.

"In partnership with NatWest, O2 Money is delivering new and innovative ways of helping our customers better connect with their money."

The joint venture is the latest move from mobile operators attempting to expand their financial services offering and follows the likes of Barclaycard, which has partnered with Orange to develop new mobile payment technology for transactions under £10.

How prepaid cards work

Simple “closed-loop” schemes, such as campus catering or purchase cards, can use “dumb” memory cards based on technologies such as Philips Mifare. A lower security threshold suits such environments where the greatest loss, for example, is the cost of a Snickers bar. They involve simple read or write security keys.

“Open” schemes, such as those backed by Visa or MasterCard, demand much stronger embedded security mechanisms that prevent duplication or message replay and as a consequence demand more sophisticated microprocessor cards.

Visa and MasterCard pre-payment schemes run on the same infrastructure, and the pre-payment applications can sit alongside other applications on the same card so the use of a pre-paid card is transparent to the retailer.