Comment by freakynit
5 months ago
A better model I had in mind works like this: customers purchase tokens in any amount they choose. Companies then charge for their services using these tokens through the platform's APIs. At the end of each month, settlements are made based on the total token value. The smallest token unit could be as small as one-millionth of a dollar.
It’s similar to a digital wallet, but without currency conversion: customers cannot exchange tokens back into money.
That approach generally doesn't work from a legal perspective: prepaid tokens are often treated as e-money (especially if it's not for company's own products or services), and in many jurisdictions, holding value for users requires an e-money/money transmitter license.
In EU, this depends mainly on the question of exchange/interchangeability: If you sell them as vouchers and do not allow redeeming/payout in the original cash, its not a problem.
The key legal issue is interchangeability. Single-merchant vouchers are generally acceptable. If a voucher can be used across multiple merchants, it's often treated as e-money in the EU. Not being able to use funds across multiple merchants would significantly reduce the value for customers, as they would no longer be able to share payment processing fees across merchants.
I kind of expected this, though not want this way :( ... it seems governments will go to any extent to prevent creation of alternative source of value other than the one they can fully control... for good mostly, bad at other times..
Surely you want any company that offers a prepaid credit card to be regulated, so that you can be extremely sure they won't just take your money and run.
And what really is the difference between a prepaid credit card and prepaid credits you can use at a large selection of tech companies. (Legally there is no distinction)
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