Certain prepaid cards require a charge at the time of purchase to enable their usage. This charge compensates the issuing company for the cost of distribution, activation, and ongoing support. For example, if one purchases a prepaid card with a $50 value and encounters such a charge, the actual amount paid at the register will exceed $50.
The existence of this initial payment ensures that the card is ready for immediate use and provides a mechanism for retailers to offer gift card services without incurring substantial overhead costs. Historically, these charges helped offset costs associated with fraud prevention and secure funds management. The structure also allows retailers to offer a wide variety of gift card options without directly managing the underlying financial transactions.