One of the biggest problems with open-loop gift and prepaid cards is the ability to use them all up, or, in some cases, use them at all, as gift and prepaid open-loop cards can be very difficult to use online.  So, if course it catches our attention when there is mention of making  these cards easier to cash out.  Take for instance this recent press-release by MasterCard:

MasterCard Inc. is partnering up with Cardtronics Inc. in order to make free ATM access a possibility for prepaid card members across the country.

Quick Overview of Prepaid Cards

MasterCard prepaid cards are similar to gift cards and can be used as gift cards in that you purchase the card and then can contribute additional money to the card. Money can be added in-store at the time of purchase, online or via direct deposit from your paycheck. You can reload the card continually.

This card is basically an alternative to cash, without all the complications of maintaining an account or credit card. MasterCard offers different cards, including prepaid gift cards, travel cards and cards for everyday purchases.

MasterCard Differentiates From Other Prepaid Card Issuers

MasterCard has focused on growing its prepaid market and the latest addition to the strategy is expected to reel in more prepaid companies. Neil Dugan, MasterCard’s VP and head of U.S. markets prepaid product management told US Banker, “It’s a great opportunity for prepaid companies that are looking to differentiate, are looking for ways to provide value for their cardholders, looking to continue progress in the evolution of their products and the way they are going to market.”

MasterCard Partners with Allpoint Network

This decision also involved Cardtronics Inc.’s Allpoint Network, America’s largest surcharge-free ATM network with more than 37,000 ATMs across the nation. Although prepaid cards are a small portion of Allpoint Network’s business, the company is eager to increase that portion. “We’re trying to leverage our infrastructure as a financial kiosk leader to sell more products and services to this growing segment,” Allpoint president Ben Psillas told US Banker. Usually, Allpoint collects revenue from a monthly fee that banks and other customers pay based of of the number of cards that have access to the Allpoint ATMs. Card issuers who use the Allpoint Network through MasterCard will get a special deal on the price they pay. The terms of the deal were not specified.

It is important to make cash as accessible as possible for prepaid card users who are looking to replace actual cash with the cards. Making ATM usage free and accessible is a smart move on MasterCard’s part and could help build its customer base.

Sounds good right?  Well, sort of.  They don’t actually come out and say that you can get cash for your open-loop prepaid or gift card at an ATM, but they seem to vaguely imply this.  Interestingly enough, MasterCards FAQ makes in interesting statement about using prepaid and gift cards at an ATM:

Can I use my Prepaid, Gift, and Credit cards at an ATM?

Yes. You may withdraw cash against the balance on most MasterCard prepaid and gift cards at any ATM. However, not all prepaid and gift card issuers allow ATM or foreign transactions. Be sure to check with your card issuer to ensure these types of transactions are permitted. Most Credit MasterCard® cards also allow you to obtain cash advances at an ATM. You will need a Personal Identification Number (PIN) to withdraw cash. To contact your card issuer, you will find their contact information on the back of your MasterCard card and/or on your billing statement. Or you can visit the issuer’s Web site to manage your account online.

The real truth lies in the fine print, which is that it is up to the individual issuing banks to decide whether or not you can simply cash out your gift card at an ATM.  As far as I know, most issuing banks DO NOT allow this or I suspect will make it hard to obtain a PIN.

Still, the fact that many more ATM’s will be available for these transactions if they are allowed is a step in the right direction.