With cards becoming the preferred method of payment in the West, Pre-Authorized Debit offers a new payment method for low value transactions, providing the one-card vision. Although there are similarities to debit and e-purse the biggest advantage with Pre-Authorized Debit is it leverages the EMV infrastructure and that it doesn't rely on individual operating systems, which are usually costly, inconsistent and work in a "closed" network.
The card holder can enter funds onto their card, either via ATM or EFTPoS, which are "ring-fenced" and therefore available for offline spending as funds are guaranteed. This eliminates the need to carry small change as even low value transactions; such as sandwiches, newspapers etc can be undertaken, cost effectively, in an offline environment.
In addition to this, Pre-Authorized Debit is providing a payment infrastructure to emerging markets, again utilising the EMV infrastructure, by allowing the current un-banked population to make transaction with cards instead of cash. This is particularly welcome in countries where there are significant security risks in cash transactions and geographic regions where there are poor communication infrastructures. Pre-Authorized Debit is already making in-roads in remote areas in South Africa and could prove just as successful in Eastern Europe where many have no credit history.