Originally Posted by
taxicabnumber
This might be second order with respect to fraud/SAR/money laundering risk, but when you use it in one shot as opposed to for routine transactions, the issuers are losing out on a decent bit in swipe fees as well.
But, even in this case the issuer is still making some money. The issuer of the card used to buy the prepaid card racks in their 3 to 5% merchant fee. The issuer of the pre paid still gets their activation fee, and any transaction fees + collects interest, assumingly, on the money they are holding.