The phone card industry’s exponential growth is a direct result of the consumers need for cheap and convenient communications services. Pre-paid phone cards and monthly billed calling cards often offer considerably lower long distance rates than the more traditional phone services such as coin, cellular and collect calling. Additionally pre-paid phone card rates remain constant no matter what time or day the call is placed. Pre-paid cards were introduced in the U.S. in the early 90’s and the large phone companies used traditional channels to market their cards to their customers. Until 1996 the phone companies made no significant effort to sell their cards as they already had a thoroughly established and entrenched profitable market. New products and concepts were also hard to sell to a public who already had a system that worked.

The advertising industry and a number of small telecommunications companies eager for some of the massive communications market first identified the power and "sellability" of the pre-paid card and before the big phone companies wiped the sleep out of their eyes the phonecard industry exploded. Mass production, the pre-paid card’s relatively low cost and the ability to produce low denomination cards suddenly produced a new advertising medium. By printing a company name on a card or information commemorating a specific event, innovative telecom companies began marketing the cards as promotional items. Cards were sold as prizes or incentives and tourist souvenirs. They also became collectors items exactly like stamps and baseball cards due to their being run in limited editions. The retail phonecard had arrived and was turned into an expendable bulk consumer product like gum, toothpaste, film and razors. All this with the added incentive that you could, at very low cost, deliver a consumer message to the holder who has to look at the card to make a call. Combine this with the fact that a calling card actually allowed you to call long distance cheaper than your regular long distance company and you have a winning combination. To add the icing to the cake you had a number of cards to choose from and you weren’t bound to the captive suppliers of old.

The combined reach of the new markets expanded the distribution of phone cards from a few hundred thousand in 1992 to over 70 million in 1995. Calling cards are now sold through virtually every conceivable channel, from convenience stores and corner cafes to vending machines. Pre-paid cards now co-exist with and in many case have replaced collect calling and coin pay phones as the preferred method of placing calls. Calling cards are also extensively used to make local or intralata calls where the local phone company is unable to provide competitive rates.

Phone cards are here to stay. They are now being packed with additional services. Pre-paid internet accounts, e-mail services, paging, SMS messaging, voicemail, cellular phone service, international callback, and a variety of audio, text and digital information and entertainment services. WAP technology is here too.

The industry is still full of surprises and the first disposable cellphone cards are already edging into the market. This is a wafer thin phone card complete with a keypad, microphone and earpiece which you use as a combined phone/calling card. When its used up you throw it away and buy a new one!

A calling card or phone card is defined as telecommunication credit card with an Identification Code for using a pre-selected long distance carrier when the customer is away from their home or office. Phone cards are now being used extensively for residential calls. Phone cards are often considerably cheaper than collect calling, coin operated payphones or having the phone call charged to your hotel or motel room.

Phone cards or calling cards are available in prepaid and credit (monthly billed) forms. Typically a calling card user will pick up a phone anywhere and dial a predetermined number (often Toll Free). The phone card user is then prompted for a user ID and/or a Password or both, before dialing the number they require.

"Cards" is a misnomer as some calling cards are available without the issue of an actual plastic "credit card" and are delivered in PIN only from.

Q) What is a prepaid card?
A) A prepaid card is exactly what the name implies. You pay a fixed amount up front which may be for units, minutes or Dollars. Typically the time based phone cards come in increments of 100, 300, 600, or 1000 minutes. Dollar based phone cards start at $5 and go up to around $300.

Q) What is a credit based phone card?
A) This is a phone card which is monthly billed. (Normally to your credit card.)

Q) What is a re-chargeable or re-usable phone card?
A) This is exactly what the name implies. It is also user friendly as you only buy the original card. You can instantly add more calling time using a credit card. Service providers have toll-free numbers or you can access their web sites. Certain cards allow you to prepay using wire transfers or cheques - this obviously has a time implication and users are advised that your recharge can take up to 15 days to clear and be activated. Many providers now also have an e-mail payment system like PayPal. You can e-mail your payment for your airtime.

Q) What is an instant PIN?
A) Certain providers will provide you with an instant phone card (often by e-mail) provided you pay for it up front either with cash or with a credit card. You don’t get a piece of plastic. You just get your PIN number. These cards are normally low value and expire.

Q) What is an International Phone Card?
A) An international phone card is one which can be used from a whole variety of countries in the world. Each international calling card is different and will be restricted to use in the countries with which the phone card company has reciprocity. Be sure to check that your International PhoneCard works from the country you will be visiting before you go. International calling cards are also used to bypass a country’s existing carriers and use the carrier of another country. (often with immense savings).

• Time based charge: The actual time you spend online either in units purchased or a time increment in seconds. The time increments vary from 1 second to 5 minutes.
• Connection Fee:

A one off charge for initiating a single call. Each and every time you use the card and your party answers, you will be charged a connection fee which will be deducted from the available minutes. This amount is deducted from the card value either in money or in minutes. If a calling card has a very low per minute rate, the chances are it has either a high connection fee or a surcharge. It is a logical extension that cards with a connection fee are hopeless for short duration phone calls whereas they may be highly effective for long duration calling.

• Initial Connection/Weekly/Monthly Service/Maintenance Fees:
  Some cards have an initial set up fee. This could be a one off just to get you on the road. Some, however, charge a weekly or monthly fee of around $1.00. This is charged after the first time that the card is used and is deducted in minutes or dollar from the card. Even if you are not using your calling card you may be racking up a charge.
• Pay Phone/Cellular Phone Charges
  Nearly all phone card calls originating from a Pay Phone are charged a fee per call. This is required by federal law and the fee typically ranges from $.35 to $.50 per call. This goes to pay Uncle Sam or the owner of the payphone. This amount is deducted in minutes from the card. If your cellular or mobile phone company allows you to call from your mobile phone, there maybe a charge per call fee. Some Cellphone contracts do not allow the use of alternate carriers like phonecards or dialaround services.
  
• Taxes
  There are FCC/State/Local charges taxes based on where the call originates. (This is the same tax that appears on your phone bill each month and is calculated on each call.) Normally this is factored into the rate but it can be deducted separately and will be deducted from the value of the card.

It is generally good practice to keep a record of all your phone card, calling card, credit card, bank account, passport, ID, Social Security, tax and driving licence numbers in one place. We recommend a small notebook which should be locked away in some secure place or kept in a safety deposit box,strongroom or safe. Many financial institutions have safety deposit boxes at a minimal annual rental.