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What Is a Prepaid Card?
Last editedMay 2022 2 min read
Business prepaid cards offer a convenient way to access funds in the same way a debit or credit card does – but without the risk of overspending. Prepaid business cards can help organizations to streamline expenses, reduce risk, and control overspending. In this post, we’ll ask what’s a prepaid card and how does it work? We’ll also discuss how to choose the best prepaid card for your business.
How do business prepaid cards work?
Employers can load their employees’ prepaid company card with sufficient cash for their expenses. Then, the employee can use the card to purchase items, book travel, pay for meals, or for any other sundry expenses, according to any rules set by the employer. Unlike with traditional debit or credit cards, prepaid cards are not linked to a bank account. They are company cards that are pre-loaded with funds by the employer.
Once the amount on the card is spent it can only be re-loaded by the business.
Advantages of a prepaid card for business
There are plenty of benefits associated with using business prepaid cards, which we’ll run through here:
Business prepaid cards bring transparency to the business when it comes to tracking expenses. The card sends data relating to the amounts spent to an online dashboard which provides the finance team with real-time insights. It’s then easy to track and moderate spending behaviors.
Cards can be linked to Xero, or another accounting system, eliminating the need to manually process expense claims, receipts, or payment of claims.
The wait for reimbursement for expenses can traditionally be a lengthy process, as expenses forms can take some time to make their way through the finance system. With a prepaid card, employees no longer have to use up their own cash reserves or be out of pocket for any length of time.
A prepaid card for business gives employees financial autonomy and helps them feel more valued. Simultaneously, employers can feel confident they have a firm grasp on expenditure.
Risk is reduced. Since there’s no credit facility, business prepaid cards can’t be used to accumulate debt. A prepaid card is also safer than carrying cash, since if a card goes missing the company can deactivate the card immediately. Since a prepaid card has no link to a bank account it’s essentially anonymous. When shopping online this means there’s no risk of leaving your accounts vulnerable to hackers.
No credit check is required to set up an account.
How to identify the best prepaid card for business
When you’re looking for the best prepaid card for business you’ll need to consider your spend limit and how many cards you’ll need. You will also need to compare each card issuer’s fees and check how convenient it is to reload the cards when the balance is low. Fees will vary from issuer to issuer too, with many charging extra for withdrawing money from an ATM, for example, or for inactivity after a certain period of time.
Look out for a provider who can give you access to an online and mobile dashboard too, so you’ll be able to set and manage dollar amounts for your spend on a daily, weekly, or monthly basis.
Prepaid business cards are growing in popularity and are becoming more and more widely accepted. Business prepaid cards are just as convenient as debit and credit cards, too, since they can be used for contactless payments, as well as for use with PIN numbers.
While credit cards are still useful for senior employees, prepaid cards are ideal for enabling payment of smaller items and offer an efficient way to manage expenses. You can track spending as it happens, and manage how the cards are used, by defining rules and limits that suit your budget and expense policies. So if you’ve had trouble with credit cards in the past, or are keen to avoid debt, a prepaid credit card can be the ideal solution for paying for expenses.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.