Profitability in business is all about keeping as much space as possible between your top and bottom lines. That means making efforts to make more sales and build more revenue, while also taking active steps to keep operational spending manageable. Nonetheless, we all know that it takes money to make money. Strategic spending in the right areas can help to grow your business, improve employee satisfaction, and build value in your brand.
What’s more, not all expenses will be borne under your roof. If, for instance, you have sales teams out on the road, you want to ensure that they’re well looked after while also making sure that you have a modicum of control over their expenses. This is one example of where prepaid cards can be particularly useful.
What is a prepaid debit card?
A prepaid debit card is much like a gift card. Except that you aren’t confined to a single brand or chain. You can use it at any physical location. Their versatility makes them ideally suited for business expenses as they can be used for things like fuel, hotel accommodation, meals, drinks, and other sundry expenses that employees incur when on the road.
Banks issue prepayment cards and they are managed by the usual troupe of international credit card companies such as Visa and MasterCard.
How do prepaid debit cards work?
Prepaid debit cards work much like prepaid mobile phones. Users put a set amount of credit on them and top up when the credit has been used up. Prepaid debit cards can be topped up in a number of ways:
Online- You can usually top up online through the card provider’s website or app using your business credit or debit card
In person- You can usually top up at your bank or at participating PayPoint locations
Bank transfer- Some businesses prefer to top up their employees’ prepaid credit cards via their payroll accounts. It’s even possible to pay your employees’ wages using a prepaid debit card if they do not have their own bank account
Prepaid debit cards are accepted wherever conventional debit cards are accepted. So you can use them pretty much anywhere. Each card also has a PIN so they can also be used to withdraw cash (although this will usually incur charges).
What are the advantages of using a prepaid debit card?
There are lots of reasons why businesses like using prepaid debit cards to cover their employees’ expenses:
They’re much safer and more secure than carrying cash
They make it easy to track spending on expenses
If the card is lost or stolen, businesses can mitigate how much capital is lost as thieves can only use the balance present on the card
Because the credit on a prepaid card is limited, businesses can assert more control over their spending on expenses
Using a prepaid debit card does not affect your credit score
Because there are a wealth of prepaid card options out there, businesses can shop around to get the best rates for their needs and usage
Avoiding fees while using a prepaid card
While prepaid cards are advantageous in many ways, they also come with a caveat. Prepaid cards are often subject to a range of charges. These vary depending on provider and product, which is why it’s so important to take your time choosing the right card for your needs. Providers may charge a fee for:
Using your card too frequently
Not using your card frequently enough
Contacting customer support
Or even topping up and checking your balance
Choose the right card for your needs and you’ll avoid unnecessary fees and keep expenses manageable.
We can help
If you’re interested in finding out more about prepaid debit cards, and how to use them effectively in your business operations, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.