Types of business payment cards
There is a wide range of cards on the market for businesses, all offering different benefits and Terms & Conditions. This section explains the different types of business cards available. As card types work slightly differently each will be fit for different uses; this section should help you to choose the right card depending on your business needs.
Credit / charge card
Business credit or charge cards allow the cardholder to buy goods or services on behalf of the company up to a limit. If the bill is paid in full by the date specified on the statement, (in most cases) the company will incur no interest. It is important to note that certain types of transactions (such as cash withdrawals) will generally incur interest from the date of the transaction. Business credit or charge cards are issued to employees, with a spending limit approved by managers.
Business debit cards are issued in conjunction with a business current account. Payments are deducted immediately from the account in the same way as using a debit card on a personal account operates. As a result, spending is limited to the funds available, offering a greater degree of control - but lacking some of the flexibility of other cards available.
Purchasing cards are generally restricted by card issuers to large corporates or public sector bodies and are designed to cut down on paperwork and the need for purchase orders. These cards are given to individuals, generally in a company’s purchasing department, who regularly buy goods from suppliers; anything from stationery, paint, photocopiers, to IT equipment.
Business travel card
Business cards for travel and entertainment (T&E) cards are probably the best-known type of business card. These are most suitable for businesses where most of the finance is spent on travel and entertainment. These cards offer staff a convenient way to pay for business expenses whilst travelling. Although they do not operate differently in principle from other business credit or charge cards, they may offer additional benefits, significantly for those who undertake lots of travel and entertainment, such as travel insurance or currency facilities.
There are a number of different types of prepaid cards, ranging from cards pre-loaded with a certain amount, which are usable until the value is exhausted, through to re-loadable cards that can be topped-up at cash machines, in branches or at bureaux de change, etc.
Prepaid cards that have a MasterCard or Visa logo have become increasingly common, and can be used anywhere that accepts other MasterCard or Visa cards. There are known in the card industry as open-loop cards.
These cards are increasingly being used by businesses for a number of reasons. One of the most common uses is to pay wages or expenses and some employers even pay wages directly to an employee's prepaid card account. Prepaid cards are also used as an alternative to business travel cards as they are available in different currencies, most typically pounds sterling, Euros or US dollars.
As prepaid cards are not usually related to an existing account, they tend to come with their own types of fees and charges, such as the issuance cost, management fees, and often transaction or ATM-withdrawal fees. Prepaid card issuers should issue a full list of the fees and charges associated with their product when the card is issued, and tell you how they will let you know of any changes.