Prepaid business cards can be a good alternative to company credit cards if you’re a business owner looking for the best way to allow your employees to pay for expenses as part of their work. They help you to limit spending and stick to a budget as cardholders can only spend the money that has been loaded onto the card. Find the best one for your business in our comparison table below.
"Many business accounts let you issue extra debit cards to employees and set spending limits for each of them, including Revolut Business, ANNA, Zempler Bank and Tide. Prepaid business cards work differently though, as they’re not used for spending money in a bank account but need to have funds added to them.
While you might start by looking at the initial cost of the card or set-up fee when choosing one, it’s important to look at the other costs and features to find the one that will suit you best. For example, if you regularly travel abroad, check what the foreign exchange fees are like.
Like business accounts, prepaid card services can integrate with accounting software, such as QuickBooks, Sage and Xero, to make your transactions easier to monitor and manage, keep track of employee expenses and create and export reports."
A prepaid card can help business owners provide employees with access to money so they can pay for expenses.
It can be linked to your bank account and quickly loaded with funds online, or using a mobile app. Some cards will also allow you to load funds with cash at PayPoints, a banking branch or other locations, such as the Post Office.
However, you can’t set up direct debits or standing orders, like you would be able to do with a traditional bank account. You are unable to go overdrawn either.
Business owners might choose to use a prepaid card if they’re unable to apply for a traditional business bank account or a business credit card.
You will usually have to apply for a prepaid card online, as a lot of providers don’t have branches. In many cases, you can complete the application by downloading the associated app onto your smartphone and entering a few basic personal and financial details. The application usually only takes a few minutes and you won’t need to pass a credit check to be eligible for a card.
Once you’ve successfully applied for a card(s), you’ll have to wait a few days for it to be delivered to you. However, most providers will give you a “virtual card” with all the details you need to make online purchases in the meantime. You could also link a virtual card with mobile payment services like Apple Pay or Google Pay.
The prepaid card will be powered by a payment processor like Visa or Mastercard. You’ll be able to use this card with any retailer that accepts card payments from these processors. You can also withdraw cash at any ATM, although fees may apply.
Either way, the transaction will only go through if you have enough money loaded onto your card. If your balance is too low, the transaction will be rejected.
Prepaid business cards are a useful tool for splitting your business’s funds between multiple people. If each individual had their own prepaid card, the account holder could easily control and ensure they stick to their budgets.
It’s particularly useful if you want to give employees a means of spending, as you may not trust them with full access to your account via a debit card. Prepaid cards also make it easier to track who is spending your business’s money and where.
If your prepaid card offers better overseas spending rates than your bank account, you may choose to only use this while you’re abroad.
If you have previously found it easier to use prepaid cards but now want to do things like set up standing orders or direct debits for your overheads, you may want to think about going a step further and opening a fully fledged business current account.
While previously business accounts had a reputation for being less customer-friendly than personal current accounts, that has changed. In the same way that banking apps and fintech providers have made managing our personal finances more convenient, there are a range of app-only banks doing the same for our business finances.
Like with prepaid business cards, fees between different bank accounts can vary pretty wildly. Business bank account providers are also increasingly competing with one another to offer their customers perks, like discounted or free access to online accounting platforms.
For full details on how business bank accounts work, and to compare the best product for your firm’s needs, check out our business bank account comparison page.
The table below outlines some of the key differences between prepaid business cards and business credit cards.
| Prepaid business cards | Business credit cards | |
|---|---|---|
| Credit check | No credit check required | A full credit check will be carried out, with the best deals being reserved for those with good credit |
| Credit building | Prepaid cards won’t be linked to your credit file so won’t help you build a business credit score | Provided you use your credit card sensibly and make repayments on time, you can build a business credit profile |
| Interest charges | No interest is charged on prepaid cards | Interest rates can be high if you don’t pay off the balance in full each month |
| Fees | You might pay a monthly account fee, plus fees for ATM withdrawals, top ups and card delivery | Fees will apply if you miss a monthly repayment or exceed your credit limit. Some business credit cards also charge annual fees, as well as fees for use overseas |
| Potential to overspend | Low, as you can only spend what’s been preloaded on to the card | High – you can spend up to your credit limit |
| Rewards and benefits | Prepaid cards don’t tend to come with rewards and benefits | Some business credit cards offer rewards such as cashback or air miles |
| Expense management | Many prepaid business cards integrate with accounting and expense management software | Some business credit cards will come with expense tracking tools |
| Cash flow management | Prepaid cards won’t help you manage cash flow as you’re not borrowing funds | Business credit cards let you borrow funds in advance so can help with managing cash flow |
If you’d like to have more control over your employees’ business expenses and budget more effectively, prepaid business cards can be a good option to consider rather than issuing company debit or credit cards to your employees. You should compare the various options carefully though, as they have different pricing structures that could affect the overall cost to your business.
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