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Guide to prepaid cards for business

Credit cards have long been associated with business expenses, but it seems that an increased amount of companies are using prepaid cards. These cards provide a good alternative to paying with cash or cheque, and work much in the same way as credit cards.

They provide benefits over cash, such as improved money management, but as they also don’t require a credit check, the only money that can be spent is the value pre-loaded onto the card. Prepaid cards are able to give business owners management of their firm’s finances and accurate budgeting, and allow for their credit score to be unaffected.

Applying for a business prepaid card

Compared to when businesses are applying for a business bank account, credit card or loan, signing up for a prepaid business card is a fairly simple process. Typically it's a one-page application form that request basic personal information, followed by the account set up.

Applicants will be required to set up an eight-digit security code and be given the chance to add additional cardholders, which could be their employees. Once everything has been finalised, the card will be sent to the address and ready to use.

Benefits of prepaid cards for business

Managing employee expenses: many businesses require their members of staff to buy products on behalf of the company or manage travel expenses. Employees may be reluctant to use their own money before submitting a claim. Prepaid cards for business are a way to manage expenses as they give employees a fixed amount of money and prevents them having to wait for permission to use the company credit card. It also means the business doesn’t lose out on any additional money being spent.

Short-term alternative to payroll: a vast number of businesses hire temporary or seasonal staff. The payroll process is often long and complicated, meaning that staff are unable to work immediately. The solution is to load the salary for short term staff onto a prepaid card.

Improved management and control: business prepaid cards can be controlled by one person, meaning that the company can arrange to load the card, access spending reports and even limit certain facilities, such as preventing cash withdrawals. Businesses will know straight away when the money is gone as employees may request more.

Ideal for business travel: prepaid currency cards allow business owners to access the top foreign exchange rate, meaning that they will get more for their money abroad.

Rewards tied to spending: prepaid business cards offer cardholders rewards that are linked to the amount they spend. These rewards should be considered when comparing cards as shopping promotions could be used as staff bonuses, but restaurant vouchers might be better suited to businesses who dine out regularly with clients.

Business prepaid card fees

Prepaid cards can charge a number of fees. The actual charges vary between card issuers, but they all have similar types of fees.

When choosing a prepaid card, it’s important to get the right balance between the facilities it offers and the fees it charges.

Account fees: some cards write off or have lower transaction and reload fees in return for a monthly fee. Business owners should weigh up how much they could save or lose by paying a monthly account fee.

Transaction fees: businesses will need to consider how they or their employees will use the card to find out which fees are going to affect them. If members of staff will withdraw cash from the business account, they will likely face higher charges than simply paying for items with the card.

Load fees: regular top ups could be eating up sizeable chunks of the business budget so it’s essential to find out the cheapest way to reload prepaid cards. Prepaid cards are a useful financial tool for small businesses, by providing an instant payment method, assisting the management and control of expenses alongside the firm’s budgets.