A business prepaid card is a type of card that needs to be loaded with money before you can use it to make purchases. It helps you set a limit on your business expenses and not worry about the interest rates and penalty fees associated with a small business credit card.
Our best business prepaid card is the Bento for Business Visa® Debit Card as it has a straightforward fee structure and a maximum spend limit of $25,000 per day. It can be used at merchants that accept Visa debit cards and for international transactions, with no foreign transaction fees.
How a Business Prepaid Card Works
Business prepaid cards are usually managed through an expense management platform. This is where a business owner can see real-time transactions made using the listed employee cards included in their account.
To use a business prepaid card, follow these steps:
Step 1: Load your business prepaid card.
You’ll first need to load the account through one of the following ways:
- Online transfer: Using the card’s expense management platform, you can link your existing checking or savings account as a funding source for your business prepaid card.
- Bank transfer: You can add funds through your bank’s automated clearing house (ACH) transfer service. This feature may be available through its website, by phone, or by visiting a branch.
- Reload location: You can add funds through the nearest authorized reload location. Note that fees may be charged if you consider this option.
- Automatic deposit: Schedule reloads on a daily, weekly, or monthly basis with a set amount that will be transferred from your checking or savings account.
Step 2: Make purchases.
Once the funds have been loaded, you and your employees can now use them for your business transactions. Every transaction made will be deducted from the amount on the card.
Step 3: Approve or reject employees’ transactions.
You can approve or reject transactions made by your employees via the expense management platform. You can also set up automatic approvals on recurring transactions, such as subscriptions.
Step 4: Reload your business prepaid card.
As funds are depleted, you can add more funds to your business prepaid card.
Pros & Cons of a Business Prepaid Card
| PROS | CONS |
|---|---|
| Is more secure than cash | Doesn’t usually require a credit check, meaning it won’t build business credit |
| Helps control your and your employees’ spending | Makes it more difficult to recover funds if it is lost or stolen |
| Doesn’t require credit scores for application | Lacks rewards, points, or benefits to maximize business expenses |
How To Select a Business Prepaid Card
When determining the right business prepaid card for your business, you need to consider costs, load limits, spending limits, and convenience. Use the questions below as a guide:
Costs
While there are business prepaid cards that do not charge setup and other fees, there are those that require a monthly fee depending on the number of employee cards that you need.
- Is there a fee for creating an employee card?
- Are there monthly, quarterly, or annual fees?
- Does it charge foreign transaction fees?
Load Limits
Most business prepaid cards have load limits depending on how much you need for your business.
- Is there a daily, monthly, or annual load limit?
- Is there a balance limit?
- Is there a load limit? If so, then will it affect your business expenses?
Spending & Withdrawal Limits
Spending and withdrawal limits are determined based on how much you need within a day or month. To help improve your daily withdrawal or spending limit, you will need to meet certain criteria, such as making regular deposits or contacting the issuer for more details.
- Is there a limit on withdrawals?
- Is there a limit on purchases?
- Can I increase the limit on my withdrawals?
- Can I increase the limit on my purchases?
Convenience
The most common way to load your business prepaid card is through a bank transfer. However, there are some business prepaid cards that offer multiple ways to load them.
- Is there more than one way to load it?
- Are there features that help you manage your business expenses?
Rewards
Rewards (cash back or points) can help reduce your overall business expenses. There are business prepaid cards that offer fixed-rate cash back rewards, while others offer premium rewards depending on the type of business that you have.
- Are there rewards for new and/or existing account owners?
- Are the rewards fit for my business needs?
Who a Business Prepaid Card Is Best For
- You don’t have strong business credit: It is an excellent option if you don’t yet have strong business credit to qualify for a traditional credit card.
- You have a startup: It’s a viable option if you’re just getting your business off the ground and want to use only your cash on hand.
- You want to monitor business spending easily: It lets you see real-time transactions made through expense management software specific to each card. While the software is usually offered for free, you’ll need to upgrade it to get advanced features and in-depth information on your business spending habits.
Business Prepaid Card vs Alternatives
A business prepaid card and its alternatives, such as credit, purchasing, corporate, and secure cards, all allow you to make transactions. However, there are differences in how they work and how they’re funded.
Type of Card | Quick Description | Source of Funds | Unique Features | Leading Card |
|---|---|---|---|---|
Business Prepaid Card | Is not linked to a checking account or a credit union share account | Limited to the money loaded on your card | Some may let you earn cash back rewards | |
Business Credit Card | Requires you to have the necessary credit score to apply | Your approved credit limit | Comes with rewards (cash back, points, or miles), an interest-free financing option, and protection for you and your employees’ accounts | |
Purchasing Card (P-card) | Is linked to the organization’s account; the business owner controls where they can be used and determines daily or weekly limits | Linked only with the company’s bank account | Less expensive option than credit cards, so long as you can pay the account balance per month | |
Corporate Card | Is a payment card issued by companies to their employees to make business-related purchases | Funded by the company with a predetermined amount | There are different kinds of corporate cards depending on your business needs | |
Secured Business Credit Card | Can be used for those who didn’t qualify for an unsecured card due to either low or bad credit or no credit history | Funded by your security deposit | Some cards offer rewards on top of helping you build your credit score and qualify for an unsecured card |
Frequently Asked Questions (FAQs)
Business prepaid cards are not connected to your company’s bank account, making them less prone to expense fraud. Meanwhile, corporate cards do not have any set limits, and their expenses are charged to the company’s account.
Unlike debit cards that draw funds from a linked bank account, business prepaid cards draw from the money that is already loaded into it, making it great for business owners who are trying to manage business transactions.
Your business prepaid card could have been declined for a number of reasons:
- Insufficient funds in your account
- Card not yet activated
- Merchant not accepting the network’s cards
- Exceeded your spending limits
Bottom Line
A business prepaid card is great if you want to use only your cash on hand for business expenses. Through its expense management system, it lets you control expenses while monitoring real-time transactions made on the card. However, it won’t help build your business credit and won’t let you maximize your business expenses through cash back rewards, points, and other rewards that traditional credit cards have.
