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A business prepaid card is a payment card that you load with funds before use. Unlike credit or debit cards, which are tied to a credit line or bank account, prepaid cards prevent overspending and debt. By limiting spending to the available balance, you can control employee expenses like travel, meals, and office supplies.
Prepaid cards also come with fewer fees—avoiding interest charges and overdraft fees for instance—and are easier to apply for since they don’t require a credit check or bank account. Additionally, many providers allow these cards to be managed through an online platform, providing added convenience and control. They also offer increased security, as only the loaded amount is at risk if the card is lost or stolen.
How Do Business Prepaid Cards Work
A business prepaid card works like other cards. You can swipe or insert it at checkout to make purchases, and in some cases, you can use it at ATMs to withdraw cash. To use a business prepaid card, follow this process:
- Step 1: Load your card. Add funds to the business prepaid card using one of these methods:
- Online transfer: Link your checking or savings account through the card’s management platform.
- Bank transfer: Transfer money via your bank’s ACH service online, over the phone, or in person.
- Reload location: Add funds at authorized locations (fees may apply).
- Automatic deposit: Schedule automatic reloads daily, weekly, or monthly from your bank account.
- Step 2: Make purchases. Once loaded, you and your employees can use the card for business transactions. Each purchase will be deducted from the available balance.
- Step 3: Manage transactions. Approve or reject employee purchases using the card’s management platform. You can also set automatic approvals for recurring expenses like subscriptions.
- Step 4: Reload the card. When the balance runs low, simply add more funds to keep using the card for future purchases.
Pros & Cons of a Business Prepaid Card
| PROS | CONS |
|---|---|
| Is safer and more secure than cash | Lacks rewards, points, or benefits to maximize business expenses |
| Reduces the risk of overspending since it uses preloaded funds only | Cannot be used for expenses that exceed the preloaded balance |
| Doesn’t require a credit check upon application | Doesn’t help build business credit since no credit check is required |
| Allows real-time tracking of expenses | May have fees for reloading or transactions |
| Has no due dates to keep track of | Makes it challenging to recover funds if the card is lost or stolen |
Business Prepaid Card vs Business Credit Card: Key Differences
A business prepaid card uses funds you load onto it, giving you control over spending without the risk of debt. Meanwhile, a business credit card allows you to make purchases on a credit line, offering more flexibility and the opportunity to build credit. However, it requires careful management to avoid accumulating debt and fees. For a quick comparison of the key differences, look at the table below.
| Question | Business Prepaid Card | Business Credit Card |
|---|---|---|
| How is it funded? | Is preloaded with a set amount of money | Offers a credit line you can borrow from |
| Does it affect credit? | Has no credit check; doesn’t build business credit | Requires a credit check; helps build credit if used responsibly |
| Is there debt or interest? | Has no debt or interest; spend only preloaded funds | Can accumulate debt; interest charged on unpaid balances. |
| How does it control spending? | Offers strict control; limited to the preloaded balance | Provides flexible spending; can lead to overspending if not managed |
| Are there fees and rewards? | May have fees, but generally has no rewards | May offer rewards, but typically includes fees and interest |
How to Select a Business Prepaid Card
When selecting a business prepaid card, keep the factors below in mind, and use the questions as a guide.
Fees
Review potential fees for loading, transactions, or ATM withdrawals to avoid unexpected costs.
- What are the fees for loading, transactions, and withdrawals?
- Are there any hidden or monthly maintenance fees?
- Can I avoid fees by choosing certain payment methods or limits?
- Does it charge foreign transaction fees?
Load Limits
Check the maximum amount you can load onto the card at once or over time to ensure it meets your business’s financial needs.
- What is the maximum amount I can load onto the card at one time?
- Is there a daily, weekly, or monthly cap on how much I can add to the card?
- Are there limits on how often I can reload the card within a specific time frame?
Transaction Limits
Check the card’s spending and withdrawal limits to ensure they align with your business needs and prevent disruptions during purchases or cash withdrawals.
- What is the maximum spending limit per transaction or day?
- Are there daily or monthly limits on how much cash I can withdraw?
- Can I adjust the transaction limits based on my business’s changing needs?
Reload Options
Look for flexible ways to reload funds, such as online transfers, automatic deposits, or in-person options.
- How can I reload the card—online, at a bank, or via automatic deposits?
- Are there reload fees or restrictions on how often I can add funds?
- Can I schedule regular reloads to ensure the card always has sufficient funds?
Business Convenience
Choose a card that offers real-time expense tracking and easy employee management features.
- Can I issue multiple prepaid cards to employees through a single platform?
- Does the card allow me to set individual spending limits for each employee?
- Can I easily monitor and track all transactions in real-time through one system?
Who a Business Prepaid Card Is Best For
- Those who don’t want to carry cash for safety and security reasons.
- Those who want to control expenses and avoid the risk of debt.
- Those with multiple employees who need to allocate specific budgets for purchases without providing access to credit.
- Those without established credit who want a flexible spending tool without undergoing a credit check.
- Those needing a simple way to manage day-to-day expenses without linking to personal accounts.
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 | Rewards from Leading Card | 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 |
| Emburse Spend Card Review |
| Business Credit Card | Requires you to have the necessary credit score to apply | Your approved credit limit | Often comes with rewards (cash back, points, or miles), an interest-free financing option, and protection for you and your employees’ accounts |
| American Express Blue Business CashTM Review |
| 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 |
| Ramp Card Review |
| 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 |
| U.S. Bank Commercial Rewards Card Review |
| 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 |
| Discover it® Secured Credit Card |
Frequently Asked Questions (FAQs)
Yes, many business prepaid card providers allow you to issue multiple cards for different employees, with the ability to set spending limits and monitor their transactions.
Some business prepaid cards can be used for international transactions, but they may incur foreign transaction fees. Always check the card’s terms and conditions for international usage.
Yes, most business prepaid cards need to be activated before use. The activation process typically involves following instructions provided by the card issuer, which may include calling a customer service number or visiting the card provider’s website to complete the activation.
Bottom Line
A business prepaid card gives you a simple, effective way to control expenses without risking debt or overspending. It’s perfect for setting budgets, tracking spending, and managing employee purchases, all without the need for a credit check. While it won’t build credit or earn rewards, it’s a flexible tool for keeping your business finances organized and under control.
Fit Small Business has partnered with CardRatings for our coverage of credit card products. Fit Small Business and CardRatings may receive a commission from card issuers.
