This article is part of a larger series on Best Small Business Credit Cards.
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.
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.
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 an in-person visit at a branch.
- Reload location: Netspend Prepaid Debit Card, Brink’s Business Expense Card, and Mesh Card are some examples of business prepaid cards that let you add funds through the nearest authorized reload location. Note that there may be fees to consider with 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
|Is more secure than cash||Won’t help you 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:
- Is there a fee for creating an employee card?
- Are there monthly/quarterly/annual fees?
- Does it charge foreign transaction fees?
- Is there a daily/monthly/annual load limit?
- Is there a balance limit?
- Is there a load limit? If so, then will it affect your business expenses?
- Is there a limit on withdrawals?
- Is there a limit on purchases?
- Is there more than one way to load it?
- Are the features that help you manage your business expenses?
Business Prepaid Card vs Alternatives
A business prepaid card and its alternatives, such as debit, credit, purchasing, and secure cards, all allow you to make transactions. However, there are differences in how they work and how they’re funded.
Business Prepaid Card
- Is not linked to a checking account or a credit union share account
- Is limited to the money loaded onto your card
- Lets you lose only the money that was already on your card
- Allows you to add employee cards and set a limit on their spending
- Is linked directly to your bank account
- Is limited to the money that’s in your savings or checking account
- Offers a safeguard against high fees since some banks have overdraft protection
- Requires you to have the necessary credit score to apply
- Comes with rewards, cash back, and protection for you and your employees’ accounts
- May charge numerous fees
- Chase Ink Business Unlimited is our leading small business credit card as it has straightforward 1.5% cash back rewards on all business-related purchases and a sign-up bonus of $750 cash back after spending $7,500 on purchases within the first three months of account opening
- Linked to the organization’s account; the business owner controls where they can be used and determines daily or weekly limits
- Also called a p-card, procurement card, and corporate charge card
- Less expensive option than credit cards, so long as you’re able to pay the account balance per month
- Citi Purchasing Card is our top-recommended purchasing card for those wanting comprehensive control of business purchases and access to capital analytics
- Funded by your security deposit
- Best for those who are unqualified for an unsecured card due to either low or bad credit or no credit history
- Can help you build your credit score and qualify for an unsecured card
- Bank of America® Business Advantage Unlimited Cash Rewards Secured Credit Card is our best secured business credit card as it helps you build your business credit and lets you earn unlimited 1.5% cash back rewards on all purchases
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.