Credit cards offer teams ease of payment for their business expenses worldwide. Prepaid credit cards provide the same convenience while offering the possibility of even more flexible expense management at the same time. What makes a prepaid credit card the best corporate credit card?
It can be difficult to understand the different types of modern payment cards. The rise of prepaid cards has continued steadily in recent years, especially after the adoption of stricter e-money regulations in the EU.
Meanwhile, prepaid cards have also made their entry in the domain of business payments. As an organization, this allows you to offer multiple payment methods to employees. Read more about the different cards in this article.
❯ What exactly is a prepaid credit card?
❯ How does it work?
❯ When do you use them?
❯ What are the advantages of corporate p-cards?
❯ Business payment needs in practice
❯ What are the advantages of an integrated payment system?
❯ How do you choose the best corporate payment system?
❯ Getting started with corporate prepaid credit cards
What exactly is a corporate prepaid credit card?
With a normal credit card, a cardholder lends money for making payments. A prepaid card is a variant in which you can only spend money, which you have advanced onto the card yourself. This type of credit card is an official means of payment in the Netherlands and in Germany.
When we talk about a prepaid credit card, we often mean a prepaid debit card. Not only do you guarantee the amount to be spent, but you also actually transfer it in advance to an account linked to the card.
Just like regular credit cards, prepaid credit cards are always issued by regulated banks or financial institutions. International Card Services (ICS) is the largest issuer of (prepaid) credit cards in the Netherlands. A card issuer is a financial institution that is entitled to provide credit lines via a payment card.
In addition to issuing cards, ICS also takes care of the administration and transactions of the most-known Mastercard and Visa credit cards. There are various retailers, such as Bijenkorf in the Netherlands or Karstadt in Germany, who issue prepaid cards. This happens in cooperation with a card issuer, and they link their bonus point system to the card.
How does a prepaid credit card work in practice?
Using a prepaid credit card is extremely simple. You first load money onto the card yourself. This is done by means of a top-up. The amount you deposit can vary between €10 to more than €50,000. Only the amount you deposit to the card can be spent in shops afterwards.
If there is no money on the card, it cannot be used temporarily. Thus, you cannot be in the red , which is possible with many other payment cards. After the balance is deposited on the card, it functions as a regular credit card again.
Money is added to the card by making a transfer to the balance of the prepaid payment card from a normal banking account. As soon as the transfer has taken place, the amount is directly available on the card. With most prepaid credit cards, you can view the current balance via a web login or the corresponding banking app. The card is never directly connected to your normal (business) bank account and as such, your bank accounts are protected at all times.
When intending to make a payment in a web shop, it works just like with a regular credit card. You choose the payment option ‘pay with credit card’ and follow further payment instructions of the shop. Fill in the name of the cardholder, card number, expiration date and CVC code. All these details can be found on the front and back of the card itself. In a physical store you usually do not need these details as you only need to enter your PIN code.
When do you use corporate prepaid credit cards?
A prepaid business credit card can be used for many purposes. The cards are ideal for online expenses and payments at home and abroad. You can also simply withdraw money from an ATM.
❯ Online payments:
Prepaid credit cards are great for online purchases such as digital services, software subscriptions or online advertising costs. You link the card to the platform and the amounts are automatically debited from the card.
Make sure there is always enough money on the card as this prevents the service from being cut off. It can easily be arranged by means of an automatic bank transfer. Of course, you can also make one-off purchases online, such as for printer paper or delivery service.
❯ Non-recurring business expenses:
If your organization has many changing suppliers or if you regularly make one-off purchases, this often is not possible on invoice. Then, you can easily pay for such expenses in advance with a prepaid credit card.
❯ Traveling abroad:
When travelling abroad, it is useful to have a credit card available. Hotel reservations or flight tickets often can only be booked with credit cards. You can use these cards to pay for a taxi or at a restaurant on site. Or you can withdraw money in the local currency at the ATM.
In case of sudden large expenses, a regular credit card limit may not be sufficient. With a prepaid card, you can increase the balance with just a few clicks, so you’ll never get stuck. In addition, Mastercard cards are accepted all over the world.
What are the advantages?
Using prepaid cards offers many advantages. The risk of overspending is reduced, as only the amount of money can be spent that is transferred to the card at forehand. As such you are always in control. And at the same time, it offers your teams a lot of convenience and flexibility paying for their expenses.
In addition, with an online transaction overview, you have direct insight into all expenses. Every time a transaction is made, you will see it appear in real-time in the overview.
❯ Control and insight:
By using prepaid credit cards you always have the latest transaction data at hand. This enables you to tightly control your budgets and to act quickly in case of unexpected expenses. In the case of ad hoc expenses, the finance team can increase the balance of a credit card in a matter of seconds.
When working with an integrated payment and declaration solution, you can even easily assign all transactions to cost centres or project IDs. This way you can link the expenses directly to your accounting. Not only does this provide for better control, but it also shortens administrative processing.
❯ Convenience for teams:
Prepaid credit cards make sense for organizations as they enable teams to work more agile and efficient. When employees have to pay for their hotel during a business trip, for example, using cash or a Maestro card can be inconvenient. With a prepaid credit card you can pay almost everywhere.
Internally, you can appoint someone to manage the budget for the team. Within the set limits, the team can make quick decisions together with this cash manager. This way, they can make the necessary business expenses at any time at their own responsibility.
❯ Cash is no longer needed:
Using cash or private advance payments by employees creates risks and can be susceptible to fraud. A prepaid credit card solves this problem to a very large extent. Electronic payments can be traced much easier. The payment process becomes safer and the declaration process watertight.
Business payment needs in practice
In addition to spending in physical stores, employees are also spending more and more online. Purchases in a shop can be paid for in cash or with a Maestro card, while for online payments you normally need a credit card. As a prepaid card basically works the same as a regular credit card, you can pay by credit card at virtually any internet business.
It offers a solution for dozens of business expenses such as:
❯ Ordering a gift for an employee in a webshop;
❯ Shopping online at a supermarket;
❯ Ordering office supplies;
❯ Paying a software subscription.
When employees have lots of small expenses, it is useful if they are integrated in one payment and expense system. This is the only way can you ensure that all transactions, accounts and their control are combined in a watertight lock. That way you can process expenses faster and more securely. With SimpledCard, Eric Smeding finds such an all-in-one solution for his team.
“We were looking for an innovative payment method that provides online payments and clear budgeting. We found that solution with SimpledCard”.
What are the advantages of an integrated payment system?
An integrated payment solution offers you various functionalities and advantages:
1. You issue the prepaid credit cards of, for example, SimpledCard yourself. This means that you receive a stock of cards and that you issue these credit cards to your employees without the intervention of a bank. You can scale up when necessary. If an employee leaves the team, you can easily reassign his/her card to another employee. You have the flexibility to only make certain cost centres or cost types available per team. This ensures smooth integration with your accounting.
2. In the mobile expense app, cardholders can see all transactions they have made with the prepaid credit card. They add the receipts themselves by taking a picture of the receipt with the app. Then they select the cost type, cost centre and possibly a project ID.
3. All cards are connected to your own online card management system. This provides full insight into expenses made with prepaid credit cards. With periodic transfers, you always ensure enough money is stored on the cards. In addition, you can define your own administrator roles. This allows you to determine who can increase the budget in real-time and who approves justifications. In this way, you can ensure the correct governance level for your organization.
How to choose the best business payment system?
There are many integrated solutions, all with their own functionalities. When researching which system suits your organization best, it is important to pay attention to several aspects:
❯ From which network do the cards originate and are they accepted worldwide?
❯ Ask if the provider of the prepaid cards is entitled to issue payment cards in your country.
❯ Do the prepaid cards guarantee both online and offline payments?
❯ What about the due diligence process? Are there any additional formalities required when adding a new cardholder?
❯ Find out how much support will be provided. In case of an urgent payment problem, you want to be helped quickly and competently.
❯ How well does the system fit in with the governance process of your organization? What expertise does the provider offer in designing the workflow?
❯ If your organization has several associations and different bookkeeping entities, is it still possible then to work well with the system?
❯ Do similar companies in your sector also use this software?
Tip! In some supermarkets or other physical stores, you cannot pay with credit cards, they only accept Maestro cards. Do you want to make sure you have a suitable means of payment for all your purchases? Take a look at how to best use the Maestro version of prepaid payment cards.
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