A Guide to Prepaid cards for Business
Prepaid cards – the basics
Prepaid cards for business are simple and effective. After loading them with money (hence the ‘prepaid’) you, or your employees, can use them to make purchases or withdraw cash until the money runs out. Then you load them up again.
The important thing is that they are not linked directly to a bank account or credit facility. This means that there’s no interest added to purchases because you’re spending your own money, and there’s no accumulation of debt. Because you are not asking for credit, prepaid cards are also much easier to get hold of.
That last point is crucial. Many small businesses are turned down for business credit cards because they’re relatively new. Further to this, they haven’t got enough of a trading track record to have built up the necessary credit score.
Even if you have – or could have – a business credit card, there are still many good reasons to invest in prepaid business cards. As this guide will show, prepaid cards can be a game changer when it comes to expense management, and an excellent way to empower employees with controlled access to company money.
Prepaid cards and fees
According to Mastercard “companies of every size are turning to prepaid cards for their business purchases and expenses. While corporate credit cards continue to play a vital role in business life, they’re not always available to all employees.”
While this may be true, something to consider is that not all prepaid cards for business are the same.
For a start, different issuing companies charge different fees. It’s worth taking a moment to learn about the landscape of fees, because it should influence your choice. Typical fees include:
- Top-up fees: A fee charged when you add funds to a prepaid account.
- Monthly fees: A management fee charged every month.
- Application fees: A fee charged for issuing the card.
- Withdrawal fees: A fee charged for withdrawing cash from ATMs.
- Transaction fees: A fee charged every time you use the card (for example, 3% of the value of a purchase).
- Inactivity fees: A fee charged if you haven’t used your card for a period of time.
Most cards charge some, but not all, of these fees, so different cards will be more suitable for different businesses, depending on what you use them for and how.
Minimums and maximums
Many providers specify a maximum amount you can hold on a prepaid card for business, which might be anything up to £25,000. Some have minimum balance requirements, typically £50 or £100. Some have a maximum daily transaction cost – say £5,000 to £20,000 – or a maximum single purchase value. ATM withdrawals are often limited to around £250 per day.
Are you eligible for a prepaid card for business?
The answer to this question is almost certainly yes. You don’t have to share your credit history to apply. Mastercard doesn’t even require a bank account. Proof of identification is all you will usually need to provide, alongside some basic company details.
This is one of the most important benefits of prepaid cards for business – it means you can get one even if your business is new or your credit rating is low.
What to look for in a prepaid card for business?
The best card for you will depend on your likely usage. Here’s what you need to consider…
- Costs: Base your calculation of cost on your likely usage. Compare monthly and transaction fees but also consider how frequently you or your employees are likely to withdraw cash or travel abroad. Choose cards with fees that best suit your anticipated use cases.
- Number of users: How many cards does your business need? Make sure a provider will issue enough cards at a reasonable cost. Also look out for minimum card spends.
Features: Look for management tools that offer control. For example, do you want to restrict spending by category (like travel, food and entertainment)? Would it be useful to be able to monitor spending in real time? Do you want the option to top-up cards automatically? The best solutions offer these features and many more.
Why use prepaid cards?
Prepaid business cards aren’t just a last resort for those who can’t get credit. In fact, many companies now use prepaid cards alongside a company credit card. There are good reasons why.
Give employees freedom – but stay in control
Giving employees prepaid cards gives them the autonomy to make the right purchase at the right time. It lets them act quickly and decisively.
Significantly, it also means they never have to spend their own money on the company’s behalf.
That’s important if you want to keep your best talent happy and motivated. It’s well established that making employees pay business expenses from their own pockets, and then wait for reimbursement, can leave them frustrated at least, and even in financial difficulty.
Instead, the best prepaid cards give employees freedom to spend company money responsibly, within sensible predetermined limits.
Convenience and security
Paying by card is convenient, and some prepaid card providers also issue virtual cards for online purchases. The controlled allocation of real money makes budgeting easy, with no risk of nasty surprises at the end of the month.
It’s also reassuring to know that your business can never lose more than the amount loaded onto the cards, and that most prepaid solutions give you the option to turn cards off (and on) with the click of a mouse. A lost, stolen or fraudulently used card can be deactivated in seconds.
Good prepaid cards let you load them with a foreign currency before you travel – meaning changing FX rates won’t affect the balance on your card.
Prepaid cards make life easier for your travelling staff, too. There are no wads of cash to carry around (and worry about). And prepaid cards that come with a mobile app means that employees can capture receipts instantly with a camera phone, rather than stuffing their wallets with paper receipts and painstakingly entering numbers into an expense report when they get home.
The downsides of prepaid business cards
Prepaid cards are a useful tool for many businesses, but they do have downsides, too:
- Fees: pick the wrong card and a plethora of small fees can quickly add up.
- Credit: you don’t improve your credit rating by using a prepaid card.
- Rewards: credit card style reward schemes (cashback on purchases, air miles etc.) are not available for prepaid.
The business traveller
Your team needs to meet clients and attend trade shows, but expense spending can easily get out of hand. With prepaid cards, you can set realistic limits for travel, hotels and subsistence. Put a little extra on the most senior employees’ cards for client entertainment. Either way, everyone can travel worry-free.
The lifelong learner
Studies show that millennial workers value personal development opportunities more than any other in-work benefit. By loading up prepaid cards with a set amount earmarked for L&D, you can motivate your workforce and give HR a useful recruitment and retention tool. All without any administrative burden at all: it’s a set-and-forget L&D strategy!
The team leader
Don’t make line managers come cap in hand every time they want to reward teams for a successful conference, sales quarter or marketing campaign. Give them a controlled amount for impromptu celebrations and encourage autonomy and responsible spending. With prepaid, you’re also minimising their admin: no more forms, no more signing off each month (or forensically assessing expenses which you don’t want to sign off…)
Prepaid cards vs credit and debit cards
Prepaid vs credit cards
The most obvious advantage prepaid cards have over credit cards is that it’s much easier to get them. No credit checks are required.
And with a prepaid card for business, you never risk debt spiralling out of control.
Research shows that people find it easier to spend excessively on credit cards than with cash, and in this instance prepaid cards are much like cash. When the loaded sum is spent, it’s spent.
You are also spending company money that already exists, rather than building up debt that will need to be paid off in the future. When multiple employees are spending money on your company’s behalf, it’s easy to rack up large debts quickly.
Prepaid cards vs debit cards
Prepaid cards for business offer a couple of key benefits over debit cards.
De-risking spend: It can be risky to issue multiple employees with debit cards, especially if you have an overdraft facility. Prepaid cards offer more control, with less chance of spiralling debt. And a stolen debit card can be used to make purchases up to an account overdraft limit that might run into tens of thousands of pounds. With prepaid, you choose the spending limit on every card.
Visibility: By loading pre-agreed sums onto cards you make accurate budgeting easy. You also get a real-time view of spending, something that isn’t always possible with debit cards.
Prepaid cards as a business tool
Prepaid cards are as much a management tool as a spending system:
- Take control of your business spending and focus it in more productive ways.
- Give staff the autonomy they need to make key decisions at the right time, without relinquishing control of your budgets.
Soldo is a system of real and virtual prepaid cards, backed by a sophisticated management platform. It means you can empower more staff to make their own spending decisions, without ever losing overall control.
- Spending rules and limits are entirely customisable. Decide who can spend what, where and when, based on departments, teams or individuals. Set limits for categories (like travel, training or food and drink) and/or daily spending limits.
- Allow or prevent online or contactless transactions, and limit or prevent cash withdrawals.
- If necessary, restrict spending to certain countries and categories.
- Turn cards on and off at will.
It’s proactive expense management at your fingertips.
Accounting software integration
Many prepaid cards integrate seamlessly with accounting software for small business, making the lives of your finance staff easier. Soldo integrates directly with Xero, for example.
Manual data entry is a recipe for errors, leading to inaccurate records and missed VAT deadlines. By automatically sending data to accounting software, prepaid card management systems mean accurate accounts that are reconciled in just a couple of clicks.
That also means that your ledger staff can spend their time on more productive and strategic activities.
Prepaid cards give you greater visibility on your spending, including the insights you need to spend more wisely.
- Real-time monitoring means spending can never spiral out of control. You always know who is spending what, when and where – and within the limits you have set. Sophisticated platforms will also inform you if spending limits or rules are close to being broken, allowing you to take remedial action.
- In-depth reporting gives you actionable insight into how your business spends money. Filter by user, currency, period or more. Identify extravagant individuals and teams, and compare spending to value. Find more cost-effective alternatives for recurring expenses. With the best prepaid solutions, intuitive dashboards and useful visuals give you the clearest understanding of where your money is going and where savings might be made.
Prepaid cards for business can automate many hitherto time-leaching processes.
- Create automatic reloads for specific cards, based on your rules and timings. For example, staff who regularly entertain clients don’t want to be embarrassed by running out of money at the wrong time. Create automatic top-up rules for appropriate cards, individuals or teams.
- Spending rules are automatically applied, freeing you from the burden of overseeing countless trivial spending decisions.
Prepaid cards for business expenses make life easier for your employees.
- Staff don’t have to spend their own money on the company’s behalf, some of which is often never reclaimed. Soldo estimates that the approximate value of items that haven’t been claimed back in the last 12 months by SME workers across the UK is a whopping £137,171,252!
- Employees no longer have to carry around a wallet-full of receipts. Cards with an associated mobile app let staff snap receipts with a phone camera, add notes and send the whole thing off to the accounts department. No more wasted time filling in manual expense reports (and filling them in again when somebody discovers a typo…)
- Giving employees the freedom to spend company money creates a sense of trust, and incentivises staff to spend wisely.
Soldo is a prepaid card for business that offers all these benefits. It lets you take control of company spending while simplifying expense management and reporting. It empowers employees and makes their lives easier. It offers real money saving insight and makes bookkeeping effortless.
And it does so without hidden deposit or transaction fees. We don’t insist on a minimum number of cards and there are no minimum deposits. Soldo’s plans and prices are simple and transparent. We do not charge transaction fees and our foreign exchange fee is fixed at just 1% for Pro and Premium plans. There is no charge to add funds to accounts, and though we charge a small monthly fee per card for Pro and Premium plans, our basic Soldo Start plan is free.
Can I get a Soldo card if I have poor credit?
Yes. You are not asking for a line of credit, so your credit score doesn’t come into it. To get started, you just need to be a registered company and provide details for the company director and admin of your Soldo account.
How long before I can get up and running?
Once you complete the simple application procedure your Soldo cards should arrive in 2 – 5 days. Load them up, create controls and you’re all set.
We don’t use Xero – will Soldo work with our accounting software?
Yes. You can export all transaction data in a couple of clicks to all major accounting software systems. Soldo exports in Excel, CSV, QIF, OFX and PDF.
There are three Soldo price plans. What is included in each and who are they aimed at?
You can find details on each price plan here.
- Soldo Start is a basic spending solution, featuring an automatic daily bank feed into Xero. This plan doesn’t include receipt capture or the complete integration with Xero.
- Soldo Pro features a complete expense solution and automatic bank feed integration with Xero. This plan also includes receipt and enriched data capture, which is why we think it offers the best value for small and growing teams.
- Premium is the most complete plan, which comes with all the features of Soldo Pro, plus advanced reporting and permissions/roles and the option to create non-nominative cards for company expenses.