Credit and debit cards have transformed the payments landscape in the U.S. for both consumers and businesses. In 2016, for example, credit card and debit card payments surpassed the use of cash for the first time, accounting for $23.1 trillion in consumer spending.
Businesses owners have also turned to plastic for payments. In one study 37 percent of small businesses reported that they had used credit cards to meet capital needs in the previous 12 months. Among businesses, 44 percent reported that the terms of their credit cards had grown worse, and they reported an average interest rate of 15.6 percent.
It is clear that credit and debit cards are taking over the way in which payments are made in the U.S. and around the world. However, it is important for business owners to understand how to use their cards wisely so that they can curtail losses and grow their businesses.
A business debit card is a debit card that is designed to meet the unique needs of businesses. Unlike credit cards, business debit cards are not associated with revolving lines of credit. Instead, business debit cards are linked to a company’s own debit account so the purchases that are made with it do not add debt.
In 2017, the overall debit card purchase volume accounted for $2,860 billion, including both consumer and business purchases. For companies, the advantages of business debit cards are that many have built-in spending controls, they don’t add to debt, they don’t require credit checks since they are not credit cards, and they don’t incur interest charges.
The disadvantages of business debit cards are that they, won’t provide financing during cash shortfalls, and some cards may provide access to the business account if they don’t have protections.
Debit cards may be advantageous for businesses if they come with built-in controls for spending. They may help businesses to cut costs and to prevent internal and external losses.
Credit cards that are designed for businesses work in a similar way to consumer credit cards. A credit card for business requires business and business owner credit checks and may impact the owner’s credit score. A business credit card for startup companies may be especially difficult to get because the businesses may not have been operating for a long enough period of time.
When companies are thinking about getting a new business credit card, they should consider several factors like, interest rate, annual fees, rewards and perks, whether there are expense controls offered, and other fees.
Cards that are virtual are not made out of plastic but are instead randomly generated credit card numbers and CVV codes that can be used to securely make purchases remotely. These cards include virtual business credit cards, virtual payment cards, p cards, and ghost cards, and each type has a different function.
Virtual credit cards for business can be instantly generated to make single purchases. Once the numbers are used, they will no longer work. This makes them useless to thieves if they are stolen. Purchasing cards are virtual and are cards that may be given to a select group of employees to make secure purchases over a specific duration. Finally ghost debit or credit cards are numbers that can be assigned to individual departments or to suppliers that complete a high volume of transactions.
Internal and external thefts are real problems that businesses should work to prevent, and these incidents happen far more frequently than business owners might realize. According to the Association of Certified Fraud Examiners, the median loss that businesses suffer in these types of thefts is $145,000. The organization is the world’s leading organization of certified fraud examiners.
The ACFE reports that 25 percent of businesses that its examiners investigated suffered losses of $1 million or more. The organization has a number of resources to help businesses learn how to detect and prevent these types of internal schemes and tools to prevent fraud.
There are multiple causes of business fraud. Learning to recognize them can help companies to implement strategies to prevent themselves from becoming victims. Using a business calculator and reading fraud eBooks can help companies to understand their risks. A risk calculator is free and quickly identifies areas of risk for businesses to address.
A gas or fuel card is a type of debit or credit card that can be used to purchase fuel. Many companies that have fleets of vehicles use company fuel cards to help to manage their fleet fuel expenses.
Companies can give employees who are required to drive for their jobs gas credit cards or gas debit cards to use to pay for fuel. Giving the employees fuel credit cards or debit cards can allow companies to get rid of expense reimbursements and allow workers to get fuel when it is needed. These types of cards also help to make the spending more transparent so that fleet managers can quickly identify any problematic spending patterns.
Expense management includes all of the systems that companies have in place to manage their business and travel expenses. Good financial management is crucial for the success of businesses.
One survey found that as much as 10 percent of employee expenses violate company policies. If companies do not keep tight control of their expenses and plug expense leaks, their expenses may balloon out of control. Expense cards may help to give back some of the control.
Several tools can help companies to gain control of their expenses. A fraud calculator can help to identify areas of risk. Using an expense app and expense cards can help by getting rid of unwieldy traditional systems such as reimbursements, checks, and petty cash funds.
Gas cards, debit cards for employees, and corporate cards may all help to streamline accounts payable. Using cards instead of traditional systems can help to automate the processes and to prevent thefts.
A card for a small business may include a credit card for small business or a debit card for small business. Credit cards and debit cards are important for small businesses for several reasons. The Small Business Administration reports that spending by businesses with credit cards accounted for $430 million in spending on cards in 2015.
Small business debit cards can allow employees to buy needed items for their companies without waiting for purchase approvals. When comparing a small business debit card vs. small business credit card, the differences are that debit cards don’t require credit checks, debit cards don’t add to debt, debit card purchases don’t incur interest, and debit cards may offer greater spending transparency.
Reloadable credit cards are not truly small business credit cards because the money that people can spend with the cards is the company’s own money. Reloadable credit cards are actually reloadable debit cards on which companies can decide how much money to make available. When the funds on refillable credit cards are depleted, the companies can add more money in the amounts that they choose.
Secured cards are secured credit cards. Unlike debit cards for business, cards that are secured have credit limits that are set by the card issuers in the amount of the initial deposit. Companies may then charge up to the deposit amount, and they will be charged interest. These cards are used to build credit, and the credit limits may beyond the initial deposit over time. However, these cards may charge high annual fees and interest rates.
The construction industry is enjoying tremendous growth. The global construction industry is expected to grow at a rate of 3.6 percent through 2022. In Oct. 2018, the construction industry saw year-over-year growth of 4.9 percent compared to Oct. 2017.
While business might be strong, there are several things that construction companies should do to protect and grow their companies. Giving employees construction credit cards can help businesses to meet their project deadlines. However, debit cards may be a better option than credit cards for the construction business.
Unlike construction credit cards, debit cards will not add to the debt. They also do not incur interest charges, and they may have better expense control features. Finally, debit card transactions can be viewed in real time so that companies can spot issues and address them quickly.
Healthcare cards are cards that are meant for health care businesses. These types of cards include healthcare business credit cards and healthcare business debit cards. Cards for health care businesses can help to streamline payments processes and allow the businesses to keep better track of their expenses.
To get cards, health care businesses can submit applications. Credit cards will require that the businesses pass credit checks, and they may also require guarantees from the owners. Debit cards do not require credit checks or personal guarantees since they are not business credit cards.
Unlike for-profit businesses, non-profit companies are focused on social issues or causes instead of on profits. Despite their different focuses, non-profits should still use some lessons from the private business industry in terms of managing expenses and cutting costs.
One way that non-profit companies can help to cut costs and to prevent losses is by using non profit cards. Different types of non-profit cards include non profit debit cards and non profit credit cards. By adopting nonprofit cards, non-profits can take better control of their expenses and prevent losses from thefts, waste, and abuse.
Bento for Business offers business Visa cards that have built-in controls. The controls that come with these debit cards allow businesses to control how much a company employee can spend, where they can spend money on business purchases, and when they can be used.
The cards are debit cards that allow companies to learn how to better track their business expenses. They offer companies the ability to see the spending on each card in real time, and the cards can be turned on or off by tapping or clicking a button on a mobile device from anywhere 24 hours per day.
Bento for Business was founded by finance professionals who wanted to offer better solutions to companies for managing expenses and preventing losses. The company is considered to be a leader in the payments industry and has thousands of customers.
Bento has earned top reviews on trusted third party sites like TrustPilot, Capterra, and the BBB from hundreds of its customers. The company is featured in leading national publications such as Fortune, Forbes, and the Wall Street Journal. Bento offers a free 60-day trial so that businesses can try the cards before they decide to purchase them. To learn more, contact us today at 866.220.8455.
Applying does NOT affect your credit score!*This is not a credit card.
Banking services provided by The Bancorp Bank, Member FDIC. This Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A Inc. and may be used everywhere Visa® debit cards are accepted.