Business Prepaid Debit Cards: The Business Credit Card Alternative Preferred By Small Business Owners

credit card alternative

Business Prepaid Debit Cards vs. Credit Cards

For small business owners, managing employee expenses can be a minefield, especially as a business expands and individual employee expense requirements grow. The business credit card used to be the standard option, if you could even qualify.  But now the business prepaid debit card, sometimes referred to as the prepaid credit card, is fast becoming the most popular business credit card alternative.

Employee credit cards bring a number of risks, particularly for small to medium companies. But whether it’s office supplies, travel expenses, fuel for company vehicles, or client entertainment, business prepaid debit cards give you more flexibility without the risks.

Why are business prepaid debit cards the better business credit card alternative? Let’s take a look:

Business Credit Card

Business Prepaid Debit Card

Eligibility

Credit cards, whether personal or business, require approval for a line of credit from the financial provider. While large corporations won’t usually have a problem qualifying, smaller enterprises are often seen as high risk by lenders, so small business owners have a hard time getting business credit

There are no credit barriers to signing up for business prepaid debit cards, so they’re perfect for business owners who don’t want to have to go through credit checks or have been denied lines of credit.  Every verifiable business can get approved.

Control

There is certainly some element of control over spending on business credit cards, as they have a set limit. However, if a card has been used to purchase anything inappropriate or unapproved, you’ll only find out about it when you receive the monthly credit card statement.

Using a prepaid debit card as a business credit card alternative gives you complete visibility over spending through real-time reporting. Not only that, but you can control exactly how much can be spent, who can spend it, and what it can be spent on.

Credit Risk

The business owner’s own personal credit is linked to any business credit cards, so any negative effects on the business credit will ding your own credit too. While you may not think anything could go wrong, it only takes one problem employee or mistake during the expense management process to damage your business credit, and your personal credit along with it.

Because the monetary value on this type of card has been prepaid, there is no credit needed, and therefore no risk to either your business or personal credit.

Costs

The cost of using business credit cards includes interest charges, late payment fees, and usually monthly and/or annual fees, all of which can add up quickly if you aren’t monitoring them.

Business prepaid debit cards will usually come with a small monthly fee attached, but unlike employee credit cards, there are no extra charges such as late payment fees or interest, because they never carry an outstanding balance.

Flexibility

Using a business credit card allows the cardholder to use it anywhere and on anything. While this is certainly a positive in some ways, business credit cards may be too flexible, leaving room for employee overspending and fraud.  If you are giving employees your credit card, you may be opening yourself up to unauthorized charges, A.K.A. fraud.

Business prepaid debit cards are just as flexible as business credit cards because they can be used anywhere a credit card can, but they also offer more control—the business owner can limit where and when they’re used. They’re also easy to refill—you can set up autoload if you don’t want to handle it manually.

Conclusion

Choosing a business prepaid debit card is a lower cost option that gives you control over how your employees use their cards, without a credit check, and with no risk to your business or personal credit. It’s a business credit card alternative that lets you control your business finances in a way that’s smart, convenient, and efficient. Take a look at Bento’s commercial prepaid debit MasterCard and see if prepaid is the right solution for your business.