Prepaid, Credit and Debit Cards

There are many different kinds of business card programs out there – credit and debit for small business or large credit-based corporate P-card and travel card programs. Banks also offer debit cards linked to bank accounts. Now that PEX Card is available, there is prepaid for business as well. So what’s the difference?

For the employee cardholder, they all function more or less the same way – cards have a network brand name (like Visa), are presented for payment and require a PIN or signature at the point of sale to complete a transaction. Overall, they are very convenient – no checks, no cash and information is electronic so its available online. For the business, determining which of these products to implement becomes a question about which features are going to help facilitate operations and how the program will integrate into a business, while maintaining control of spending.

A small business credit card is most similar to a personal credit card. Though most small business cards require company authorization for purchases, employees still have access to their employer’s line of credit, which may be problematic for some business owners and CFOs. While most of the workforce may have a need to spend corporate funds, only the most senior employees receive cards. All others are required to pay out-of-pocket and submit expense reports, requisition cash, or borrow an authorized cardholder’s card to make purchases. In many cases, small business cards cannot be used by companies effectively.

P-cards and travel cards are tailor-made card programs offered to larger organizations whose revenues are generally in excess of $10 million to $20 million per year. These cards have customizable profiles and have components integrated directly into HR and accounting systems which requires buy-in and support from IT groups and management.

An alternative to credit-based products is a debit card linked to a bank account. Debit card (or check card) payments are akin to check payments in that money is accessed directly from a checking account – cards issued share one common balance. This can be problematic if one cardholder spends all funds in the account and may bypass any float available through a credit card payment, but debit cards still enable employee access to spending on the Visa network.

The PEX Visa Prepaid Card is a blend of all of the above. It behaves similarly to a debit card in that funds must be added to an account prior to spending, yet with detailed controls, individual balances and reporting it also behaves like a P-card. Because PEX Card is prepaid, no credit check is required to open an account, giving companies easier access to Visa spending with less risk of putting credit in employees’ hands. Prepaid is a form of debit but no checking account is opened for the customer, making the card the primary access point for funds. There is no ATM access with PEX Card.

While there are similarities between them all, the tools companies need to streamline spend management have, until PEX Card, been out of reach for smaller organizations. The PEX Card Service is the most comprehensive expense management tool at this price point, offering access to individualized balances, features to control and pre-authorize spending, manage company money, and access real-time spend data for visibility into cash flow.