Businesses have to keep up with the rapidly-changing digital world to stay ahead of the game. Integrating new financial technologies can boost your performance in the long run.
Many companies are still using traditional tools like company credit cards to help employees manage their expenses. While such tools do the job, they are not as efficient as modern payment technologies. We use so many different payment methods in our personal life, so why should our professional life be any different?
Corporate prepaid cards have been around for a while. Between 2006 and 2012, the number of transactions conducted with the help of prepaid cards increased by 18.5% per year. It is high time that companies switch to prepaid employee expense cards that can benefit them and their employees.
What are corporate prepaid cards?
There is nothing visually striking about corporate prepaid cards. They look and function as any other card. Your employees should be able to use them virtually and in-store as necessary. The global prepaid card market size was worth $1,847.96 billion in 2019, and could be worth $5,510.87 billion by 2027.
Since the card is ‘prepaid’, it has to be loaded with a particular allowance beforehand. Usually, corporate prepaid cards are not directly associated with the company bank account. Hence, they are safer to distribute among your older and newer employees. You will also be able to monitor whether your employees are using their prepaid cards appropriately.
Why should you use corporate prepaid cards?
Many businesses do not grant a card to anybody but top-level officials, which limits the purchasing capacity. The situation does not improve much if only managers or a particular team has access to cards because all transactions will then have to be ratified by them.
Your frontline employees deserve purchasing power of their own which is where prepaid cards come in handy. Following a policy of reimbursing your employees after they make a purchase can eventually lead you to spend a lot more than you intended. Corporate prepaid cards prevent such a situation by placing reasonable restrictions. You can introduce a set of rules and use any expense management platform to track the payments.
Are corporate prepaid cards different from debit cards?
While there are subtle differences between corporate prepaid cards and debit cards, they serve the same purpose essentially in the corporate context. Both cards will allow you and your employees to spend only the preloaded money that is accessible on the account. Neither comes with an overdraft or credit system, which means that you will be in complete control of how much is spent overall.
Using prepaid cards
Ideally, you should distribute prepaid cards that can operate both online and offline. Managers are responsible for granting access to the funds. They can set up a monthly budget and inform employees of the maximum amount spendable on a single purchase. If the employees have to make a transaction that does not meet these requirements, they have to get it approved by the manager.
If you want all the transactions to go through a manager first, you can set the budget and card limit to 0 and have employees submit requests. However, that can be overbearing, especially for high-level employees who have earned your trust.
You can also set up one-time use virtual cards for your employees. This means that employees will get access to a new card for every transaction depending on whether it meets the requirements or has been approved.
Finance teams can match the receipts submitted by users at the end of the month to test the legitimacy of every payment. However, you can avoid this manual process completely by opting for a card system with an online platform where employees can upload their receipts immediately and automatically after payment for verification.
Advantages of corporate prepaid cards
Control total spending
You will be able to restrict and approve transactions and grant some degree of financial freedom to your employees simultaneously without going over your budget.
You do not have to follow a strict pattern. Depending on the plans for the month, you can change the limits and be flexible in your approach.
No more employee reimbursement
Employees will not have to make company payments from their own pocket anymore, and you do not have to go through the lengthy process of reimbursement.
Increases financial awareness
Federal Deposit Insurance Corporation found that 6.5% of U.S. households did not have a bank account in 2018. Prepaid cards give unbanked consumers the chance to experience cashless transactions and grants access to other payment services.
Your managers and you do not have to approve every single transaction within a time limit.
Monitoring and verification
Tracking payments through an app will make your work much simpler. You can also integrate it with your accounting software to avoid tedious data entry.
Are you ready to make the switch to corporate credit cards?