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Finance strategy 3 min read

Why prepaid expense cards are better than classic credit cards

Faustine Rohr-Lacoste

Chances are you don't carry much cash around anymore. That's not strange — the convenience and security of plastic money is hard to beat. But while you're probably familiar with the classic corporate credit card, you might not have heard of how prepaid cards can help your business manage its expenses.

What are prepaid cards?

At a glance, a prepaid card looks exactly like any other payment card — it's a small, plastic rectangle with protruding numbers on the front. On the back you'll find the same magnetic strip and Card Verification Code (CVC) you get on every credit card. The main difference isn't apparent, but it's definitely crucial — the card is prepaid, meaning that it's pre-loaded with a specific amount and you can't spend one cent above that. 
 
Prepaid cards for businesses are not connected to the main company bank account so they are less risky to hand out to employees. The ones Spendesk provide are integrated with an online dashboard, where finance managers can handle spending limits and track payments in real-time.
 

Why should your company use prepaid cards?

The way most businesses deal with credit card purchases is inherently flawed — they either prevent everyone from using the company credit cards (which is a bottleneck when you need to make an online payment at work), or have a couple of corporate cards shared around the office to use whenever needed. These approaches could end up being problematic. Either team members can't get the job done because they don't have access to a payment method, or the fraud risk is huge since no one knows where the card is or who used it.
 

Prepaid cards to the rescue! Together with a smart expense management platform, they're perfect for giving your employees the freedom to spend when they need to, while also keeping an eye on your budget. Instead of giving people access to the unlimited funds of a credit card, they can only access a predefined amount based on rules you set up beforehand.

How do prepaid cards work?

For your employees, Spendesk physical prepaid cards work in exactly the same way as any other card they're used to — either by swiping and signing, using chip and pin or when making an online transaction. Virtual prepaid cards first need to be generated from your Spendesk dashboard, after which its numbers can be used in the same way for online purchases. To make things even simpler, you can directly copy and paste the card numbers into the right field (and our customers love it!)
 
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Both the physical and virtual versions work with the MasterCard network, one of the world's most trusted payment brands. This means that they're accepted at millions of stores in over 200 countries, giving you the same flexibility as traditional cards. You can even use it to get money from an ATM!
 
But in order for employees to be able to purchase things with their prepaid card, their manager first needs to give them access to funds. The cornerstone of this system is the personalised monthly budget, which can be set up on the Spendesk dashboard. Here it's possible to define the monthly budget that can be accessed through the card, and the maximum amount that's available for a single purchase. If a transaction falls within these two parameters it's automatically validated, but otherwise it needs to be approved by a manager first.
 
Of course, it's also possible to set the budget and transaction limits to zero, which means that payments are only possible by making a request. On the other hand, if there are some high-level employees who you would like to trust with more financial freedom, you can easily give them access to much higher amounts of money.
 
For virtual cards the system is slightly different. If the user’s budget and transaction limits allow for the transaction, or a manager approves an out-of-budget purchase, a one-time card is created that can immediately be used for this specific payment alone — significantly increasing its security.
 

You might be thinking how all of this works with subscription-based services or other kinds of recurring payments. With our subscription cards, it couldn't be easier — just set one up from the Spendesk dashboard and the right amount is loaded onto the card when the payment is due, so the subscription is automatically paid.

Embrace the power of prepaid cards with Spendesk

Spendesk prepaid cards

As you can see, using prepaid cards gives us an incredible amount of flexibility in creating the world's most powerful platform for expense management. Thousands of companies already make use of our budgeting options and many other smart features. There's no reason to miss out anymore.

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Faustine Rohr-Lacoste

Faustine is Head of Community at Spendesk. She is in charge of CFO Connect, a community of modern finance leaders.