Credit, debit or business prepaid cards for global expenses?

The use of physical credit and debit cards has been the go-to solution for online purchases and employee expenses. As compared to requesting invoices and processing manual payments for each, even for small purchase, and dealing with employee expense reimbursement, using expense cards or some transactions is a step towards greater business agility and streamlined operations. Credit cards still fail to address a lot of challenges when it comes to global expenses. As a challenger in the category, virtual cards have boomed in recent years, growing from 136 billion in 2017 to 355 billion in 2022, representing a staggering 21% compound annual growth rate.

So, as a global business, should you use business credit cards or virtual debit and prepaid business cards? The article below explains the advantages and disadvantages of each solution so that you can pick the one that best fits your business needs.

With credit cards, companies have access to their credit line - there is no limit since financial institutions provide the funds. Due to the fact that they are tied to company credit, companies tend to issue them only to senior management and the C-suite.

In spite of this, credit cards offer some enticing advantages that explain their long-standing popularity.

Pros

The use of credit cards is widespread and often used to secure a deposit at the time of booking a hotel or renting a car.

No limit makes it ideal for large spends like inventory.

Post-purchase reconciliation is facilitated by a large amount of underlying data.

Cons

In order to issue a credit card, the company has to undergo credit checks and compliance processes, which involve extensive contracts and meetings, which delay the process of getting access to the funds.

There are annual fees associated with credit cards, and the higher the credit line, the higher the fee. On top of that you need to be aware of interest rates and fees for late payments if you’re planning to use the card for big purchases.

Traditional debit cards are a trusted alternative to credit cards. Instead of using a credit line - the funds are limited to what’s in the account the card is connected to. Debit cards give everyone equal access to company money. While they are much easier to get, they are also associated with fees and you need a bank to get debit cards. This means that for every currency and country you operate in you need to open another bank to get access to debit cards. Maintenance costs of those banking relationships will accumulate.

With traditional cards bringing a lot of costs and operational issues to SMBs, technology offers a better solution - virtual cards.

Whether prepaid or debit, virtual cards for business function much the same as traditional plastic cards, but with additional features that streamline payments, improve budget visibility, and reduce costs.

Pros

Spend Control and Flexibility:

Businesses can gain real-time insight into their spending through intuitive dashboards.

Using flexible funding methods to load only the needed amount on virtual cards or to set spending limits and controls keeps unapproved spending in check.

Budgeting:

For trips and projects, virtual cards make it easier to manage budgets by allocating them to specific teams or individuals.

Single-use cards are great for enhancing security for one-off projects or trials of new software, preventing unauthorised or recurring expenses.

Multi-Currency Support:

For overseas trips or purchases in a foreign currency, issue a card in a specific currency to avoid delays in payment and associated FX fluctuations. It prevents you from losing out on conversion fees when your employees have to pay in foreign currency when your native currency is weakening. Moreover, multi-currency cards enable you to streamline global travel or expenses.

Automation:

Virtual cards can be seamlessly connected to accounts payable processes and ERPs, reducing manual reconciliation.

Virtual debit and prepaid cards for employees let them upload invoices for their expenses on the ton which minimises the back-and-forth of requesting documentation.

Security:

Virtual cards, running on platforms like Visa and Mastercard, enjoy global acceptance, providing a secure and widely recognized payment method.

A number of unique security features provide a strong defence against unauthorised purchases and fraud, such as the ability to deny transactions for specific merchants, dynamic CVVs, and tokenizations.

Unlike traditional banks where a lost or misappropriated card needs to be cancelled and then reissued through often lengthy processes, virtual cards allow you to freeze or delete the card remotely and issue a new one instantly without disrupting business.

Cost:

Using virtual cards eliminates the risk of overdraft, preventing businesses from incurring additional expenses.

There are many virtual cards that offer 0% transaction fees, which contributes to overall cost savings.

Cons

There is no overdraft or credit available. When you run out of money, you will need to load the card again or create a new one connected to an account with funds. It is necessary to always monitor the available cash on the cards you intend to use before making purchases.

Apart from all the features mentioned above about control, flexibility, and multi-currency, Fyorin's cards have some unique advantages that make them especially useful for global companies

High value spending - Create cards that can handle high value transactions like tax payments or fuel purchases which are not usually offered by traditional debit card providers where the transaction may need to be approved.

Wide acceptance - Our cards are widely accepted and can be used for nearly all online payments.

Unparalleled flexibility - No limit on the number of cards you can create and you can create both debit, pre-paid and in GBP, EUR and USD.

Superior budgeting with sub accounts - assign cards to specific sub-accounts to manage budgets even more granularly.

Cost savings- 0% transaction fees and cash rebate every time you spend effectively turn finance from cost to revenue centre.

Improving efficiency - Say goodbye to manual work thanks to the integration with your accounting tool or ERP. Once the bill is paid it will automatically be marked off as paid.

Simplified compliance - With one onboarding you can tap into our network of financial institutions around the globe giving you access to 220+ currencies. We will connect you to the right banking partners and products and help you scale.