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Six Reasons a Prepaid Expense Card Program Trumps Credit Cards

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By Michael Noles
Chief Marketing Officer
PEX Card

Many business leaders are uncomfortable giving credit cards to their employees. But companies with workers on the road now have a game-changing option: corporate prepaid expense card programs. They provide the perfect mix of credit card convenience with an online, real-time control and management system.

It’s a new approach to managing day-to-day employee spending that, until now, was available only to the largest corporations. Also, unlike standard business credit cards, a prepaid expense card ensures employees never have direct access to the business credit line. Employers no longer need to worry about exceeding credit limits or getting hit with late fees, over limit fees, or interest charges.

Progressive firms across a wide variety of industries and verticals are implementing prepaid cards to streamline their business expenses. Here are six key reasons why a prepaid expense card program trumps corporate credit cards:

1. A corporate prepaid expense card program helps managers limit individual employee expenses by dollar amount and merchant category (e.g., fuel, dining, retail). For example, most business owners and executives would prefer to limit their drivers’ expenses to fuel and maintenance. Standard business credit cards simply don’t offer that level of control or flexibility. But with a corporate prepaid debit card program, company administrators can limit purchases to fuel and adjust how much money is on the card any time they want. And if unexpected expenses arise, employees must request a card reload prior to spending – a significant difference from credit cards where employees can spend first and ask forgiveness for over spending later.

2. With standard credit card programs, employees have direct access to the company’s line of credit on the card. In a prepaid expense card program, employees can only access funds that the manager has placed on the card. Moreover, the manager can change how much is available – online and instantly.

3. Standard credit card lines are limited by what bank is willing to lend, and don’t necessarily change when your business needs change. With a prepaid business expense card service, companies take control of the spend availability by funding their repository account with an adequate amount of money; the bank has no say in what a company is allowed to spend. As business needs expand or contract, managers decide how much money to make available for expenses. There is never a risk that employees will be turned down because of a bank-assigned limit. In 2009 credit card firms cut credit lines with little or no advance notice, causing embarrassment and operational issues for staff and companies.

4. Business owners are progressively rethinking how to thrive in today’s economy with limited credit histories and mobile workforces. Because corporate prepaid debit cards eliminate the burden of interest charges, over limit fees and late fees, companies can more efficiently manage their spending and allocate funds appropriately.

5. Providers of this prepaid service never order a credit report – not on employees or the business. Standard business credit card companies usually require a personal co-signer for the debt and order credit reports on that person and the company. There’s no reason to do so with a prepaid business debit card – after all, the money belongs to the business – why would the provider need to access credit histories?

6.There is no personal liability with a prepaid business expense card program because funds were provided ahead of the purchase. With standard card programs, the owner or authorizing officer is held responsible for the company’s debt if the business is unable to pay.

In today’s business climate, the challenge to constantly and consistently "do more with less" is alive and well. There are millions of small- and medium-sized businesses that are typically underserved by commercial card issuers.

Businesses are facing critical financial challenges, including employee spending control, funds disbursement problems for remote employees purchasing travel and job-related materials, and card abuse, as well as the misuse of corporate funds.

By streamlining employee spending, progressive organizations can eliminate the traditional financial burdens of credit management, and allocate their time, attention and resources to operations that truly impact the bottom line.

Michael K. Noles has more than 30 years of diverse financial services experience, holding senior management positions at the world’s largest financial institutions, large regional banks, large credit card issuers and privately held companies. As the CMO of PEX Card, Mike is responsible for developing and implementing the company’s growth strategy over multiple online and offline channels. He can be reach at


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