Prepaid cards - What is it and how do they work?
The use of prepaid cards for business expenses has gained considerable popularity in recent years as a convenient and efficient way for companies to manage their employee spending.
These cards are essentially pre-loaded with funds that can be used for specific business expenses, such as travel, office supplies, or meals and entertainment.
Unlike traditional corporate credit cards, prepaid cards can be easily issued to employees, making them a popular option for small businesses or those with remote teams.
Additionally, prepaid cards often offer robust reporting and expense management tools, giving businesses greater visibility and control over their spending.
What is a business prepaid card?
A business prepaid card is a payment card that is preloaded with funds and issued to employees to cover specific business expenses, such as travel, meals, and office supplies. Unlike credit cards, prepaid cards do not usually require a credit check or incur interest charges.
They offer businesses greater control over employee spending and often come with features like real-time expense tracking, spend limits, and automated expense reporting.
Overview of prepaid cards in Singapore
In Singapore, prepaid cards are commonly utilized by businesses as a more efficient alternative to traditional payment methods. These cards can be obtained from various financial institutions, including payment service providers and banks.
Prepaid cards are versatile in their usage for both online and in-person transactions, bill payments, and ATM cash withdrawals. Some prepaid cards in Singapore also provide rewards programs, cashback, and other advantages.
It is important, however, for cardholders to be aware of any fees associated with the card, such as transaction or reload fees.
Furthermore, the Monetary Authority of Singapore (MAS) is the government body responsible for enforcing regulations and guidelines for the use of prepaid cards for business expenses.
Benefits of prepaid cards for business expenses
Secure payment method
Prepaid business cards offer a secure payment method for businesses. Since the cards are preloaded with a fixed amount, they eliminate the risk of overspending and minimize the risk of theft or loss.
Prepaid cards also come with enhanced security features such as PIN protection, encryption, and fraud monitoring. These features make prepaid cards a safer option for business transactions than traditional credit or debit cards.
Improved control on expense
Prepaid cards also provide businesses with greater control over their employee spending. Employers can set spending limits on the cards and restrict usage to specific categories such as travel, meals, or office supplies.
This helps prevent employees from overspending or using the card for personal expenses. Additionally, many prepaid cards offer real-time monitoring, enabling employers to track employee spending as it happens.
Better record keeping
Business prepaid cards come with features such as transaction logs and expense tracking tools, making it easier for businesses to keep accurate records of their expenses in real-time.
These records can be used for tax purposes or to analyze spending trends and identify areas where cost savings can be made.
Reduced incidents of fraud and risks
Using prepaid cards can help businesses reduce incidents of fraud and financial risks. Since the cards are not directly linked to a bank account, there is no risk of exposing sensitive financial information.
Additionally, prepaid cards are only loaded with the amount that needs to be spent, therefore reducing the amount of money that is put at risk.
Cash flow management
Prepaid cards can help businesses better manage their cash flow. By loading funds onto a prepaid card, businesses can ensure that they have the necessary funds available to cover their expenses.
This can be particularly useful for small businesses or those with irregular cash flow.
Budget control
Prepaid cards can also be used to enforce budget control. By setting spending limits and restricting usage to specific categories, businesses can ensure that their expenses stay within budget.
Business prepaid cards for employee expenses can also be used to monitor employee spending and identify areas where cost savings can be made.
Convenience
Business prepaid cards are a convenient payment method for organizations. They can be easily obtained from banks, payment service providers, or other financial institutions, and can be used for a variety of expenses, such as travel, meals, or office supplies.
Prepaid cards are also widely accepted at most merchants, making them a versatile option for business transactions.
For a more in-depth look at travel-specific prepaid cards available in Singapore, check out our article on the best prepaid travel cards in Singapore.
Use cases of prepaid cards for business expenses
Employee expenses
Prepaid cards can simplify the process of managing employee expenses. They allow for real-time expense tracking and control, eliminating the need for manual expense reporting.
This, in turn, simplifies the reimbursement process and saves time and effort for both the employee and the employer.
Business travel expenses
Prepaid cards offer easy access to funds while employees are on the road, making it simpler to manage travel expenses.
Enhanced security features protect against fraud and unauthorized use, and tracking and reconciliation of expenses are simplified for all involved parties.
Procurement
Business prepaid cards considerably streamline the purchase order and payment process. This provides enhanced control and oversight of the expenses associated with procurement.
Vendor management and reconciliation are also significantly simplified with the use of prepaid cards.
Incentives and rewards
Prepaid cards can be used as a way to offer incentives and rewards to employees or even clients.
They can be loaded with cash or used to purchase goods and services, providing a flexible and convenient reward option.
Contingency planning
Prepaid cards can also be used for contingency planning purposes, such as for emergency expenses or unexpected business needs.
They can be preloaded with funds to ensure that businesses are prepared for any unexpected costs.
Entertainment expenses
Prepaid cards can cover entertainment expenses, such as client meetings, team-building activities, and corporate events.
This simplifies expense tracking and reconciliation and can help companies stay within their entertainment budgets.
Prepaid cards implementation and best practices
Evaluate your needs
Determine what your organization's specific needs are for prepaid cards. Consider what types of expenses the cards will be used for and how many cards will be needed.
Choose the right card provider
Select a card provider that offers the features and benefits that meet your organization's needs. Consider factors such as fees, security features, customer support, and ease of use.
Integrate into existing system
Integrate the use of prepaid cards into your organization's existing expense management system. This ensures that expenses are tracked and recorded accurately and consistently, preventing any possible bottlenecks or other issues in the future.
Establish clear policies and procedures
Develop clear policies and procedures for the use of prepaid cards. This should include guidelines for card usage, approval processes, and reporting requirements.
These guidelines should be readily accessible to all employees should they feel the need to refer to them.
Train employees
Provide training to employees on how to use the prepaid cards, as well as the policies and procedures that are in place for their use. This ensures that employees understand the proper usage of the cards and how to comply with company policies.
Continuously monitor expenses
Regularly monitor expenses to ensure that they are within budget and comply with company policies. This can be done through regular expense reports and audits.
Keep records and reassess regularly
Keep accurate records of all prepaid card transactions and regularly reassess the effectiveness of their use. This will help identify any areas for improvement and ensure that the cards continue to meet the organization's needs.
Why get Volopay’s corporate cards for your business?
If you need quick access to prepaid cards for business expense management, Volopay’s corporate cards might just be the solution for you. The cards offered by Volopay come with a range of benefits for businesses looking to manage their expenses more efficiently.
With Volopay, businesses can easily issue and manage prepaid cards for employees, track expenses in real-time, and automate their expense management processes.
Volopay's cards are also equipped with advanced security features, such as transaction limits, expense approval workflows, and real-time notifications, to help prevent fraud and unauthorized transactions.
You can even issue and use unlimited virtual cards at no added costs whatsoever. These cards offer a comprehensive financial solution that helps save time and money and at the same time elevates the role of the finance team.
FAQ's
A debit card is connected to the user's bank account, enabling them to use the available funds, whereas a prepaid card requires the user to deposit money onto the card first before using it. Moreover, since prepaid cards are not connected to a bank account, they do not have an impact on the user's credit score, while debit cards can affect the user's credit score as they are connected to a bank account.
The different types of prepaid cards available to businesses include employee expense cards, purchase cards, corporate gift cards, payroll cards, and travel cards.
Yes, it is possible to withdraw money from ATMs using business prepaid cards.
The exact process for getting a prepaid card for your business may differ from provider to provider. However, the general process starts with submitting the required business financial documents and from then the provider’s team will guide you through.