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Physical cards

Physical cards are plastic or metal payment cards that cardholders use to make purchases. Company credit cards are designed exclusively for business spend and can be issued in the form of physical cards or virtual cards.

All types of business roles, from employees to executives, can use physical cards to make payments for business expenses and work-related purchases, both at the office and on-the-go.

Types of physical cards

There are several different types of physical cards that individuals and companies can choose from.

Debit cards

Everytime a payment is made with a debit card, credit is deducted or debited from a set balance within a linked bank or financial account. Bank debit cards can also be used to withdraw cash at ATMs. 

If more funds are withdrawn than available in the account, an overdraft penalty fee can apply. 

Prepaid cards

Prepaid cards are similar to debit cards, but are not linked or synced to an associated bank account. They can be purchased from stores or issued by employers with a specific amount of funds loaded into them. 

There is no overdraft fee, as they cannot be used for payments that exceed the amount of funds that exist on the card.  

Credit cards

Purchases made with a credit card are essentially borrowed funds that need to be repaid at a later time. Individual and business credit history affect eligibility as credit card providers do credit checks on applicants.

Approved cardholders can spend directly with the card or withdraw cash advances, accumulating a credit balance within their monthly credit limit. The outstanding balance rolls over month-to-month with minimum payments that need to be paid off by the end of the credit statement. 

If minimum payments aren’t made on time, penalties can apply with interest. 

Charge cards

These are similar to credit cards, but instead of making a minimum payment at the end of each statement period, cardholders are required to pay off the entire amount spent during the statement period by the payment due date at the end of the month. 

It’s more difficult to qualify for charge cards than credit cards, and eligibility usually requires an exceptional credit score and higher income level.

How are physical cards used?

Businesses use physical payment cards in different ways. Some companies have one physical credit card that is passed around to the team members who need to spend. Other companies issue individual cards to employees who are frequent spenders in their roles. 

Overall, it heavily depends on the company’s expense policy and the unique needs of their teams. Here are the some of the most common usages for company credit cards:

  • Employee expenses 

  • Business and operating expenses 

  • Marketing and advertising  

  • Office and workspace materials

  • Business travel

Companies often work with a network of suppliers and contractors to maintain healthy and balanced working environments, as well as achieve their business goals.

Supplier invoice management and employee expense reimbursement can become overwhelming as the company grows, at which point many finance teams turn to automated spend and payment management solutions. 

Although many businesses use only physical company cards to pay for everyday expenses, there are better options for those who want to scale, like virtual cards.

Physical cards vs virtual cards

Virtual cards are digital payment solutions that generate a unique set of card details every time they are used, and have a customizable limit to the amount that can be charged to that unique card. They can be offered as debit, prepaid, or credit cards, depending on the card issuer. 

Here are some of the benefits and drawbacks to using physical cards versus virtual cards for company spend. 

1. Types of spending

Physical cards can be used for both online and in-store purchases. Virtual cards are generally used mostly for any online purchases and transactions, because they are just a set of unique credit card numbers. 

However with certain virtual card providers, there is now the option to add and sync virtual cards to your smartphone for use with Apple Pay or Google Pay. This means that cardholders can pay at brick-and-mortar locations with a virtual card as long as the vendor accepts contactless payment methods with smartphones. 

2. Payment security

Physical cards are highly vulnerable to credit card fraud. As long as someone has access to the physical credit card number, it can be duplicated, shared, and misused for fraudulent purchases. 

Compared to physical cards, virtual cards are safer and more secure payment solutions. As they can generate a completely new set of card details with a budget limit for every transaction, the risk of online credit card fraud and theft is significantly lowered.. 

If the unique number to a virtual card does happen to be stolen and there is unused budget on it, the cardholder can cancel the card (or simply pause it) immediately with a click or tap. No waiting on hold for ages trying to reach the bank to freeze the compromised card.  

3. Flexibility

Accessibility varies widely between physical vs virtual cards. From business travel to SaaS procurement, employees need to spend on a range of different resources and tools to perform their jobs well and grow the company. 

Physical company cards result in frustration when teams waste time tracking down a misplaced card...which could be inaccessible if an employee accidentally took it with them while out of town.

In contrast to physical cards, virtual cards cannot be lost and can be generated instantly from anywhere with an internet connection. They give everyone involved in the spend process–from the employee and their manager, to finance–more control and visibility over how, and exactly how much, company funds are spent.

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Last update: 2 February 2022