The pros and cons of prepaid travels cards vs corporate cards

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Should I use a prepaid travel card for business?

Giving your travelling employees prepaid travel cards might seem like a no-brainer. They're built for that purpose, right? Hand them over, load them with funds and send the employee on their way, avoiding the headache…

The problems arise, however, if your employees are frequent business travellers, as these cards can pose more challenges than solutions. Prepaid cards have limited spend visibility, less flexibility than other card products, and don't offer many commercial travel benefits.

So, if you're on the cusp of setting up prepaid travel cards, hit pause and consider using corporate cards instead.

If you implement the right kind of spend management solution, then aside from cards, you'll also get connected expense management software. Plus, you can expect this software to help you effectively manage and control business travel costs, save hours and even days of manual admin, enforce spending policies, and dive deep into all business spending.

Nine limitations of prepaid travel cards

Still deciding whether implementing prepaid cards is best for your business needs? Here are the nine biggest limitations of prepaid travel cards:

1. Limited merchant acceptance
Prepaid travel cards aren't as widely accepted as corporate cards, particularly if the card issuer is lesser known or regional. If your employee relies on prepaid cards and their payment isn't accepted, this can create unnecessary stress, especially if they don't have another way to pay.

2. You can’t set custom travel expense policies
Most prepaid travel cards don't allow you to set custom travel policies. Without in-built policies you can't support compliance and your employees are left in the dark about what they can and can't spend their money on. This confusion can also leave your organisation open to fraudulent expense claims.

3. You have to preload the card with funds before the trip
You can only really use your best guesswork when preloading the cards with suitable funds. That means if employees need to spend more to cover unforeseen business travel expenses, they can't. Lack of funds and the stress involved can knock the employee's confidence when travelling and impact business purchases. Some prepaid cards also have reloading limitations, further restricting employees requiring frequent or large fund reloads.

4. You have to pay high fees
Prepaid cards are notorious for having tonnes of hidden fees. Be mindful of activation and monthly maintenance fees, charges for inactivity, card reloading fees, ATM withdrawals charges, and more. Prepaid card fees can soon add up, making you reassess whether the card is worth the cost.

5. There’s limited consumer protection
As prepaid cards aren't linked to a bank account, like credit or debit cards, it can be difficult to recover funds from fraudulent transactions. More robust fraud protection can protect your organisation in these instances; the card provider seeks to recover the money on your behalf.

6. You can’t build credit
Prepaid cards can't help your organisation build credit lines. Prepaid cards can only be preloaded with funds to spend, limiting your ability to cover unforeseen travel expenses.

7. There are limited rewards
Although some prepaid travel card providers offer rewards and/or cashback to their customers, they're often less generous than what corporate credit card companies offer. More often, prepaid travel card companies do not offer any additional benefits at all. Always check with your prepaid card provider about what is and isn't included.

8. Limited accounting tool integrations
Although some prepaid card providers offer integrations with business tools, most of them don't. Users can find tracking spending and managing their finances difficult without accounting integrations.

9. Withdrawal limits
Many prepaid cards set low daily or monthly ATM or cash withdrawal limits, so they can't use their prepaid card if your employees need to access more funds to make large transactions. It's also worth noting many prepaid cards change ATM withdrawal fees, which can get costly if employees withdraw money frequently.

Prepaid travel card FAQs

What is a prepaid travel card?
A prepaid travel card is a card you can reload with funds for employees to make purchases as they travel. These cards aren’t linked to your business bank account, so employees can only spend the funds preloaded onto the card.

What fees are associated with prepaid travel cards?
You should be aware of a few fees, including inactivity fees, ATM withdrawal fees, and monthly or annual fees to keep the card account running.

How are prepaid travel cards loaded?
To load your card, transfer funds from your bank account with the local currency needed for each country. You can usually do this through the card provider's app or website.

Should I get a prepaid travel card for my business?
Whether you should implement prepaid or corporate cards depends on your business needs. The cons of prepaid travel cards might outweigh the pros or vice versa. You should know that corporate cards generally offer better security, control over spending, and wider acceptance.

Payhawk corporate cards: a great alternative to prepaid travel cards

Corporate cards are designed to meet the specific needs of individual businesses and are a great choice for all employees, whether they’re travelling or not.

At Payhawk, our corporate cards are a great alternative to prepaid travel cards. Here are a few of the biggest benefits:

1. Spend at over 46 million merchants globally
   With global acceptance, your employees can travel and spend freely without worrying their purchases won’t go through. With our virtual cards, you can open accounts in seconds, empowering employees to spend immediately across more than 32 countries.

2. Set custom travel policies to keep tabs on spending
   By setting custom travel policies, you improve policy compliance, which means you can reduce overspending and keep within budget. In-built custom travel policies like per diems, spend limits, and more also give employees clear guidelines on allowable business travel expenses and how to report them easily without expecting them to dig out policies or collect paper receipts.

Diana Ruseva, Finance Manager at Eleven Ventures, says:
"One of my favourite features is missing document reminders. It saves me from chasing my teammates for uploading invoices from their trips.”

3. Corporate cards are linked to your bank account
   By linking your corporate cards to your bank account, you ensure employees are never left high and dry — they’ll always have access to funds if needed (and they’re within policy) and you can even check when accounts are running low.

Diana Ruseva, continues:
"My absolute favourite feature is low funds alert.It helps me not to leave some of my teammates without any funds in the middle of a business trip abroad."

4. No monthly card fees
   Payhawk corporate cards don’t come with monthly fees. Users can also enjoy 0% in foreign exchange fees in six currencies and just 1.99% exchange markup on all other currencies.

5. Comprehensive consumer protection with Payhawk
   Our stringent card controls mean you can immediately freeze or block lost or stolen cards from within our software; users can also block their own cards if they suspect fraudulent activity. We have strict security measures in place to protect user information and sensitive data.

6. Build credit with our corporate credit cards
   We’re one of the only spend management solutions offering businesses corporate credit cards. These cards not only give you more options when managing business spending, but they also help you build credit. Paying off the credit card balance each month helps establish your business as credit-worthy, which can help you access business finance should you need it to help your business grow in the future.

7. Market-leading accounting and ERP integrations
   Centralised access to finance data across multiple entities is crucial for effective spend management. That’s why we offer market-leading integrations with ERP, accounting, business productivity and business travel systems. Or, if your software isn’t on the list, you can build your own custom API. Real-time reconciliation and reporting across integrations means you never lose sight of your spending. You stay informed, always.

8. Set your own spending limits
   With Payhawk, finance teams can set individual or company-wide spending limits. These limits encourage policy compliance and reduce overspending. But remember that Visa sets daily and monthly ATM withdrawal limits; employees can withdraw up to €5,000 daily or €15,000 weekly.

Are corporate cards better than prepaid travel cards?

In short, yes. But of course, this depends on your business needs. If you’re looking for corporate cards to give you flexibility, control, and peace of mind when managing business travel expenses, then yes.

Unlike prepaid cards, there’s no need to preload them; instead, use spending controls to set limits and manage spending from afar. Build custom approval workflows to ensure spending remains compliant and request additional funds in just a few clicks.
Corporate cards give businesses unparalleled visibility into business spending. See it in action with a custom demo: book here.