Prepaid business credit cards: how do they work?

A prepaid business credit card is a payment card that your business loads with a set amount of money in advance. Unlike a regular credit card, you are not borrowing against a credit limit. You are spending funds that have already been deposited onto the card. Once the balance runs out, the card cannot be used again until it is topped up.

Managing company expenses is challenging, especially when many people are making purchases across your business. Prepaid cards are one way to keep spending under control, but they work differently from regular business credit cards and understanding those differences will help you decide if they are the right fit.

Benefits of using prepaid business credit cards

Prepaid business credit cards have many useful features, especially for companies that wish to keep a closer eye on their daily expenditures.

Control over your budget: Each card comes with a set amount of money, so you can't spend more than that after the balance runs out. This makes it easy to keep track of budgets for teams, projects, or departments without having to worry about surprise expenses.

Accessibility: Prepaid cards don't require a credit check, therefore new enterprises, sole traders, or any business that doesn't have a credit history yet can use them.

Less chance of fraud: If you lose or have your prepaid card stolen, the only money you lose is the balance on that card. There is no connection to a larger credit line or bank account, which lowers the risk of losing money.

Employee spending: Prepaid cards make it easy for firms to send employees money for travel, supplies, or other costs without giving them access to the main corporate account.

Visibility: Most prepaid card companies give you real-time information about your spending, which makes it easy to keep track of your accounts and see where your money is going.

What are prepaid credit cards used for?

Employees often use prepaid business cards to pay for things like travel, accommodation, and meals. They are also good for one-time purchases, small amounts of cash, or when you wish to set aside a certain amount of money for a certain purpose, like an event or marketing campaign.

Some companies use prepaid cards to keep track of how much contractors or temporary workers are spending. This lets them access money for a set amount of time or for a specific reason without having to have a permanent account. They can also be useful for firms who are trying out a new supplier or service and want to limit their financial risk.

Things to consider when choosing your prepaid business credit card

Before you choose a prepaid card, it’s worth comparing your alternatives carefully because not all of them work the same way.

Fees: Some prepaid cards impose fees for loading money, monthly maintenance, or transactions. These can pile up, especially for organisations that routinely add money to cards or make a lot of transactions.

Spending limits: Find out what the highest balance and transaction limits are, as these can change from provider to provider and may not work for many businesses.

Acceptance: Most prepaid cards operate with Visa or Mastercard networks and are widely accepted. However, it's a good idea to double-check this before giving cards to employees who might need to use them in certain places or for certain reasons.

Reload options: Think about how simple it is to add money. Some companies let you transfer money right away, while others may take a day or two. This could be a problem if a team member needs money urgently.

Reporting tools: Find a service that gives you clear, real-time reports and works with the accounting software you already have.

Limitations to using a prepaid business credit card

Prepaid cards have certain valuable features, but they also come with potential pitfalls.

A prepaid card does not assist you in creating a business credit history like a company credit card does. A prepaid card won't help you improve your credit profile if that's vital to your business.

Prepaid cards also don't give you a credit buffer. If your balance runs out at a bad time, you can't get more money until you contribute it yourself. This can cause problems when things are busy or when costs come up out of the blue.

Some prepaid cards can only be used in limited places, and some stores or services may not accept them. Fees that come with using a prepaid card can also make it more expensive over time than it seems at first.

Alternatives to prepaid business credit cards

If you're looking at alternatives to prepaid cards, it could be worth thinking about what a regular credit card could do for you instead.

A cashback credit card lets your business borrow money and earn cashback on everyday purchases at the same time (up to £2,000 with 2% cashback for 6 months, then 1% cashback on everything you spend after that). Instead of putting money in ahead of time, you spend up to a certain amount and then pay off the balance. This also helps your business credit profile grow over time.

The Funding Circle Cashback business credit card gives your staff company cards, so you can still keep track of who spends what and get cash back on qualified transactions. This means you have the visibility and spending limitations that make prepaid cards popular, but you don't have to deal with the hassle of adding money or the fees that can make them expensive. Check out our guide to learn more about how business credit cards work.

The Funding Circle Cashback card is a better option for many businesses than prepaid cards for everyday purchases since it is more flexible and rewarding.

FAQs

What is the difference between a prepaid credit card and a company credit card? 

You don't have to borrow money to use a prepaid card because it only works with money you've already loaded onto it. With a company credit card, you can borrow money up to a certain amount and then pay it back. You may also get benefits like cash back, purchase protection, and improving credit.

How much can you spend on a prepaid credit card? 

The answer to this question depends on the supplier and how much money is on the card. Most prepaid business cards have a maximum balance limit, however this limit is different for each issuer. There may also be limits on how much you may spend on each transaction.

Are prepaid business credit cards safe? 

Most people think that prepaid cards are safe. If you lose or have a card stolen, your only financial risk is the balance on that card because it is not linked to a bank account or a larger credit line.

Can a small business owner implement prepaid business credit cards? 

Yes. Businesses of all sizes can receive prepaid cards without having to verify their credit, which makes them a good choice for small business owners who want to keep an eye on team spending or set aside money for certain projects.

14/05/2026: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.