Using payment cards for your business

If you are looking to buy or sell goods or services using payment cards, the main card types to be aware of are:

1. Credit cards

• allow the cardholder to spend up to a specified credit limit
• offer the account holder an interest-free period
• require the account holder to repay at least the minimum amount each month, but charge interest on the unpaid balance
• incur no interest if the bill is paid in full by the specified date
• can be issued to employees, with an approved spending limit

There are numerous credit card providers - most are Visa or MasterCards issued through a bank or building society.

Read more about Visa credit cards and MasterCard credit cards.

2. Debit cards

• are issued in conjunction with a bank or building society current account
• limit the cardholder to the funds available in that account plus any overdraft, if available
• may offer a greater degree of control - you can only spend what's in your account
• have less flexibility than other cards

3. Charge cards

• may require the account holder to pay an annual fee
• allow the cardholder a period of credit, but - to avoid additional fees - this must be paid off in full each month
• can be issued to employees
• allow you to set spending limits

4. Pre-paid cards

• can be provided pre-loaded - eg for staff to pay expenses
• enable businesses to manage and monitor spending
• are available in different currencies, so can be used as an alternative to business travel cards
• usually incur various fees and charges

5. Business travel cards

• operate in the same way as other business credit or charge cards
• can offer a convenient way for staff to pay for business travelling expenses
• often offer additional benefits, such as travel insurance or currency facilities

6. Purchasing cards

• are generally restricted to buyers for large businesses or public sector bodies
• are designed to cut down on paperwork and the need for purchase orders

Issuing payment cards to staff

With the exception of debit cards - which must be used by the signatory - all the other types of payment cards outlined above can be issued to staff for them to make business-related purchases.

Contactless payment technology

Contactless cards utilise the security built into chip and PIN cards, and can be used for transactions of £100 or less. The aim of contactless payments is to speed up transactions.

Read more on contactless cards.

You could use a personal debit or credit card instead of a business card for business expenses, however this means you will be mixing personal debts with business debts.