THE DIFFERENCE BETWEEN A BUSINESS AND PERSONAL PAYMENT CARD
Business and personal payment cards may seem the same. They both allow you make payments for goods and services. However, they are different in many other ways. Some of the ways they differ include ownership requirements, available features, and how they affect your finances. It is important to keep the differences in mind when choosing a payment card for your business. Depending on your business, it is almost always better to get a business payment card. Some differences between business and personal cards are:
- Registration requirements
The registration requirements between business and personal cards differ. Personal payment cards are often attached to personal bank accounts. To open a personal bank account, it is usually enough to provide a valid form of identification and a utility bill. However, with a business account, you will need to provide business-specific information. You may need to provide your business’s legal name and contact information, industry type, legal structure, business revenue, and tax identification number. Banks may also require documents to support information you provide.
- Higher spending limits
A business payment card is likely to have a higher spending limit than a personal account. This is especially true in the case of credit cards. Most lenders will provide a higher credit limit to businesses than individuals. Businesses often have greater revenue and cashflows than individuals, and so they can more easily qualify for higher credit limits.
- Expense management
Many banks that provide business accounts also provide expense management, although the available features may vary among different providers. These features can include book keeping, expense tracking, spending limits, among others. Access to expense management features can help businesses save time and money on processes. For instance, tax payments can be greatly simplified by using the right business account. Some providers may even allow integration with other services in a business’s finance ecosystem.
- Employee corporate cards
Payment cards on personal accounts are usually limited to a single card per account. Even when it is possible to have more than one, the limits to personal payment cards are often generic. With business payment cards, it is possible for have multiple cards on the same account. Allawee lets businesses provide employee corporate cards. Different spending limits can be set on the cards. These limits can be one-off, daily, weekly, or monthly. The account owner can also manage all employee cards from a single dashboard.
- Credit scores
Lenders report credit they provide to credit bureaus. In turn, credit bureaus use those reports to assign credit scores and compile credit reports for individuals and businesses. Lenders can use credit scores and reports to determine whether to make a credit facility available and the interest rate to charge. This is important in deciding whether to use a personal or business payment card for your account. Credit on personal accounts affect your personal credit score, while those on business accounts affect your business credit score. It may be helpful to boost your business credit score. In such a scenario, a business payment card will prove to be more beneficial.