Credit cards have been central to commerce since their popularization in the late 20th century. Credit cards have been historically a product offered by banks to their customers in order to complete purchases and build credit. However, not only have consumers become more aware of the risks associated with using bank-issued credit cards, but new use cases for payment cards have opened the door for innovation in this product line.

Prepaid credit cards are a new type of Mastercard or Visa enabled credit card that provides flexibility for new forms of usage, while reducing the risks for consumers that regular credit cards have.

What is a Prepaid Credit Card?

The main difference between a prepaid credit card and bank-issued credit card is that the former is ‘prepaid’, meaning that funds need to be loaded onto the card before use. You may be asking, why do these cards qualify as credit cards then? The answer lies in the fact that these payment cards function on the credit card network rails rather than on a debit network.

Prepaid credit cards function almost identically like a bank-issued credit card. They can store funds, provide the ability to transfer funds to different accounts, and offer payment capability on the Visa or Mastercard network. Depending on the card provider, prepaid credit cards can even provide similar incentives services on usage like cash back or rewards points.

Branding is also a huge benefit for prepaid cards over traditional credit cards. With bank-issued cards, the card is usually limited to the design that the bank provides. Prepaid credit cards on the other hand are almost always fully customizable to the business that is providing them. This means that the card’s design, graphics, messaging, and carrier can all be customized to a company’s brand – the company can even place their logo on the card for maximum brand exposure.

Prepaid Credit Card Diagram

How Are Prepaid Credit Cards Used to Solve Business Problems?

Because prepaid cards function as a storage of funds, there are numerous business use cases where prepaid credit cards are being used in to solve problems.

Marketplace Payouts

Two-sided marketplace platforms have complex payment needs, as they need to both accept payments from the buyer and payout the seller. Prepaid credit cards are a medium that marketplaces can use to distribute funds from a transaction onto. The seller can receive their funds onto their prepaid credit card, and use the funds on that card just like an account. This can be a huge benefit to the marketplace, as they can easily control the flow of funds, lower risk of fraudulent or failed transactions, and can brand the payments experience beyond usage of their platform.

Corporate Expense Management

Companies are now using prepaid credit cards to manage expenses throughout the business. When employees are tasked with purchasing responsibilities, credit cards can serve as a major risk – whether it’s over-spending, personal related purchases, or internal fraud. Because of these risks, employees are often asked to pay out of pocket for corporate expenditures to be reimbursed later on. A robust prepaid credit card provider can solve this issue by providing dynamic spend controls on cards. This means the business can specify where prepaid cards can be used, how much can be spent, and the frequency of purchases. Cards are pre-funded, so there isn’t a need for reimbursement or risk of overspending. This helps to build a sense of security and trust among teams, and peace-of-mind for the company’s finance and leadership teams.

Payroll or Commission Payments

Prepaid credit cards are being used by companies for compensation management practices like payroll, commission payouts, or tip payouts. With an compensation management solution enabled by prepaid credit cards, employers can even provide their workers early access to their wages so they can be paid in real-time, whenever they need funds between pay-cycles. That can be a huge help for hourly or sales-based workers. 

Rewards and Incentives Programs

Prepaid credit cards can serve as powerful marketing tools to incentives customers to make a purchase. Auto dealers and large retailers have often used prepaid credit cards as a way to provide their customers with a controlled form of cash-back on large purchases. Incentives cards go beyond customer rewards. Prepaid credit cards can be used to incentivize employees for performance or good-deed. Operations teams utilize rewards and incentive services to boost team morale, show appreciation for hard work, and provide gifts for holidays and special occasions.

employee payout prepaid credit card

Start Your Company’s Prepaid Credit Card Program Today

Looking for a prepaid credit card program for your business? Berkeley Payments’ innovative, real-time payment solutions enable forward-thinking organizations to pay customers, suppliers and employees with control, flexibility and ease.

We help you deliver the right payment, to the right person, at the right time, every time, and it’s all branded. From our physical or virtual prepaid credit cards to real-time transfers with DirectSend, our products and solutions are designed with you in mind. 

Join thousands of companies using Berkeley to securely manage and send funds, customize user experiences, and scale their businesses.

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