Half of the United Kingdom believes that cash is going out, to be replaced by alternative payment methods. Only one in five carry it on a daily basis according to a study by First Bus. Researchers polled 2,000 adults in the UK and found that instead of using cash they choose methods such as chips, pins, and smartphones to pay.
Three quarters of the UK’s population expect all retailers to accept alternative forms of payment. First Bus’s study found 44 percent of people were unable to pay for something because cash was the only accepted payment method. In the last year around 5,000 ATMs were shut down after debit cards became the most preferred way to pay. While many merchants are making the transition to only accepting cards, prepaid cards are also helping small businesses operate.
Prepaid cards are simple. Instead of using debit from a bank account or credit with interest, you preload funds onto a card you purchase from various prepaid card companies. This is particularly useful for small business owners who can utilize them for allocating funds to employees, making sure the business stays within budget, and monitoring transactions. While there are many benefits to using prepaid cards, small business owners must understand their shortcomings to ensure that prepaid cards are working for them.
The most beneficial aspect of prepaid cards is the ability to control and regulate business expenses to ensure that the business is as fiscally efficient as it can be. Prepaid cards are easy to purchase and load with funds. They are never associated with a bank account, so there are no credit checks and are not reported to the three major credit bureaus. This means that you can’t borrow money, but they will not affect your credit negatively. Prepaid cards easy to use. Like debit and credit, they are accepted where Visa and MasterCard are taken and can be used to make online and in-person purchases.
These cards also help you keep personal expenses separate from business expenses. Whether they are for the owner or their employees, keeping expenses distinct is key to using work-related funds efficiently. You can also keep track of your employees’ spending. By setting limits, monitoring expenses, and loading it with a certain amount, the owner will not have to worry that the business’s funds are being used improperly. Perhaps the most convenient part about using prepaid cards is that you can manage spending remotely. Many prepaid card companies help you monitor transactions from a computer or app.
The biggest drawback of prepaid cards is the charges that may come with it. According to a specialist MoneyPug, a site used to compare free UK prepaid credit cards, the fees from each card company will differ and some will be better than others. Some of these include monthly charges for the main account and additional cards, cash withdrawal, balance inquiry, cancelling the card, and foreign transactions.
While prepaid cards are very convenient for small businesses that include travel, you won’t be able to get the rewards, benefits, and points you would normally accumulate with other cards. It may also be difficult for you to get your funds back if your card is stolen. Yet, the ability to mostly avoid ATM withdrawals and foreign transaction fees with the right card will help make up for what you lose on reward points. Overall, prepaid cards are beneficial for people who travel often, they just don’t offer all the benefits.
Still, in addition to travel, covering business expenses like supplies and meals is very beneficial with prepaid cards. Allocating money to certain employees and for certain things takes the stress out of worrying about wasted funds and inefficiencies. Being able to monitor every transaction provides great peace of mind. The fees that you will encounter with prepaid cards are still less than credit interest and outrageous bank fees. Overdraft charges are considerably less. The advantages you lose from not having benefits are greatly outweighed by the money you will save from loading fixed amounts, monitoring transactions, and avoiding all kinds of fees from banks and elsewhere. For small businesses, prepaid cards are the way to go.
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