The corporate card game
You work for a boutique-sized firm. For want of a better term, you’re in middle-management. You don’t have a corporate credit card but are on the road quite a bit. Sometimes you’re away for over a fortnight and need to shell out a couple of thousand pounds for flights and hotel rooms and rental cars and expensive dinners. That all goes on your personal credit card.
You have access to a whizzy online expense tool, but repayments are not instant. Your credit card direct-debits your current account and your overdraft function can’t take that kind of hit. Your credit card company hits you for interest.
You wonder whether it would be ok to put in an expense claim for the ensuing interest. Your company’s Financial Director isn’t very sympathetic – but then he has a corporate card. Senior management have discussed whether the firm is now of a size to warrant handing out corporate credit cards. They decided against the idea; they know how people are sometimes tempted to abuse their expenses.
Enter the prepaid card. John Sharman, CEO of Tuxedo Money Solutions, a firm which provides prepaid cards for travellers, says for the very reasons stated above they’re experiencing more traction with firms who employ business travellers. Apart from the fact that no one likes spending their own money when on company time, there’s also security concerns when on the move in some of the more… obscure parts of the world.
“If there’s only 500 pounds on your card,” Sharman tells me, “and it gets skimmed, then at least nobody’s going to be able to clean out your current account or max out your 20-grand credit limit.”
Employers are growing to like prepaid cards because they can access real-time statements and see who’s spent what where. They can take money out of a central pot and instantly download it, or take money off a returning staffer’s card and drag it across to credit another employee who is about to set off. “They work out as a hell of a lot cheaper for the company than credit cards with their healthy annual fees,” says Sharman, who used to work in the credit-card arena.
Prepaid cards can be used wherever a Visa or MasterCard is accepted. “If there’s no infrastructure, then the card is as useless as any other. It is a challenge in some of the emerging markets,” Sharman admits.
Tuxedo’s clients vary wildly, but those who need to operate sans frontieres, have flocked to sign up. They’re popular with small haulier firms, for example, whose drivers use them to buy fuel. Owners of Superyachts, registered offshore, use them for their 50,000-pounds-a-week outgoings on regatta fees, and flights and hotel rooms for their crews. Many other companies are non-credit worthy: prepaid cards are a godsend for them.
It’s the dynamism of the card itself that many travellers find liberating; behind the cards sits an ‘eccount’ which behaves much like an electronic wallet. As well as allowing money to be topped up in advance, you can hold money off the card, so even if it gets stolen, it’s locked away and no one can get at it.
Tuxedo works with STA Travel, producing a white-labelled prepaid card for the student-travel house. Young people on gap years might take 5,000 pounds away with them, but hold 4,500 of that in the eccount. They can SMS money onto the card as they need it. Business travellers heading to unsecure destinations do the same.
If the card is lost, holders need only send a four-digit text, which blocks it. It can then be instantly unblocked it the card is located. Traditional credit cards must be sent out to wherever you are, which for backpackers or fast-moving business travellers is no easy matter.
Tuxedo started to notice an unfeasibly frequent number of card blocks and unblocks. “We initially thought, ‘What on earth’s going on?” Sharman remembers. Feedback found that people were going jet-skiing or surfing, leaving their bags on the beach and blocking the cards on their return. Business travellers entering particularly dicey locations may need to take the same precautions.
There are already millions of prepaid travel cards issued on the consumer side. Prepaid cards have started to make themselves known on the business-travel side. Those without corporate credit cards might want to mention the fact to their personnel departments.