What are they and how to get one for your business

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In recent years, the convenience of a charge card has made it easy and seamless for many business owners to access capital in their business checking account without having to write a check. Here’s what you need to know about business debit cards.

What is a business debit card?

A business debit card is a payment card that lets you access funds in your business bank account to make purchases and withdraw money. Business debit cards are often popular with business owners who want the convenience of a charge card but don’t want to make all of their purchases with a credit card. A business debit card will bear a Visa or Mastercard logo, allowing it to be used by the cardholder wherever these cards are accepted.

Types of business accounts

A business debit card withdraws money from your linked bank account, which is usually a business current account. It’s a good idea to also have a business savings accountbut it is not mandatory to obtain a debit card.

Other options may include business deposit cards which can be used to make deposits or business ATM cards which can be used for ATM cash withdrawals.

How do I get a debit card for my business?

You may not even need to apply for a debit card. Most financial institutions will automatically issue a business debit card when you open a business checking account. Besides banks, credit unions and some online financial service providers offer debit cards when you open a checking account. (Online Business Bank Accounts have become more popular with business owners who don’t want to go to a bank branch and there are many options with features aimed at the small business owner.)

If you don’t have a business bank account, you’ll need to open one first to get a business debit card.

Note that a debit card is different from a prepaid card. With a prepaid card, you load funds onto the card so that you can then spend those funds.

Things to consider when choosing accounts for your business

Opening a separate account for your business is a crucial step in helping your business look and operate professionally. Business debit cards can also be extremely useful for keeping your business and personal finances separate and for tracking purchases for accounting purposes.

Here are some questions to ask yourself before opening an account:

What are the fees? There may be a variety of fees associated with the account, including:

  • Monthly maintenance fees
  • Bank transfer fees
  • ATM fees
  • Overdraft or NSF charges
  • Cash handling fee
  • Excess transaction fees
  • Statement fees
  • Annual fees

Note that even free business checking accounts may have fees associated with them, but there may be ways around them. For example, you may be able to avoid monthly maintenance fees by maintaining a minimum average daily balance. Or you can add an overdraft line of credit to avoid NSF checks and NSF or overdraft charges. You’ll always want to read the fine print so you’re not surprised by unexpected charges.

How many transactions will I make? What kinds? As you see in the list of possible charges, you’ll want to make sure you avoid unnecessary charges by choosing the right account type.

Will I get interest? While interest rates are low on deposit accounts these days, something can be better than nothing. If you expect to maintain decent sized balances, you might want to check out the Annual Percentage Yield (APY).

Will I need to use an agency to deposit money? If your business relies heavily on cash sales, you may want to choose a financial institution with a convenient branch to make those deposits. You will also need to know the fee schedule for cash deposits. (Cash processing fees may only apply to transactions over a certain limit.)

Will I need to withdraw money? If so, you’ll want to make sure the ATM network is convenient and inexpensive. Otherwise, you could find yourself paying hefty ATM fees for out-of-network (aka “foreign”) transactions. Some financial institutions reimburse ATM fees up to a certain limit.

Is it mobile friendly? The ability to access online banking features should be a given, but if you plan to access your account frequently from your mobile device, you’ll want to check the mobile app to make sure it has the functionality. mobile banking you need. If you want to deposit checks without going to the bank, make sure mobile deposit is also available.

Is it easy to open an account? Some issuers make opening a business bank account easier than others. Keep in mind, however, that all financial institutions must comply with banking regulations to verify customers, so be prepared to share business and personal information when you open a business bank account.

Will it integrate with other systems? Another consideration is whether the account will integrate with your accounting software. The ability to easily import transactions can make it easier for you or your accountant to keep your accounts up to date.

Which business debit card is the best?

Most financial institutions will automatically issue a business debit card when you open an account. So your choice usually isn’t, “Which business debit card is best?” but rather which one business checking account is best For Your Business. The debit card is an extension of the account.

That said, there are some features you might want to look out for, including:

  • Virtual account numbers: These allow you to create unique account numbers that can be used with specific merchants, to pay for subscription services, etc.
  • Sub-accounts: Instead of having to open multiple bank accounts for budgeting purposes, you can use these sub-accounts to set aside funds for taxes or specific spending goals.
  • Employee checks: Find out if you can limit employee purchases to certain types of expenses and/or set spending limits.
  • Awards: Credit cards generally offer higher rewards than debit cards, but some debit cards offer rewards programs. Generally, rewards are linked to card transactions for which you do not enter a PIN. Additionally, some issuers have welcome offers for new customers. However, since it is tedious to open a new bank account, choose your account for the long term and not just a short term bonus.

Some major financial institutions may offer more than one business debit card program. One card might offer rewards, for example, or employee cards, while another might be more of a no-frills card.

What are the protections against fraud?

Debit cards are different from business credit cards in that they withdraw funds from the linked bank account. Business debit cards are not covered by federal law for unauthorized use. Instead, issuers usually offer zero liability policies. Read the disclosures you receive to know what to do in case of fraud. Don’t wait for this to happen to you!

Keep in mind that if you give employees cards, you are responsible for any charges they make. Just because you don’t approve purchases made by an employee with the card doesn’t mean they’re considered unauthorized purchases.

It’s also worth noting that choosing “debit” or “credit” at checkout can affect how certain transactions are processed if you should take advantage of zero liability coverage, so again, read the disclosures.

Finally, business checking accounts may be covered by Federal Deposit Insurance Corporation insurance if the financial institution is a member of the FDIC. This coverage will be subject to specific limits.

Can business accounts have debit cards?

Small business owners rely on a variety of financial products to run their business and manage their cash flow, including business bank accounts, credit cards, small business loans and more. And yes, debit cards are one of those tools. So yes, business accounts can have debit cards, and many business owners are looking for them. Be sure to research the options to choose the right account and card for your business.

This article was originally written on October 6, 2021 and updated on April 18, 2022.

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