3 Types of Corporate Payment Cards for Centralized Payments

The business travel industry is continuously growing, with thousands of employees traveling yearly for work purposes. According to the World Travel and Tourism Council (WTTC), the business travel segment witnesses the highest growth in the industry as employees working in multinational companies are required to travel every year. Hence, the global business travel market is expected to reach $2.1 trillion by 2031, with a CAGR of 9.5% from 2022 to 2031.

Amidst the thriving business travel industry, a particular segment is garnering significant attention—corporate payment cards. The global corporate cards market, valued at $32.3 billion in 2020, is projected to maintain a robust growth rate of 7.3% annually until 2026. 

This surge in popularity determines the recognition of the benefits of corporate travel payment cards. These cards streamline, authorize employee payments during business trips, and offer other benefits. 

With this in mind, this blog will delve into the five primary types of corporate payment cards, each offering unique benefits and features. 

What are Centralized Payments in Business Travel?

Before delving into what are corporate payment cards, let us first understand what are centralized payments in business travel. Centralized payments in business travel refers to a payment method where all travel-related expenses for an organization’s employees are made through a single centralized accounting system. 

This process makes expense management seamless, enhancing spending control and providing better visibility into travel spending. 

Understanding the Process of Centralized Payments

1. Set up an account: The first step in centralized payments is setting up an account. The company creates a centralized payment account with a Travel Management Company (TMC) or a corporate credit card provider. This account is exclusively used to make travel-related payments. 

2. Booking: Employees can book travel through the platform once an account has been set up. The booking system is integrated with the centralized payment method. 

3. Payment: When the employee makes a transaction, they are charged directly to the centralized account instead of his/her personal credit card. This includes airfare, accommodations, car rentals, etc

4. Reconciliation: After the business trip, the company receives a consolidated invoice from the TMC or credit card provider. This will help companies to manage and track expenses more easily. 

5. Reporting: You can then generate reports to get detailed insights into the amount spent, expenses wasted, spending patterns, out-of-policy expenses, etc. 

Employees use an online booking system integrated with a centralized payment system for online payments. Thus, payments are automatically charged to the centralized account upon booking. 

For offline payments, when an employee makes a payment (e.g., at a hotel), he/she uses a corporate credit card linked to the centralized payment system. Hence, the payments are charged to the centralized account. 

What are Corporate Payment Cards? Why are They Used?

A corporate card is also known as a corporate payment card or company credit card. It is a card that companies provide to employees to make business transactions. Imagine an employee traveling to Chicago for work and needing to book flights, accommodations, and car rentals. With a corporate card, they don’t have to worry about dipping into their personal funds. The company provides them with a card for work expenses, eliminating the need to use their personal cards, thus easing their financial burden. 

With a centralized travel payment card, companies can ensure 100% visibility on travel spending and prevent fraud, data alteration, and expense misuse. These cards provide a secure and authorized method of making payments. Typically, a bank issues a card to the company, and they establish policies and spending limits for the card. It is then given to employees who frequently travel for business. The cards prominently display both the company name and the name of the designated employee, providing a sense of security and control over financial transactions. 

3 Types of Corporate Travel Payment Cards

After knowing what is a corporate card, let us understand the 5 types of corporate cards: 

1.  Corporate Credit Cards

One of the most commonly used corporate cards is the corporate credit cards. Organizations generally issue these centralized payment cards to their employees that cover all work-related expenses. Such cards offer several advantages to both employees and the company. 

Employees can use these cards to pay for everything related to business travel. This simplifies the reimbursement process and employees need not use their personal credit cards. 

From a company’s perspective, these centralized travel cards provide greater control and visibility over spending. Things such as detailed credit card statements and spending reports enable companies to track expenditures accurately, which helps in the budgeting and financial planning process. Organizations can also set spending limits on corporate credit cards and restrict certain categories of expenses, which helps minimize any risks of misuse. 

Additionally, centralized travel payment cards offer a variety of perks, such as travel insurance, reward programs, discounts, etc. This can be beneficial for both the company and its employees. Not just that, these cards also improve the management of cash flow by extending payment terms, giving companies extra time to pay their expenses. 

Corporate credit cards can be classified into two types: 

1. Employer Liability Cards
2. Employee Liability Cards

Employer Liability Cards

Employer liability cards are also known as corporate liability credits. In these types of cards, the organization or the employer is responsible/liable for any card bill payments and other charges incurred from the card. But, the employee must still report these charges to the company. The credit card history of the company is checked by the banks before the card is issued to the company

Employee Liability Cards

Employee liability cards are also known as individual liability cards. Here, the employees are liable for repaying the credit card bills. Once the bills are paid, employees can file them and apply for reimbursement. Although the credit score here does not affected by using the cards, the issuer will check and approve before handing over the card to the employee. 

2. Corporate Prepaid Cards

Corporate prepaid cards are specific corporate payment cards meant specifically to manage and control employee expenses. Contrary to credit and debit cards, these prepaid cards are preloaded with a certain budget for business expenses. Employees can use this card until the balance is exhausted and recharge it. This is very useful for budgeting and limiting spending. 

This is a very convenient way for employees to cover business expenses without using their personal credit or debit cards. They do not have to wait for reimbursement. Employees can use this card for various purposes such as travel, office supplies, meals, client entertainment, etc. Also, the predefined limit lets employees spend within the budget allocated, thus ensuring policy compliance. 

From a company’s perspective, corporate prepaid cards provide enhanced control and a simpler way to manage expenses. With a predefined limit already set, there is no risk of debt. accumulation, and companies can track and limit expenditures easily. These centralized travel payment cards provide transaction records and thus ensure policy compliance. This can be very beneficial if the company has project-based or seasonal work where certain budgets must be strictly followed. 

3. Corporate Virtual Cards

Corporate virtual cards are a modern type of corporate payment card designed for secure and efficient business expense management. Unlike physical cards, corporate virtual cards are generated digitally and can be used to make online payments or purchases. Every virtual card is usually linked to the card provider’s system, which provides high security and control. 

For employees, virtual cards provide many benefits. They provide ease and versatility since they can be issued instantly and utilized immediately. This eliminates the waiting time; otherwise, they must wait many days to get a physical card issued. This is very useful if employees are working remotely or from different locations. Corporate virtual cards also reduce the risk of loss or theft since there is no physical card to misplace. 

Corporate virtual cards enhance security and control over spending for organizations. Every card can be set with specific spending limits, expiry dates, merchant restrictions, etc., thus reducing the risk of fraud and unauthorized transactions. Companies can track expenditures on a timely basis and accurately with transaction records and real-time monitoring capabilities these centralized travel payment cards provide. 

Additionally, these virtual cards are integrated with expense management systems, reducing administrative burdens and automating reconciliation. Corporate virtual cards improve financial oversight, enhance security, and streamline expense management processes.

Make Travel and Expense Management Simpler with itilite

There is no denying the fact that corporate payment cards benefit both employees as well as the organizations. They streamline the corporate travel management process and remove unnecessary burden that comes with manual methods. Moroever, you can limit and control the spending and ensure compliance. 

With so many centralized travel payment cards available in the market, you might wonder which is the best one, right? Well, the answer is itilite. With the itilite card, you can maximize your savings and get up to 1.5% cashback on all card spends. 

You get unlimited virtual and physical cards at no additional costs and manage all expenses through one central card. With itilite card, you can save up to 30% of your total travel costs and get real-time visibility into all expenses made. Moreover, you also get notified of any out-of-policy and fraudulent expenses. 

Want to know more about itilite central payment card? Contact our experts now!