If you are looking to buy or sell goods or services using payment cards, there are six main card types to be aware of:
1. Credit cards:
- allow the cardholder to spend up to a specified credit limit
- offer the account holder an interest-free period
- require the account holder to repay at least the minimum amount each month, but charge interest on the unpaid balance
- incur no interest if the bill is paid in full by the specified date
2. Debit cards:
- are issued in conjunction with a bank or building society current account
- limit the cardholder to the funds available in that account plus any overdraft, if available
3. Charge cards:
- may require the account holder to pay an annual fee
- allow the cardholder a period of credit, but - to avoid additional fees - this must be paid off in full each month
4. Pre-paid cards:
- can be provided pre-loaded - eg for staff to pay expenses
- enable businesses to manage and monitor spending
- are available in different currencies, so can be used as an alternative to business travel cards
- usually incur various fees and charges
5. Business travel cards:
- operate in the same way as other business credit or charge cards
- can offer a convenient way for staff to pay for business travelling expenses
- often offer additional benefits, such as travel insurance or currency facilities
6. Purchasing cards:
- are generally restricted to buyers for large businesses or public sector bodies
- are designed to cut down on paperwork and the need for purchase orders
The UK Cards Association provides information about the different payment card types available in the UK.
Issuing payment cards to staff
With the exception of debit cards - which must be used by the signatory - all the other types of payment cards outlined above can be issued to staff for them to make business-related purchases.
Contactless payment technology
Contactless cards utilise the security built into chip and PIN cards, and can be used for low value transactions of £45 or less. The aim of contactless payments is to speed up transactions.
Read the UK Cards Association's guidance on contactless card payments.