The Complete Guide to Business Debit Cards

The Complete Guide to Business Debit Cards

The Complete Guide to Business Debit Cards

In recent years the convenience of a payment card has made it easy for many business owners to access the capital in their business checking account seamlessly and easily without the need to cut 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 allows you to access funds from your business bank account to make purchases and withdraw cash. Business debit cards are often popular with business owners who want the convenience of a payment card but don’t want to make all their purchases on a credit card. A business debit card will carry a Visa or Mastercard logo, allowing it to be used by the cardholder wherever those cards are accepted. 

Types of business accounts

A business debit card withdraws money from your linked bank account, which is typically a business checking account. It’s a good idea to also have a business savings account, but it’s not required for purposes of getting 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 cash withdrawals at an ATM.

How do I get a debit card for my business? 

You may not even have to ask for a debit card. Most financial institutions will automatically issue a business debit card when you open a business checking account. In addition to banks, credit unions and some online financial services 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 visit 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, though, you’ll first need to open one 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 you can then spend those funds. 

What to consider when choosing accounts for your business

Opening a separate account for your business is a crucial step in helping your business both look and operate professionally. Business debit cards can also be incredibly helpful for separating your business and personal finances and for keeping track of purchases for accounting purposes. 

Here are some questions to ask yourself before you open an account:

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

  • Monthly maintenance fees
  • Wire transfer fees
  • ATM fees
  • Overdraft or NSF fees
  • Cash handling fees
  • Excess transaction fees
  • Statement fees
  • Annual fees 

Note that even free business checking accounts may have some fees associated with them but there may be ways to bypass them. For example, you may be able to avoid a monthly maintenance fee by maintaining a minimum average daily balance. Or you may be able to add an overdraft line of credit to avoid bouncing checks and incurring non-sufficient funds (NSF or overdraft) fees. You’ll always want to read the fine print so you aren’t surprised by unexpected fees. 

How many transactions will I make? What types? As you see from the list of possible fees, you will want to make sure you avoid unnecessary fees by choosing the right type of account. 

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

Will I need to use a branch to deposit cash? If your business is heavily dependent on cash sales, you may want to choose a financial institution with a convenient branch for making those deposits. You’ll also need to find out the fee schedule for cash deposits. (Cash handling fees may only apply to transactions above a certain limit.) 

Will I need to withdraw cash? If so, you will want to make sure the ATM network is convenient and inexpensive. Otherwise you may wind up paying expensive ATM fees for out-of-network (a.k.a. “foreign”) transactions. Some financial institutions will reimburse ATM fees up to a limit. 

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

How easy is it to open an account? Some issuers make it easier than others to open a business bank account. Keep in mind, though, that all financial institutions must comply with banking regulations to verify customers, so be prepared to share both 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. Being able to easily import transactions can make it easier for you or your bookkeeper to keep your accounts up to date. 

Which business debit card is best?

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

That said, there are features you may want to look 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.
  • Subaccounts: Instead of having to open multiple bank accounts for budgeting purposes, you can use these subaccounts to set aside funds for taxes or specific spending goals.
  • Employee controls: Learn whether you can restrict purchases by employees to certain types of spending and/or set spending limits. 
  • Rewards: Credit cards typically offer higher rewards than debit cards, but some debit cards offer rewards programs. Typically rewards are tied to card transactions where you don’t enter a PIN. Also, some issuers have welcome offers for new customers. However, since it’s a hassle to open a new bank account, choose your account for the long-term and not just a short-term bonus. 

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

What are the fraud protections? 

Debit cards are different from business credit cards in that they draw on funds in the linked bank account. Business debit cards are not covered by federal law in the case of unauthorized use. Instead, issuers typically offer zero liability policies. Read the disclosures you receive to learn what you need to do in the case of fraud. Don’t wait until it happens to you!

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

Also it’s worth noting that choosing “debit” or “credit” at checkout may affect how certain transactions are handled if you need to 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 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 seek them out. Make sure you investigate 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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