- Digital credit cards for small business are credit cards and an expense management platform in one package.
- They offer small business owners, entrepreneurs, and startups two things: access to credit and tools for managing expenses.
- The digital business credit cards in this article can also help you earn rewards on your everyday business expenses.
- Learn what digital credit cards are, how they work, and how to choose the best one for your business in this article from Nav’s experts.
What Are Digital Credit Cards?
The digital credit cards we cover in this article are more than an online credit card account — they’re a mix of credit card perks and expense management tools. Many of these cards are rewards credit cards that may have welcome offers and other benefits, but you may need to establish a formal business entity (LLC, corporation, partnership, etc.) before you can apply.
These card accounts don’t charge interest in the form of a variable APR, like other credit cards, and they can also help you manage your business cash flow. These card issuers also may not require a personal guarantee, which is the agreement that you will pay your credit card bill from your personal finances if your business can’t afford to pay it back.
How Digital Business Credit Cards Work
Digital business credit cards work like other business credit cards. You can use these cards for all your business purchases, up to your set credit limit. However, you won’t pay an interest rate on what you borrow (so no need to look for an offer for an introductory APR of 0%). Instead, they work more like charge cards, which require you to pay off your entire bill every month.
Most of these don’t charge an annual fee, and you may get perks like cash back or bonus points. The rewards programs don’t usually offer rewards points on specific eligible purchases for your business, like office supplies or gas stations, and instead offer a flat rewards rate across every expense. You can also usually get unlimited virtual or physical employee cards.
The main difference between these digital business credit cards and other small business credit cards is that these cards usually offer a built-in expense management platform. These platforms may let you do things like:
- View transactions in real-time
- Collect receipts automatically
- Set pre-approved expenses
- Manage spending limits
- Convert currency for receipts or payments
- Reimburse employees
- Pay vendors
- Get spending insights and reporting
Also, many of these card accounts have built-in integrations with software like QuickBooks, NetSuite, Sage, Slack, or Xero. Keep in mind that you may need subscriptions to the software services to get the full benefit of these integrations.
The Differences Between Digital Business Cards and Other Small Business Credit Cards
Digital credit cards for small business aren’t exactly like most credit cards, and it’s important to know the distinctions to see if they will work for your business. We cover the main differences here.
1. The rewards programs are a little different
Most digital credit cards for small business offer rewards programs for using the card. Typically, you’ll get a flat rewards rate for every purchase that can come in the form of a statement credit or be redeemed for gift cards, travel, or more. It depends on the credit card issuer.
These cards also typically partner with companies and services that are commonly used by small businesses to offer percentage-based discounts. You may be able to access hundreds of thousands of dollars in savings using these partner deals, depending on your level of spend. But there’s not usually a welcome offer on account opening like other credit cards. You may also be able to get extended warranties on purchases.
The redemption options may differ from other cash back rewards programs you’ve encountered. Some digital card providers want you to wait until after the first year or gather a specific number of points before you can redeem them.
2. You won’t pay interest
These cards usually don’t charge an interest rate on what you borrow. Instead, they make money by charging merchants an interchange fee every time you use your card. However, this also means that it’s not a revolving credit line like most credit cards — so you have to pay your balance off in full at the end of your billing cycle. They operate more like charge cards in this sense.
One other perk is that you usually won’t pay a foreign transaction fee to use these cards overseas.
3. You may not need a personal guarantee
Most business credit cards require a personal guarantee, but these don’t. A personal guarantee ensures the credit card provider that if your business fails to pay off the credit card, you are personally responsible for making a payment. Not having to include a personal guarantee makes these options less risky to your personal credit and finances.
They also typically don’t look at your credit history or your credit score before deciding whether you qualify, and some like Divvy have programs that may help cardholders build credit.
4. Your business needs to be registered
You probably need a formal business structure to qualify, like an LLC, partnership, or corporation. If you’re a sole proprietor, you may not qualify for these card options. This isn’t the case with most other business credit cards. Check out these business formation services curated by Nav’s experts if you’re ready to formalize your business’s structure.
What Is the Difference Between Digital Credit Cards and Virtual Credit Cards?
The two sound the same, but they aren’t an exact match. The biggest difference between a digital credit card and a virtual credit card is the focus on privacy and security. Virtual credit card lenders allow you to create a new single-use credit card number for each transaction. This swapping of card numbers makes it almost impossible for a fraudster to steal your credit card information and use it elsewhere.
However, there are potential drawbacks to using disposable credit card numbers offered by virtual credit cards. For one, returns may be more difficult since you can’t produce the card in person. Also, the frequently rotating expiration date means you’ll have to update the expiration date on subscription-based purchases more often than with a regular card. But the access to higher security may make using a virtual credit card worth it.
What Are the Best Digital Business Cards on the Market?
Let’s look at some examples of digital business credit cards. We gathered the best digital business cards below for you to explore.
Divvy can help you build credit and earn rewards on your business spending. It also offers a spend management dashboard that is free for cardholders that makes managing money easier. There’s also a well-rated app that allows you to upload receipts and approve spending on the go.
Airbase offers a spend management tool and a high rate on its unlimited cash back program. You can also integrate several existing card types into your Airbase platform so you can continue using them. Control spend, set budgets, and upload receipts easily from the platform or the app (although the app is only rated at 2.9 for Apple and 2.8 for Android).
*All information about Airbase has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.
Expensify is a well-rated app that uses OCR SmartScan technology to capture receipts. Users can access corporate cards, track expenses, and get reimbursed the next day. You may have to pay a monthly fee, depending on your needs — there’s a free plan but the higher-tier plans currently start at $5 per month.
*All information about Expensify has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.
Jeeves is an expense management platform built for global companies. You’ll get unlimited cards for your employees that earn cash back rewards (and you get access to 1,300 airport lounges). You can make payments and track spending in multiple currencies, helping avoid the headache of currency conversion. Plus, you can apply for working capital or growth capital through Jeeves.
*All information about Jeeves has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.
With Ramp, you can automatically manage your business’s spending, like blocking or restricting spend to a specific vendor, on one card or for the entire company’s cards. You’ll also be able to use a digital wallet and manage all of your unlimited cards from the Ramp platform — while also earning rewards on card usage.
*All information about Ramp has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.
Tribal is focused on providing corporate credit cards and financial services to startups in emerging markets around the world. It gives cardholders a business credit card that helps to automate spending using its expense management platform. The rewards program is not yet launched at the time of writing, but is expected to come in the future.
*All information about Tribal has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit Nav.
How to Vet Digital Business Credit Card Lenders
With all the credit card offers out there, it can be a huge challenge for small businesses to pick the right one or to know which ones are legitimate. This is especially true after Brex decided to end its relationship with small businesses earlier this year, causing distrust of this type of credit card provider throughout the small business community.
Although no one can predict when a company might make a move like Brex did, the good news is that there are steps you can take to make sure the digital credit card provider you choose has a good reputation and is right for you. First, make sure the company is funded by a Member FDIC, which basically means it’s insured by the federal government. Avoid banking with any company that isn’t a Member FDIC. Then check reviews to make sure customers have an overall positive experience. Also, you should have zero liability or limited liability on your purchases, which means you aren’t responsible for fraudulent transactions on your card.
Terms apply on every card, so be sure to read them carefully before signing up.
Finally, consider what your business needs and what your current business spending looks like. If you prefer tailored rewards for specific purchases like gas stations, cell phone plans, or business travel, you may want to consider a traditional small business credit card since digital credit cards only offer flat-rate rewards. The same is true if you need revolving credit with a low intro APR — digital cards operate more like charge cards. Think through whether you prefer a card that uses a specific financial institution like American Express (AmEx), Visa, Mastercard, or Discover, as well.
Your best bet for finding top quality business credit cards that you’re most likely to qualify for is with Nav. Head over to Nav today to see all your personalized credit card recommendations based on your business’s details.
Nav’s Verdict on Digital Business Credit Cards
Finances are complicated enough. Digital business credit cards could work great for businesses looking to streamline their finances. Using a single platform for credit card spend and expense management can lessen the burden on small business owners who usually don’t have spare time. Being able to automate the receipt capture and expense approval process can be a huge help for businesses that are struggling with their finances. Also, using these programs can help you save money by identifying overspend — and they don’t charge an annual fee.
Additionally, if you’re looking to establish and grow your business credit, some of these digital card options may help you do that. If you’re new to business credit, learn how to establish business credit from our Nav guide. And if you need more funding than a credit card will offer, consider small business loans or other financing.