Business debit card or virtual debit card: What are your options?

Business debit cards are a handy way to pay for business expenses. At the same time, virtual debit cards are also used by businesses to make it possible for business owners and staff to make business purchases wherever Visa and Mastercard are accepted as payment methods. Here’s a quick rundown of these cards, including their benefits and shortcomings. 

What is a business debit card?

A business debit card is similar to a personal debit card. You can pay for goods and services and withdraw cash from ATMs or through EFTPOS. For larger businesses, these cards are known as corporate debit cards. Unlike virtual debit cards, using these requires holding a physical card.  

What are the types of business debit cards? 

While you can have cards attached to your business transaction or savings account, there are also prepaid cards that have a set limit. 

In this case, additional card spending limits can be determined based on the needs of the employee. For example, the card could be used for travel expenses for a business trip or regular SaaS subscriptions. With some of these prepaid cards, expenses can be tracked, categorised and synced with accounting software.

What are some of the benefits of having a debit card for business? 

The main benefit is the ease of use. Just like a credit card, you can make purchases using the physical card for in-person or online transactions. These cards can be used for any type of business, from freelancer debit cards for sole traders providing freelance services to corporate debit cards for larger businesses with many employees. 

In many cases, such as with a traditional debit card for business, there are no added costs. However, alternative providers that offer expense tracking often charge a monthly fee per card. In any case, it’s a good idea to compare fees and charges and read the product disclosure statement. 

Like a credit card, these cards can be set up on a digital wallet through Apple Pay and GooglePay, so the person using it can make purchases using a smartphone and not carry the physical card. 

What are virtual debit cards? 

There is no physical card with a virtual debit card, also called a virtual payment card. With this type of card, you get a 16-digit number through Visa, Mastercard or Amex. You can then use this number to make payments. You simply use the number, expiry date, and CVV. For in-person transactions, you can include the details in a digital wallet through Apple Pay and GooglePay. Like a physical card, the virtual card is linked to a business bank account, enabling you to monitor and record transactions through online banking. Plus, you can upload transactions into accounting programs to reconcile transactions. 

What are the benefits of virtual debit cards in Australia? 

Virtual debit cards are relatively new to Australia. The benefits of these ‘cards’  are similar to their physical counterparts, as mentioned above. They can be used in all business types, making it possible to track transactions and set spending limits. 

One thing you can’t do with a virtual debit card is withdraw cash using EFTPOS or an ATM. This might be okay in Australia, where you can purchase almost anything without cash, but it could pose an issue if you’re travelling overseas and need cash. In some countries, you will need to use cash in smaller cities and regional areas, so a virtual credit card won’t work for business travel. Additionally, virtual cards require a strong internet connection. If you’re working in and travelling to rural or regional areas for work, this is another thing to keep in mind. 

Choosing the best virtual debit card in Australia will depend on your needs. With several options to choose from, it’s best to compare the features before selecting a virtual card. 

What are the alternatives to business debit and virtual debit cards? 

Business credit cards are still popular among all types of companies – from small businesses to large corporations. 

For a new business, a business credit card makes it possible to build a credit history and credit score. This is not the case with the cards outlined above because there’s no credit involved. Having a solid credit history means a business can access other forms of finance as it grows and its needs change. 

Business credit cards also give you an interest-free payment period (usually 30 days), so they can help free up cash flow. This isn’t the case with business debit cards, where the funds are immediately withdrawn from a business bank account. As opposed to prepaid debit cards, business credit cards also don’t require you to load up funds and can be a more seamless way to pay. 

A business debit card and virtual debit card alternative

Archa business credit cards provide a range of benefits that go beyond business and virtual debit cards. With Archa you can:

• Instantly issue cards to staff
• Easily set spending limits and get real-time visibility. 
• Effortlessly capture receipts and automatically match and reconcile them in Xero

Get all the details about Archa's business credit cards. Also, check out our Business Credit Card Guide for everything you need to know about choosing a business credit card. 

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