Since EU Regulation 2015/751 came into effect in 2015, new rules have applied to business credit cards. These rules have a direct impact on a company’s liability, so it’s important to be familiar with the EU directive.

In this article, we’ll talk about what exactly qualifies as a business credit card, what advantages and disadvantages it has, and what requirements must be observed since the implementation of EU Regulation 2015/751. We’ll also explain the implications of the regulation for businesses and what precautions they should take to protect themselves.

What’s in this article?

• What is a business credit card?
  
• What are the advantages of a business credit card?
  
• What are the disadvantages of a business credit card?
  
• What EU regulations apply since the introduction of EU Regulation 2015/751?
  
• What impact do the EU regulations have on businesses?
  

What is a business credit card?

A business credit card, sometimes called a company credit card, is a credit card used by companies for business purposes to cover business expenses. Employees of a company can use it to pay for goods or services without using cash. For example, employees do not need to use their personal accounts to purchase office supplies or to pay for hotel and transportation expenses during business trips; they can use the company account instead. The plastic card displays the company name, credit card number, and employee name.

The primary advantage of a credit card is its ability to provide short-term credit. While cash is spent immediately and payments made via girocard are debited from the account after a few days, expenses incurred using a credit card are settled at the end of the month through a reference account. With these charge cards, the credit card company does not charge interest on the money advanced. There are around 38.4 million credit cards currently in circulation in Germany.

Business credit cards work for businesses of all sizes – from sole proprietorships to large corporations. The only requirement for obtaining a card is good credit. Applications can be made through banks or directly to issuers. The most well-known issuers of business credit cards are Visa, Mastercard, American Express, and Diners Club.

Virtual or digital business credit cards can also serve as alternatives to physical plastic cards. These can be used via mobile payments systems such as Apple Pay or Google Pay. Stripe Issuing can support you with your individual card programme, whether it involves physical or virtual cards. Issuing allows you to create, manage, personalise, and scale your business card programme.

What kinds of business credit cards are there?

Although the lines are becoming increasingly blurred, there are two main kinds of company credit cards: business cards and corporate cards.
A business card is a credit card designed for small- and medium-sized businesses. It’s cheaper and easier to apply for than a corporate card, but it typically offers only basic expense management and accounting functionality. A corporate card, on the other hand, offers customised solutions for managing large expenses, handling complex travel plans, and accessing special discounts. As a result, it’s a better fit for larger companies.

Additionally, companies are commonly restricted to a limited number of business cards, whereas there is typically no limit on the number of corporate cards that can be issued. There is also a difference between corporate credit cards and corporate travel cards.

What is a corporate travel card?

A corporate travel card is a credit card used primarily to pay for business travel expenses. This primarily includes hotel reservations and the cost of flights, rail travel, or car rentals. Expenses not related to business travel cannot be paid with a corporate travel card. In addition, it cannot be used to withdraw cash or make payments while travelling. A corporate travel card is issued to the company, not the individual. Rather than issuing a physical card, the company often provides a number that can be given to partner companies, such as airlines or hotels.

What are the advantages of a business credit card?

Business credit cards offer companies a convenient way to manage and control spending, while providing several features and benefits. Here is an overview of the most important benefits:

• Simplification: Business credit cards greatly simplify business payments and help keep business and personal expenses separate. They also simplify accounting because employees don’t have to submit individual receipts to the company. Expenses are easy to track and business expense reports can be generated quickly.
  
• Liquidity: Because the business account is not debited until the end of the month, business credit card payments improve the company’s short-term liquidity.
  
• No advance payment: Employees don't need to make personal advances for company expenses. They also have little or no cash to carry.
  
• Conditions: Compared to personal card purchases, business credit cards often offer more favourable terms. They may offer free cash withdrawals abroad or longer payment terms. In addition, discounts on business expenses are often available, such as bonus points for airline miles or cash back for certain spending categories. Insurance packages may also be included, such as trip cancellation or international health insurance.
  
• Liability: With business credit cards, the company – not the individual employee – is responsible for all debts and liabilities arising from the use of the card. This means that individuals don’t have to go through a credit check.
  
• Spending control: Companies can use the business credit card to set specific spending limits, thereby controlling employee spending.
  

What are the disadvantages of a business credit card?

Although business credit cards have several advantages, there are also some potential disadvantages that should be considered:

• Limited choice of issuers: There are fewer providers for business credit cards than there are for personal credit cards.
  
• Risk of fraud: Employees who leave the company may present a fraud risk. If the company fails to retrieve the business credit card from departing employees, it remains liable for any expenses they might incur.
  
• Administrative burden: Business credit cards often come with an increased administrative burden. However, once the accounting process is well established, this disadvantage can actually become an advantage due to the time saved.
  

What EU regulations apply since the introduction of EU Regulation 2015/751?

Since 2015, new rules regarding business credit cards have been introduced at the EU level under the regulation on “interchange fees for card-based payment transactions” (2015/751). As a result, a business credit card may only be classified as such if its transactions are processed through a company’s corporate account.

Until 2015, it was possible to link a business credit card to the holder’s personal account. Card issuers could maintain a separate account for their customers that was linked to their main account. Now, companies must set up an official payment account. This means that a contract can only be agreed between the card issuer and the company. The EU regulation aims to ensure that private and business expenses can be clearly separated. As a result, companies are fully liable for transactions made with the company credit card.

What impact do the EU regulations have on businesses?

Because companies are liable for all payments made with business credit cards, appropriate safeguards must be in place. There should be a strong relationship of trust between management and cardholders. However, it is advisable to have a written agreement that clearly defines the purposes for which the business credit card may and may not be used.

The most important rule is this: the card may only be used for business expenses. Personal payments are prohibited. In addition, the agreement should include detailed information on proper card usage and what to do in the event of loss or theft. Some card issuers offer a payment confirmation SMS service. This allows you to quickly determine if the card is being used without authorisation.

A card spending limit is also recommended. An individual spending limit can be set for each employee using a corporate credit card. This limit can be increased for certain periods of time, such as when an extended business trip is planned and higher expenses are anticipated.

Ideally, management should designate one or more individuals to serve as a point of contact for card users. They can provide information in the event of uncertainty and prompt assistance in the event of emergencies. In addition, these individuals should ensure that card contracts are cancelled promptly and that company credit cards are retrieved from employees who leave the company.