Prepaid business cards and managing overseas travel expenses

Whether you are sending employees abroad or paying other businesses worldwide, staying on top of your overseas expenses can be a challenge. Aside from budgeting across multiple currencies, paying vendors promptly and accurately reimbursing staff, there’s also the potential impact that currency volatility can have on transactions, which can hit your business’ profits hard if you aren’t keeping track.

Thankfully, foreign exchange service providers can help companies save money and time on their travel expenses by offering a range of solutions and services, including:

Prepaid currency cards: Provide a safe, hassle-free way for employees to spend money abroad, often coming with the ability to lock in a favourable exchange rate.
International payment solutions: Send money to employees working overseas, vendors and business partners.
Risk management solutions: Help businesses reduce currency risk and exposure to volatility, which can affect your profits.

Through these solutions, FX service providers can help you manage currency risks, lower administrative costs and save money by finding more favourable exchange rates and reducing the amount you pay in fees for international transactions.

However, with so many FX service providers in the market, how can you find the option that’s right for your business needs? That’s where FXCompared can help. We compare and review the best FX service providers so that you can choose the option that’s right for you. But first, let’s examine the different solutions for managing business expenses overseas.

Contents

What is a prepaid currency card?
What are the benefits of prepaid travel cards?
Risks of prepaid business expense cards
Who offers prepaid travel cards?
Business prepaid card: A case study
Sending international payments
Risk management and currency hedging solutions

What is a prepaid currency card?

Chances are, whenever your employees travel abroad, they need to spend money. The logistics involved with reimbursing expenses can be time-consuming and subject to error, which can either leave your business or your employees out of pocket. Giving staff cash upfront might be an easy way to budget, but money could easily be stolen or lost.

A prepaid currency card can help solve these issues. Unlike a regular debit or credit card, a business expense card is not connected to a regular bank account. Rather, it is front-loaded with currency that employees can use to make purchases abroad. Your business can budget for how much the employee can use, and also choose whether they want to load with foreign currency (in other words, exchanging only once) or local currency that will then go through an exchange after each transaction.

What are the benefits of prepaid travel cards?

Prepaid currency cards allow you to cap employee spending; provide a safe, hassle-free way for employees to spend money while travelling abroad; and reduce administrative costs by removing the need to reimburse clients for overseas travel expenses. They are usually easier to set up, offer better exchange rates than withdrawing cash while travelling and, in some cases, can be programmed with spending limits.

With a prepaid currency card, you can lock in a favourable exchange rate from the get-go (although, of course, the exchange rate could go in the other direction, leading to the value of the card depreciating).

Finally, prepaid cards also prevent the risk of overspending and making purchases much harder to track, as employees no longer need to collect receipts for reimbursement.

Risks of prepaid business expense cards

While using a prepaid travel card to lock in favourable exchange rates is one of the easiest and most convenient ways to travel, it is possible that the currency rate may fluctuate and improve once a rate is already locked in. If this occurs, it is possible to “lose” money on the amount that is already stored on the card. Equally, a prepaid card may allow a “gain” to be made if the rate were to deteriorate.

It may also not be possible to use prepaid cards in all locations, and they may come with additional fees for use. While some cards will use the interbank rate for exchange, others may add an additional FX margin to each transaction.

Who offers prepaid travel cards?

manage corporate travel expenses and fx cards FX service providers that provide prepaid currency cards include Wise, Soldo and FairFX, to name a few. These providers’ offerings may differ when it comes to transaction/delivery fees, cashback offerings, numbers of currencies supported or availability.

The good news is that we’ve compiled information on some of the best FX service providers out there to help you narrow down your search. To read more about prepaid travel cards and other solutions offered by leading FX service providers, head to our reviews page.

Business prepaid card: A case study

Issue: Give employees a way to safely pay for expenses while travelling abroad for business without making them carry large amounts of cash or exposing them (and the company) to fluctuating exchange rates.

Business goal: Find a safe, cost-effective solution that allows the company to provide its employees with spending money while also reducing the need for travel expense reports.

An international beauty brand needed a safe, cost-effective way to provide cash to its employees whilst overseas on business. The company wanted to secure the best exchange rates, give employees the ability to pay for expenses in a safe, easy manner and cut back on administrative efforts and costs at the same time.

The company found a foreign exchange service provider that offered prepaid travel cards, favourable exchange rates that could be locked-in in advance on the card and the ability to store multiple currencies on the same card. Employees were able to use the cards at most locations while travelling and avoided the hassle of having to find a bank or ATM to withdraw cash while on the road.

Today, the company has been able to save approximately 20% on administrative costs related to expense reporting and invoicing, and employees are not only satisfied with the abilities of the prepaid card for their travel expense needs, but feel safer carrying it instead of large amounts of cash when travelling.

Sending international payments

Aside from prepaid currency cards, many FX service providers can help your business establish international payments for their overseas transactions at better exchange rates than those typically found at a bank, provide a dedicated account manager and offer online access to customised reports and analysis.

Using a service provider can make it easier for your business to send money internationally for payments to employees and vendors or for purchasing goods, as well as saving money.

Service providers will assign a dedicated account manager, who can often find the best overseas exchange rates, and will help you set up regularly recurring payments to save time. Providers can generate reports to help you analyse global spending, and help to reduce administrative costs in the process. Fees for global payments are usually significantly lower than what is charged by a bank.

Risk management and currency hedging solutions

The value of currencies can fluctuate. That means if your business is regularly paying money to a business abroad, you could be losing money on repeat transactions if the exchange rate isn’t going in a favourable direction.

That’s why most service providers will also offer customised risk management solutions for their customers, which can include a range of offerings, from tailored reports to market analysis and online tools, as well as trading solutions, including options contracts, hedging and futures contracts.

For more information on currency risk solutions or to read more about our solutions for international payments, take a look at our guides below: