What is a Pcard?
Short for “purchasing card”, a pcard is a type of commercial payment card that functions similarly to a credit card, with a few exceptions that will be explained later.
The card utilizes the same infrastructure as a credit card, so it can be used anywhere that credit cards are accepted.
This makes it much easier for organizations to make purchases, since they can avoid setting up purchase orders and having to pay multiple invoices later.
How to Get a Pcard
The organization’s management must first enroll in a pcard program. Several major and regional banks and credit card companies offer this type of program.
Once the organization is enrolled, the employee needs to request a card from management. Typically the employee will need to sign an authorization and attend training prior to receiving the pcard.
P-card vs Credit Card
There are a few differences between a p-card and credit card.
Balance Rollover
With credit cards, the organization can roll their balance over from month to month. With pcards, the organization must pay the balance in full each month.
Interest Rates
Banks charge interest on balances on a credit card, typically on the portion that is rolled over. Purchases made with pcards are usually not subject to any interest.
Fees
Many major credit cards also come with annual fees. Pcards typically aren’t subject to these types of fees.
Limits
While it’s common for credit cards to impose monthly credit limits, pcards can also be set up to impose individual transaction limits, in addition to monthly limits.
Furthermore, pcards have the ability to be set up to block certain types of purchases, such as liquor or gas.
This gives the organization more control over company spending and reduces risk of unauthorized or fraudulent charges.
Summary
This article has explained what is a pcard, summarizing the pcard vs credit card. For more information about implementing a pcard program, check out the information on NAPCP’s website.
