One of the focus points of every small business owner is looking into the details of money, including budgeting, managing cash flow, and controlling access to it. Operating on a cash-only basis can be risky while starting your own business. If you have a bank account, a small business debit card offers a convenient and simpler way to pay for everyday purchases.

Debit cards can be used for almost everything today, and are accepted almost everywhere in our increasingly cashless society. In addition, it can reduce the amount of cash you need to keep on hand. However, debit cards have their limitations, and you may find that a different solution better fits your needs.

Benefits of a Business Debit Card

  1. Debit Card Offers Convenience – Today, most merchants accept debit cards. This is why you don’t have to worry about having a backup payment method. Using a business debit card is very simple and it mostly involves only swiping and entering the personal identification number (PIN). The money then gets deducted from your checking or savings account balance. You can also have the added convenience of getting cashback when you need it. This could be either after completing a transaction with a merchant or by using your debit card at an ATM.

  2. Allows to Maintain Budget - Unlike a credit card, which lets you borrow and spend money you might not have a debit card limits your spending to what’s in your checking or savings account. Credit cards involve a fee if you overdraw your card account balance. You can avoid the high interest rates and late payment fees by not overspending and making your payments on time. However, instead of this hassle, you can simply opt for a debit card.

  3. Easy to Obtain - When you seek a business credit card, you might have to go through an extensive application process which includes a credit check and submission of earning history. Most financial institutions or credit unions, on the other hand, offer a debit card when you open a business checking account, even if you may have questionable credit or no credit history at all. Thus, obtaining a debit card is far easier when compared to a credit card.

  4. Higher Security - Banks and other lending institutions are far more vigilant when it comes to debit card security. In case something unusual occurs, such as a large purchase or one occurring in a state other than where you live, most banks tend to put a temporary hold on your card.  They also flag purchases until you respond. These heightened security measures may not be applicable to a credit card.

Disadvantages of a Business Debit Card

  1. No Impact on Credit Score - If you are looking to build your credit then a business debit card may not help. When you borrow money, you build good credit by keeping your debt usage low and making all your payments on time. Since a debit card only allows you access to money you already have it doesn’t impact your credit score. While this may not seem like a disadvantage, you’ll need to find alternate ways of building your credit history to qualify for a business credit card or loan.

  2. Usage Restriction - If you need to make a large transaction and your account balance is low, a business debit card won’t be useful. Credit cards or lines of credit, on the other hand, give you access to financing when your cash flow dips. Debit cards restrict your spending to your available cash balance therefore you may need to access alternative sources of funds.

  3. Higher Chances of Fraud - Fraudulent techniques including skimming, phishing, SIM swap and so on can put debit cards at risk. Approaching the bank to investigate any fraud cases and getting reimbursement or insurance coverage can be quite a task. On the other hand, if it happens that the money in your credit card is stolen, then only the money that has been loaded on the card is susceptible to fraud. 

When Should You Use a Business Debit Card?

If you want to avoid credit card debt and need to stick to a budget, a business debit card is a good solution. Using one won't help you build your credit, but it can help you stay within your budget by avoiding interest or annual fees and potentially high monthly payments. You may make better decisions with a debit card because only using the money you have may force you to fully evaluate each purchase—and that can be good for business.


  1. What should I do if my debit card is lost or stolen?

If your card is stolen, the first thing that you need to do is to make sure that you block your card. You can do this either by calling the bank’s customer care or by doing so via your internet banking account.

  1. What are the debit card transaction charges for withdrawals from other bank ATMs?

Most debit cards allow between 3-5 withdrawals from other bank ATMs in a month. Post that, every withdrawal is charged a certain fee - but this varies between banks.

  1. Should I retain the PIN given by the bank when I first receive my debit card?

No. You must change the PIN for security reasons as soon as you receive one from the bank. It is important for customers to change their PIN frequently to enhance the security of their account.

  1. What happens if the money in my account is withdrawn for some unknown reason?

In case of any suspicious withdrawals from your account, you have to report the case immediately to the bank. If required, you would also need an FIR with the local police department to register a case of fraud with the bank.

Additional Reading: Debit Cards Vs Credit Cards

End Note

While you may have a personal debit card, you should apply for a separate business card to protect your finances. It will benefit you when it comes time to file taxes or review past transactions. Always weigh the pros and cons of a business debit card before opting for one.