Many organizations’ procurement departments rely on purchasing cards, commonly known as P-Cards, to purchase goods and services from vendors. Unlike other charge cards, P-Cards allow organizations to control employees’ (i.e. cardholders) spending by establishing presets for different cardholders. P-Cards yield many perks for organizations, such as fewer invoices and faster payments.
How do P-Cards Work?
P-Cards can be physical or nonphysical account numbers. Organizations set numerous controls, primarily monthly spending limits and single purchase limits, for each P-Card. What’s more, organizations may set restrictions based on a vendor’s merchant category code (MCC), which classifies a business by the types of goods and services it provides. For example, a trucking company can limit their employees’ P-Card transactions solely to gasoline stations in the United States.
Who are Issuers?
Issuers, also known as P-Card providers, partner with organizations to implement P-Card programs, issue cards and invoice transactions. Issuers employ card networks and processors to authorize transactions between cardholders and their vendors. After each month, issuers collate all of the organization’s transactions into a single invoice, which outlines each cardholder’s individual transactions, in addition to the grand total for the organization. Transactions must be paid in full to the P-Card issuer. Issuers include commercial banks and other financial institutions, such as JPMorgan Chase and American Express.
Click here to learn more about P-Cards and how they work.
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