What are P-Cards?

A Purchasing Card (P‑Card) is a type of Commercial Card that allows organizations to take advantage of the existing credit card infrastructure to make electronic payments for a variety of business expenses (e.g., goods and services). In the simplest terms, a P-Card is a charge card, similar to a consumer credit card. However, the card-using organization must pay the card issuer in full each month, at a minimum. P-Cards are also known as Procurement Cards (ProCards), Payment Cards, Purchase Cards or similar terms. See also Historical Insight on Commercial Cards.

Organizations that use P-Cards come from the corporate, education and government sectors and are often called "end-users." The individual employees who are issued a P-Card to initiate transactions/payments on behalf of their employer (the end-user organization) are known as "cardholders."

P‑Cards are not limited to plastic cards; they can also take the form of non-plastic account numbers. The term "card" is typically used within the industry when describing any type of Commercial Card product, regardless of whether or not a plastic card is issued. One variation of a P‑Card is a:

• Ghost Card/Ghost Account – a card account that an end-user organization issues to a specific supplier or supplier type and the supplier processes all of the organization's purchases to the account; functions like a P-Card

Other Types of Commercial Cards

P‑Cards are just one category of Commercial Card. Other Commercial Card products include the following. Each is intended to address different types of purchases and/or spend categories.

• Corporate Card – commonly used by organizations for employee travel and entertainment (T&E) expenses; also referred to as a Travel Card
• One Card – a single charge card that combines procurement with T&E and, in some cases, fleet charges
• Fleet Card – a card product used by organizations to pay for fuel, maintenance, repair and related expenses on company vehicles
  • ♦ Fleet Card Mergers and Acquisitions: A Supercharged Market by First Annapolis Consulting 
• Prepaid Card – debit-based card, allowing the user to pay now versus later, as the card transaction amounts are deducted from a funded account; for example, a Payroll Card "loaded" with an employee's earned wages 
• Declining Balance Card – a card that typically does not require a pre-funded account; a spending limit and/or expiration date are established up-front, giving it a specific "shelf life" to accommodate a specific project budget or spend allowance; for example, a Meeting Card 
• Business Card – a credit card targeted for smaller businesses (in lieu of a P-Card), commonly used for a variety of expense types (e.g., goods, services, travel, etc.); the end-user organization may be allowed to carry a balance

In addition to the distributed card products defined above, an organization may take advantage of complementary solutions offered by card providers, such as:

• Electronic Payables – a type of electronic payment, generally involving a supplier invoice (may be electronic or paper) and end-user approval process, followed by a "behind-the-scenes" payment to the supplier through the card network; these solutions are also known as electronic accounts payable, automated payables, e-payables, push payments, straight-through payments, buyer-initiated payments, single-use accounts and electronic invoice presentment and payment

• Convenience Checks – a payment tool with characteristics resembling those of a common checking account, but they settle against a P‑Card account

End-User Perspective

Southwest Airlines uses many card types to improve their processes. As the Sr. Supervisor of Corporate Card Services, Jennifer Gruich manages a One Card program where five additional card types are consistently used as well (see listing below). Members, click here to read the full article.

• One Card
• Ghost Cards
• Petty Cash Cards
• Declining Balance Cards
• Emergency Response Cards
• Virtual Cards

Look for additional card industry terms and definitions in the Commercial Card and payment glossary.

Become an IOCP member or complimentary subscriber to gain greater access to educational resources; participate in polls and surveys; and receive P-Card news and event notifications.

Next page (Why Use P-Cards)