One quick and easy way for businesses to improve their cash flow is to deposit payments as soon as possible. The quicker a payment gets processed, the sooner it can be used in the business.
But in the case of businesses managing cash or check payments, the only solution is to take these payments to a bank or an ATM. And if you only have one person who’s the account holder, deposits have to wait on their availability.
The solution is to give more people authority to make deposits. With warm cards, you can give employees that ability without the risks that come with issuing a standard bank card.
What is a warm card?
A warm card is a specialized bank card that allows employees to make deposits, but blocks their ability to withdraw funds or make purchases. Sometimes called a “deposit-only card,” it’s essentially a bank card that only allows money to flow through to the bank account.
Warm cards look and function like a typical debit card. However, when the financial institution issues the card, it is configured to reject any transaction that isn’t a deposit automatically.
How warm cards work
When a warm card is used at an ATM, the menu of functions will either be limited, only showing deposit-related functions, or any attempts to use a different function will be rejected.
Similarly, any attempts to use the card at a bank teller or point-of-sale system would be rejected.
The functionality is programmed into the card at your financial institution. Just in the same way a debit or credit card can reject transactions based on account balances, vendor names, or suspicious activity, the warm card treats any non-deposit transactions as necessary to reject.
These restrictions are always automatically enforced. This means no micromanaging employees or their warm card activity.
Key characteristics of warm cards
Understanding what makes warm cards unique can help you determine if they’re the right fit for your needs.
Restricted functions
The main, defining trait of a warm card is its deposit-only capability. Unlike traditional debit cards that have a wide array of functions, including withdrawals, purchases, and balance checks, warm cards are limited to one function. This restriction is enforced by the banking system, making it impossible to bypass.
Convenience
Issuing warm cards to trusted employees saves business owners from needing to personally handle every deposit. This is especially helpful for businesses with one bank account across multiple locations, as an employee can make timely deposits rather than wait for the account cardholder.
Appearance
A warm card looks exactly like a standard debit card. It has the same physical form, with a magnetic stripe and sometimes an EMV chip.
Since the warm card is essentially a debit card, with all restrictions happening on the banking system, there’s no training necessary on how to handle the card. Employees simply need to be told that any transaction that isn’t a deposit will be rejected.
Security
Security is the primary motivation for businesses considering warm cards. With their limited functionality, you eliminate the risk of unauthorized withdrawals or purchases.
Even if the warm card is lost or stolen, it can’t be used to pull funds from the account, only make unauthorized deposits. This built-in security feature gives business owners peace of mind without having complex processes or oversight.
Key benefits for your business
Using warm cards can dramatically change how your business manages deposits and strengthen your financial security. These are the benefits of adding them to your operations.
Cost-effectiveness and efficiency
Warm cards streamline the deposit process by removing the bottleneck of people authorized to hold debit cards. By trusting employees to make deposits with warm cards, the funds reach your account (and are ready for use in the business) sooner.
This efficiency also directly contributes to cost savings. Less time is spent on routine banking tasks, with more time going towards value-generating activities.
Fraud protection
The deposit-only functionality of warm cards naturally protects businesses against internal fraud. Employees can’t use the card for purchases or withdrawals and, if the card is misplaced or stolen, it can’t be used illicitly.
Warm cards help you delegate deposit responsibilities without taking on additional risk. The card itself is a control mechanism, enforcing your policies without micromanagement.
Faster deposits
Delegating deposits helps you maintain a more frequent deposit schedule, potentially to the point of daily or same-day deposits. Store managers could deposit receipts on their way home, and field technicians could deposit checks on their way back to base.
The speed of deposits is more than just convenience. The sooner cash or a check is deposited, the sooner it can be used in your operations.
Transparent audit trails
Every warm card has its own record of transactions, making it easy to track who made deposits for what amount and at what time. This simplifies reconciliation while also providing a clear audit trail.
Improved cash flow management
When you speed up the deposit process, you get a clearer picture of your actual cash position. This helps you understand your actual financial health and working capital without having to track any loose cash or checks that have gone undeposited.
That promptness of deposit also allows you to put that money to work earlier, like paying down invoices sooner and maybe taking advantage of an early payment discount.
Who should use a warm card?
Warm cards work best for businesses that frequently receive payments in the form of cash or checks. Some examples include:
- Retail stores
- Restaurants and bars
- Salons
- Dry cleaners
- Repair shops
- On-site services (like landscaping, plumbing, or repair)
Warm cards are also especially helpful for businesses with multiple locations that don’t have someone with access to a debit card. This gives every location the autonomy to make deposits without waiting for an account holder to pick up cash or checks.
An example of a warm card use case
A plumbing company has a crew of five plumbers doing jobs throughout the day. Their customers frequently pay by check and occasionally with cash.
Their existing system has each plumber collecting payments throughout the day and dropping them off at the end of their shift. Their finance team processes the payments, closes the invoice, and then keeps the funds in a safe on-site to be deposited at the end of the week.
One week, a work van is experiencing issues and needs to be taken to the mechanic. But when they check their bank account, they don’t have the funds ready to cover the costs. Instead, most of the payments collected throughout the week are still on-site, in the safe.
To help them put their payments to work sooner, they adopt warm cards with each plumber given one. Instead of running payments back to the office at the end of their shift, they deposit each one on their way back.
Now, instead of waiting until the end of the week for an account holder to make a deposit, all funds are deposited on the same day they are received. And, even though the plumbers have deposit authority, they can’t withdraw any funds from the account or make purchases using the warm card.
How to request a warm card
To start the process of obtaining a warm card, reach out to your bank. Not all banks offer warm cards, so start by inquiring about their availability.
It’s best to reach out directly to a business banking representative. Warm cards are a very specific type of tech used by businesses, and a bank teller or personal banking representative may not be familiar with them.
If they are unfamiliar with warm cards, try asking for “deposit-only cards” and outlining the specific use case: giving employees the ability to make deposits without the possibility of withdrawals or purchases. They may be able to set something up for you even if they don’t offer it explicitly.
Confirm whether there will be any fees associated with the warm cards, such as issuance fees. This may impact how many warm cards you want to issue.
Just like debit cards, warm cards are associated with a specific cardholder. You’ll need to provide the names and information of the employees who will be receiving warm cards.
Once the warm cards are authorized by the account holder and approved by the bank, they will be issued and ready for use. Give each warm card to the cardholder and give them a brief rundown of how the card can (and should) be used.
What options do employees have to make purchases?
Since warm cards are specifically for deposits, giving employees purchasing power needs to be done through a different card type. These are some of the options available for employee purchases.
Virtual spending cards
Virtual cards are digital-only payment options that are issued by the business with unique card numbers. Each card can be used for specific purchases, as defined by vendors, amounts, or time periods.
The ease of issuing virtual cards enables businesses to give cards to employees for specific purchases without opening them up to potential fraud or misuse. For example, you may have a virtual card that’s restricted to a specific software provider, giving the team that uses it the autonomy to manage their own subscription.
An added benefit of virtual cards is that, since they don’t have a physical presence, they are unlikely to be misplaced or stolen.
Corporate cards
Unlike virtual cards, corporate cards are physical credit cards. But, similar to virtual cards, they can have built-in spending controls to prevent misuse.
Corporate cards are ideal for situations where employees need reliable and flexible access to business funds. A common use case for corporate cards is employee travel, where they may need business funds to cover travel, accommodation, or supplies.
A corporate card gives employees more flexibility and ease of use. However, there is an increased chance of fraud or misuse if the card is lost or stolen.
Expense reimbursements
The traditional expense reimbursement process has employees using their personal funds for business expenses. Afterwards, they submit the receipt and details of the transaction to the business to record the transaction and process repayment.
This approach works and has a long history of usage, but it has a hefty administrative burden and delays recording the transaction. Even with new technologies like dedicated software and phone cameras that make capturing a receipt easy, it requires a high level of oversight to be managed effectively and efficiently.
Empowering employees without the risk with BILL
While warm cards solve the specific challenge of depositing funds, growing businesses need scalable solutions that empower teams to process all types of transactions without the administrative burden.
With BILL Spend & Expense, you give your teams smart, flexible purchasing options with controls that ensure only approved transactions get through. For any transaction, AI-powered management software processes and categorizes it with real-time reporting updates. That means every transaction is automatically controlled, categorized, and compliant.
Reach out to request a demo and see how BILL can save you time and money on your expense management process.
