A procurement card can be either a corporate debit card, which deducts cash directly from a company's bank account, or a credit card. A procurement card program is an excellent tool for any company making payments to its suppliers, since it circumvents the lengthy and expensive process of issuing purchase orders, matching receiving documents to supplier invoices, and making check payments. It is primarily used for lower-priced purchases.
Under this system, the bank managing the procurement card program will bill the payer on a monthly basis for all charges made during the month, while remitting funds to the payee within a few days of each charge. If the payer pays the monthly bill late, then the bank charges interest on the open balance.
Control over these purchases can be achieved by setting daily spending limits on cards, as well as by monitoring purchases on all cards issued.
Procurement cards are less commonly used for international payments, because the payer is also charged a fee for any conversions of foreign currencies back into the credit card processor’s home currency.