May 24, 2022

Using a ghost card for business expenses? Here's how it can cost you


Imagine your employees coming to you looking for approval to spend on some job-essential items. Instead of giving them a set budget or a prepaid card, you simply assign each of them a credit card number with no spending limit. What do you think happens next? It’s a recipe for financial disaster. This is called the “ghost card effect.”

This dilemma is more serious than a simple debate over secured vs unsecured business credit cards. Ghost cards are generally connected to an unsecured business credit card. That opens the company up to liabilities for expenses they have no control over. 

In this article, we'll explain what ghost cards are, their downsides, and why Ramp is a worthwhile alternative for business owners looking for robust spend controls and visibility.

What is a ghost card?

Ghost cards are credit card numbers assigned to specific departments within the business. Anyone in that department can use them, so there’s very little accountability. In most cases, there are also no spending limits attached to them so employees can spend freely without much oversight.

Proponents of ghost cards tout the benefits of being able to itemize expenses by department. The system expands purchasing privileges to more employees within the company, eliminating the need for expense reimbursement programs. Ghost cards can also be issued to suppliers, giving them the ability to charge the company whenever an order is processed.

If everyone with a ghost card number spends responsibly and ethically, this system can streamline reporting and invoice reconciliation. Unfortunately, it often doesn't work this way. Even without fraudulent or malicious intent, human beings make mistakes and sometimes overspend and ghost cards don’t have the spend controls in place to prevent that.  

Downsides of using ghost cards for business expenses

Ghost cards have a purpose in personal situations, like helping a family member in need or granting purchase power to someone in a remote location. They’re just not a good fit for small business expense management. Corporate cards are a better option for several reasons, which we’ll get into below. The downsides of ghost cards in business include the following:

Vulnerability to fraud

Assigning a credit card number to an entire department is an invitation for anyone in that department to commit credit card fraud against your company. It could be something as minor as buying their morning coffee or supplying their home with paper goods and office supplies. Your accounting department won’t catch that with a ghost card.   

Higher interest rates

Ghost cards are connected to your business credit card account. That means you’re paying interest on unpaid balances. According to WalletHub, the average interest rate on a business credit card in 2022 is 18.32% for new accounts and 14.56% for existing accounts. You’ll be paying that on every department purchase made with a ghost card.    

Lack of spend controls

Small business owners don’t have the luxury of carte blanche spending power, so they shouldn’t give it to their employees. It’s impossible to control spending without spend controls. Ghost cards don’t offer them, which makes them a bad idea for your business.  

No personal accountability 

Sharing a credit card number with an entire department eliminates personal accountability. That puts pressure on the department head to monitor spending. Unfortunately, most ghost cards don’t give them the tools to be able to do that. This means that misuse of company funds may not be revealed until the next budget review. 

Ghost card vs. corporate, procurement, business credit, and debit cards

There are several alternatives to ghost cards that could be a fit for your business. Choosing the right one is a process of evaluating how many purchases are made each reporting period, how many people are involved in purchasing and expenses, and the size of your business. Here are some of your options:  

Corporate cards

Corporate cards come with control features and many of them offer virtual cards for ease of use. With a ghost card, the company assigns a credit card number to each department. That number is attached to the main business credit card. With a corporate card, expenses can be itemized by user and managed with spend controls and expense limits.  

Procurement cards

A procurement card is a corporate charge card issued to employees for small expenses that they don’t need to go through a procurement process for. They are unique to the individual employee, so expenses can be tracked. Procurement cards are good for small businesses because you can set spending limits and minimize the cost of employee expenses.     

Business credit cards

Business credit cards charge interest, but not if you pay the full balance off each month. They are a good choice for sole proprietors and entrepreneurs because they generally offer rewards programs that can be used for travel or meal expenses. 

Debit cards

A debit card works like a credit card but has a spending limit set by a preloaded balance. Many companies use debit cards to control spending or fund special projects. The budget for the project can be loaded as needed and the card can be “recharged” when necessary.

Ramp: an alternative to ghost cards

Ramp is a great alternative to ghost cards because the company is in control of who uses it and how the company funds are spent. Ramp’s easy-to-use dashboard can be used to set spending limits and designate user permissions for specific cards or at scale.

Unlike ghost cards, Ramp corporate cards are a safe and secure option for any size business. Spend controls are built-in and can be adjusted to fit individual situations.

Plus, our platform connects via API to popular accounting software such as QuickBooks and Xero, and we offer a wide range of perks and pricing intelligence to help you company thrive and grow while saving money.

Ready to learn more? Explore our interactive demo.

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What is a ghost purchase?

A ghost purchase is a purchase made with a ghost card. The purchase is assigned to a department, not an individual, which makes personal accountability almost impossible. 

What is the difference between a virtual and a physical ghost card?

Ghost cards are completely digital, so there is no physical version of them. A physical card would be a corporate charge card, debit card, or business credit card. 

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Issue instant cards.
Unlimited virtual and physical cards with built-in spend limits, instantly available for everyone in your team. Define spend rules and let your smart cards enforce your policies automatically. No more surprises or under-the-radar spending.
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Stop waiting on monthly statements or manual spreadsheets. Find, browse, and download real-time transactions from any employee, department, or merchant – on any device.
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Trim wasteful spend.
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