Debit Card vs Charge Card: Make The Right Choice For Your Hong Kong Business

What is a charge card and how does it work? 

A charge card is often confused with a credit card but the two are not the same.

A charge card does work like a credit card as it allows you to make a purchase on credit. However, you must pay for the purchase in full by a stipulated time, which is usually by the end of the month. Some charge cards might give you the option of making payments over time, but this is not the norm and you will have to check with your card provider for this. 

In contrast, a credit card allows you to pay a minimum amount at the end of the grace period (usually 25 days) and carry the balance forward until your next credit card statement and payment due date arrive. The credit card provider charges an interest on the balance amount. Because a charge card requires payment in full at the end of the month, it does not charge interest like a credit card.

In Hong Kong, charge cards typically don't have preset spending limits. Instead, the card issuer adjusts your spending capacity monthly based on your payment history, credit profile, and business financial health. However, this doesn't mean unlimited spending power - issuers continuously monitor and adjust limits based on usage patterns and risk assessment.

Failing to pay your charge card balance in full by the due date results in substantial late payment fees and could lead to card cancellation.

What is a debit card and how does it work? 

A debit card in Hong Kong is directly linked to your bank account and allows you to spend only the funds you have available. When you open a business account with a Hong Kong bank, you'll typically receive a linked debit card that can be used for purchases and ATM withdrawals.

Debit card transactions in Hong Kong are processed through the Easy Pay System (EPS) for local transactions and international networks like Visa or Mastercard for overseas purchases. When your employees make purchases using corporate debit cards, the amount is immediately deducted from your linked business account.

Unlike charge cards, debit cards aren't credit instruments, so they don't involve interest charges. However, if you attempt to spend more than your available balance, you may incur overdraft fees, which vary by bank in Hong Kong.

How are debit cards and charge cards similar? 

Both debit cards and charge cards in Hong Kong are issued by authorised financial institutions operating under HKMA supervision, though debit cards are more widely available through local and international banks while charge cards are primarily offered by select providers like American Express. These cards can be used for business purchases through Hong Kong's extensive merchant network, including physical stores, online platforms, and international payments. 

Neither card type charges interest on purchases, though their fee structures differ. They offer similar convenience in Hong Kong's digital payment ecosystem, working with contactless payments, mobile wallets, and QR code payments through the Common QR Code Standard for Retail Payments. Physical cards of both types include standard security features like chip technology and PIN requirements, adhering to Hong Kong's payment security standards.

How are debit cards and charge cards different? 

The primary differences between these card types in Hong Kong are significant and worth understanding in detail. Debit card purchases are processed through EPS or international networks with immediate account deduction, while charge cards accumulate expenses for monthly settlement. 

Hong Kong debit cards are limited by your account balance, while charge cards typically offer flexible spending limits based on your business profile. Local banks readily issue debit cards with business accounts, while charge cards require stringent credit assessment and often have minimum business revenue requirements. Charge card activity is reported to TransUnion Hong Kong, affecting your business credit profile, while debit card usage doesn't impact credit scores. Charge cards typically offer premium benefits tailored to Hong Kong businesses, such as airport lounge access at HKIA, dining privileges at local establishments, and business travel insurance. 

The fee structures also differ considerably - Hong Kong charge cards usually carry higher annual fees but may offer more valuable rewards, while debit cards generally have lower fees but may charge for specific services like overseas withdrawals or foreign currency transactions.

What do you need to sign up for one? 

The requirements for obtaining a charge card in Hong Kong are more stringent than those for a debit card. Charge card providers typically require business registration in Hong Kong, minimum annual revenue (which varies by provider), clean credit history with TransUnion Hong Kong, at least one year of business operations, and valid Hong Kong business documentation. Debit cards are more accessible, typically requiring only a Hong Kong business account, valid business registration, and basic KYC documentation.

Which has better rewards? 

Charge cards in Hong Kong typically offer superior rewards, including access to airport lounges at HKIA and worldwide, dining privileges at premium Hong Kong restaurants, business travel insurance, corporate expense management tools, and merchant discounts with local partners. In contrast, debit cards usually offer more basic benefits such as local merchant discounts, basic purchase protection, and small cashback rewards on specific spending categories.

Security considerations 

Hong Kong's banking regulations provide different protection levels for debit and charge cards. Under HKMA guidelines, charge cards typically offer stronger fraud protection and dispute resolution processes. Debit cards, while protected by bank security measures, may leave your business account vulnerable if compromised, as funds are directly accessible.

Debit Card vs. Charge Card: Which one is right for your Hong Kong business? 

Your choice between a debit card and charge card should be based on your business needs and circumstances. A debit card might be more suitable if you're running a small business or startup, prefer direct access to your funds, want lower fees, don't require premium benefits, and want to maintain strict spending control. On the other hand, a charge card could be the better choice if you have established business operations, need flexible spending capacity, value premium benefits, want stronger purchase protection, and can manage monthly full payments.

Then, there’s the Aspire Corporate Card 

Aspire's Corporate Card offers Hong Kong businesses a modern alternative, combining the best features of both card types. As a virtual, multi-currency card, it provides a comprehensive solution without activation or transaction fees, competitive FX rates for international payments, and 1% cashback on digital spending. Users can create multiple virtual cards with customisable limits, enjoy integration with Hong Kong's digital payment infrastructure, and access real-time expense tracking and management. The card works seamlessly with Hong Kong's payment systems while offering the flexibility modern businesses need for both local and international transactions.