Final answer:
A corporate credit card is provided to employees to simplify purchasing and payments, allowing companies to track expenses and pay after a billing cycle, contrasting with a debit card that draws funds directly from a bank account.
Step-by-step explanation:
A corporate credit card is issued to selected employees to streamline the traditional purchase order and invoice payment processes. Unlike a debit card, which acts as an instruction to the user's bank to transfer funds directly and immediately from the account holder's bank to the seller, a corporate credit card represents a short-term loan given by the credit card company to the cardholder. When an employee makes a purchase with a corporate credit card, the credit card company pays the seller immediately. At the end of the billing cycle, the employee or the company must settle the debt with the credit card company. This system is advantageous for businesses as it allows for easier tracking of expenses, simplifies the reimbursement process, and can provide certain perks such as cash-back rewards or travel points.
In the broader context of "plastic money," which includes debit cards, credit cards, and smart money, the essential distinction is that credit cards are considered a form of borrowed funds rather than money. Smart cards, on the other hand, allow users to store a value of money on the card for making purchases, but their functionality may be limited to specific uses or locations.