What do you do if you are doing business with a supplier who doesn’t accept credit cards as payment (but you want to use a credit card)?
This is a significant inconvenience that many business owners face.
But there is a workaround. It adds a little margin to the overall cost, but you can earn points and take advantage of your credit card’s payment terms.
Find a better credit card for your business. Turn your expenses into points and enjoy travel perks.
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Key takeaways
- Third-party payment platforms allow businesses to pay suppliers using credit cards, even if the supplier does not accept them.
- It typically costs around 1-3% of the payment amount, although this varies based on the platform, the amount paid, and the card used.
- Businesses might be able to double-dip, i.e. earn rewards points on their credit card and the payment platform.
Using a third-party payment platform to pay suppliers with a credit card
You can use a third-party payment platform to pay a supplier with a credit card, even if they do not accept credit cards.
These platforms are intermediaries between your credit card and the supplier's bank account. You can link your credit card to the payment platform, set up the supplier's bank details and the transaction, and then use the platform to pay your suppliers.
But there are drawbacks to consider. It costs more, and payments take longer when using a payment platform.
Of course, the main drawback is the service fee. These vary, so it's essential to compare the costs and features of each one before choosing one to use. The fee is tax-deductible, though.
Bills third-party payment platforms can be used for
- Tax payments to the ATO, including paying BAS.
- Paying rent to landlords for an office, display room, etc.
- Overseas suppliers, even if they invoice in a foreign currency.
- Freelancers and contractors you have a direct relationship with.
How to set up a third-party payment platform
Setting up a third-party payment platform is typically very simple and fast.
- Sign up for an account. This typically involves providing some personal and business information. You may need to provide documents so they can establish your identity and check the standing of your business.
- Add your card. Most platforms support American Express, Diners, Mastercard, and Visa credit cards. Fees may vary, with Amex and Diners often costing more.
- Set up your supplier. Typically this involves adding the supplier's basic details, such as their name, address, contact details, company number, etc.
- Set up a payment. You may need to provide a copy of the invoice. Depending on the platform, it may be possible to schedule the payment or make it recur.
- Send payment. Funds will be drawn from your elected card and sent to your supplier's bank account.
Payment platform options
These are two of the best-known payment platforms for business-to-business payments.
- B2Bpay. In addition to points earned with your credit card, earn Qantas Frequent Flyer points on payments made to and received from suppliers. Integrates with Xero, MYOB, and QuickBooks. Fund payments with American Express, Diners, Mastercard, and Visa.
- RewardPay. Pay creditors via EFT or BPAY using an American Express card, even if the supplier doesn't accept it. Diners, Mastercard, and Visa credit cards are not accepted.
- American Express AccessLine. Send payments to suppliers in Australia and overseas, even if they don't accept Amex.
Pros and cons
Pros
- Use your credit card even if they aren't accepted.
- Earn reward points. Some platforms reward users with additional points for choosing their service. This is on top of what the credit card earns.
- Improve cash flow. Make use of the interest-free days available on most credit cards.
- Reduce travel costs. Use the points earned to pay for business and leisure travel.
Cons
- It takes time to process payments. If you have a bill due today or tomorrow, you probably won't have time to get set up without your payment being late.
- There's a processing fee. This changes depending on the platform, the amount paid, and the card used to fund the transaction.
FAQs
Are payments considered a cash advance on my credit card?
No, payments made through a third-party payment platform such as B2Bpay and RewardPay are not considered cash advances. This means they can earn rewards points on your credit card.
Can a third-party payment platform be used for bulk payments?
Yes, most third-party payment platforms can make bulk payments to suppliers. This typically involves uploading a CSV file containing the payment information for multiple suppliers.
What does it cost to use a third-party payment platform to pay a supplier?
The cost to use a third-party payment platform to pay a supplier varies depending on the platform, the card used to fund the transaction, and the amount being transferred. Typically, fees for using a third-party payment platform are around 1-3% of the payment amount.
How long does it take a third-party payment platform to process a payment?
This varies, but it may take 1-2 business days for funds to appear in the recipient's account.
Why do suppliers not accept credit card payments?
If a supplier does not accept credit cards, it's typically because they do not want to absorb the processing fee since that would impact their profit margin.
