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Plastiq, PaySimply, and More: All About Bill Payment Services Ricky May 19, 2020

Plastiq, PaySimply, and More: All About Bill Payment Services

This post was first published in 2018, and I’m updating it with some more current information on Plastiq and to cover a wider range of bill payment services, such as PaySimply and GetDigs.

As you grow from a beginner in Miles & Points to a more advanced participant, one of the most important lessons you learn is that you never let minimum spending requirements hold you back from applying for a card and getting the signup bonus. 

One of the best ways to reach some of the higher signup bonuses out there that may appear intimidating at first is by using bill-paying services to pay for things that normally don’t accept credit cards, such as rent, taxes, or tuition – thus simultaneously earning you rewards points while making a dent in your spending requirement.

In This Post

How Do Bill Payment Services Work?

Whenever you purchase something with your credit card, the credit card company charges a fee to the merchant. In the retail world, merchants end up adjusting their prices to pass on the bulk of these fees to the consumer, and are therefore happy with the arrangement; after all, accepting credit cards also brings in more customers thanks to the convenience factor. 

However, bill collectors – such as the CRA, municipal governments, landlords, utility companies, and universities – tend to be unwilling to accept credit cards and deal with the associated merchant fees.

That’s because they know that you have to pay these bills anyway, so they’d much prefer to receive your money via cheaper avenues like cash or debit. These organizations would find credit card fees especially costly, since the fees are charged as a percentage of the total transaction, and things like tax payments can easily add up to significant dollar amounts.

Bill payment services exist to fill this gap. They act as an intermediary between you, the bill payer who wants to use a credit card to pay a bill, and the biller, who wants to receive their money in a frictionless manner. The bill-paying service gets hit by merchant fees when doing so, and so offsets this loss by charging you an added convenience fee that makes it worthwhile for them to provide the service.

By using a bill-paying service, you get to pay your large bills with a rewards-earning credit card, earning points on these transactions (which you might value more than the convenience fee you pay), as well as helping to meet spending requirements that’ll land you a huge signup bonus (which you’ll definitely value more than the convenience fee you pay).

For example, let’s say you’re shooting for the signup bonus on the American Express Business Gold Card, which is a hefty 40,000 Membership Rewards points, but only after you spend $5,000 in the first three months. If you pay a $5,000 tax bill via Plastiq at a 2.5% fee, that’ll cost you an incremental $125, which is a small price to pay when 40,000 MR points are on the line.

Of course, you should aim to complete as much of the minimum spending requirement through your daily organic spending as possible, but using bill-paying services to knock out the excess is always a good deal.

As an added benefit, you also get to take advantage of the interest-free grace period on your credit card (typically 21 days), giving you more streamlined access to your money compared to paying the biller immediately via bank transfer or debit. 

Let’s take a more in-depth look at some of the best bill payment services available to Canadians, starting with the biggest player in the space.

Plastiq: Intuitive Bill Payments with Visa, MasterCard, and Amex

Plastiq – available on both mobile and desktop – allows you to pay your bills using Visa, MasterCard, or American Express, charging no more than 2.85% for every transaction to a recipient in Canada.

Plastiq-Logo.jpg

Debit card transactions are subject to a lower fee of 1%, but since debit cards don’t earn rewards, it’s almost never worthwhile to use them for Plastiq.

The standard fee for using Plastiq to pay US billers is lower at 2.5%. Indeed, Canadian payments used to be charged at 2.5% as well, but were recently raised to 2.85% in May 2020. The following Canadian billers remain subject to a lower fee, including the CRA at 2.5%:

Plastiq works with most major billers across Canada to send them your bill payments via electronic bank transfer, so that your bills can be delivered seamlessly within five business days.

The process is quite simple – you log in to your account, search for the biller you’d like to pay, enter the payment details (amount, account number, memo, etc.), and then finalize the payment using your desired credit card.

What’s more, Plastiq also lets you add your own billers. For example, for rent payments, Plastiq has many property management companies in their database to whom you can pay rent; however, you’re also able to pay your own landlord by manually entering their contact details.

When you complete a payment, Plastiq will send a cheque to the custom payee’s address; in most cases, this takes about two weeks to process, so you’ll want initiate the payment well before the bill is due.

The ability to add custom billers may also be useful for business owners who need to regularly make payments to suppliers or contractors who don’t accept credit cards as payment – Plastiq will accept your credit card payment and send a cheque to the supplier on your behalf. By using Plastiq, business owners will also benefit from greater liquidity through the interest-free grace period on their credit cards compared to paying the bill via cheque or e-Transfer.

I’ve personally used Plastiq to pay plenty of bills in running the Prince of Travel website, such as photography work, video editing work, or professional fees.

Note that American Express works with Plastiq to strictly regulate the types of billers that can be paid with American Express cards; therefore, many types of billers can only be paid with Visa or MasterCard.

The full chart showing which payments can be made via which credit card networks can be found at this page on the Plastiq website. If you attempt to send a payment to a non-supported biller via American Express, it will be intercepted and reversed.

With Plastiq, you can also earn “fee-free dollars” (FFDs), which is how Plastiq rewards its users for referring their friends and family members to the service. A certain amount of FFDs allows you to pay that amount to a biller for free, without being charged the 2.5–2.85% transaction fee.

As of May 2020, the referral scheme works as follows: every time you refer a friend to Plastiq, you get 100 FFDs after they make payments totalling $500 or more. Furthermore, the person who signed up via your referral link earns 50 FFDs as well, after satisfying the same criterion.

Lastly, a significant benefit of Plastiq is that it’s one of the 40 eligible “designated suppliers” for the American Express Business Gold Card, on which you can earn points at a double rate of 2 MR points per dollar spent.

Simply select Plastiq as one of your three designated suppliers and you’ll be earning double points on all your bill payments when using the Amex Business Gold, and this makes it even sweeter of a deal to use Plastiq to meet the $5,000 spending requirement on this particular card.

PaySimply: Pay Select Bills via PayPal for a Lower 2.29% Fee

Besides Plastiq, there are a variety of smaller players in Canada providing bill-paying services, and it’s definitely a space that attracts new entrants on a regular basis.

One of the more prominent services that has popped up in recent years is known as PaySimply, which allows Canadians to pay bills to the CRA, municipalities, colleges and universities, and utility companies using their credit cards at a optimal fee of 2.29%.

The list of eligible billers is more restrictive than Plastiq’s, and there isn’t the ability to add your own custom billers just yet.

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Instead of creating an individual account and logging in, all payments are handled directly on the PaySimply website or mobile app. Simply choose your biller, enter the details of your payment, and then proceed to complete the transaction.

Direct payments with Visa, MasterCard, or Amex are subject to a 2.5% fee, but a lower fee of 2.29% can be unlocked by first linking your credit card to your PayPal account and then using Paypal to complete the transaction. However, utilities payments don’t seem to be eligible for the PayPal payment option at this time.

With a lower transaction fee, PaySimply is therefore a better choice than Plastiq if the following conditions are met:

  • Your biller is supported by PaySimply

  • You don’t have enough Plastiq FFDs to help reduce the 2.5–2.85% transaction fees

  • You’re simply looking to hit a minimum spending requirement, rather than earn as many points from your bill payment as possible; if that’s the case, then using Plastiq in conjunction with 2x points on the Business Gold Card would be optimal, even if the fee is higher

GetDigs: Pay Rent with Visa or MasterCard with a 1% Fee

GetDigs.io is a service backed by RBC that allows Canadians to make their rent payments using their credit cards. GetDigs accepts Visa or MasterCard and charges a 1% transaction fee.

(Some GetDigs users who signed up when the service first launched may have the grandfathered ability to make rent payments on their RBC-issued credit cards with a 0% transaction fee, which can prove very lucrative indeed.)

When you set up a GetDigs account, you’ll set a certain date of the month for your recurring rent payment to be charged to your credit card. Then, GetDigs will send an Interac e-Transfer to the landlord on your behalf. It’s pretty effortless on the landlord’s part, so it should be very easy to convince your landlord to accept GetDigs for rent payments.

Since GetDigs only accepts Visa or MasterCard, you’ll want to make payments with a credit card whose rewards can outweigh the 1% transaction fee. Some good choices might include the following:

While Plastiq also allows you to make residential rent payments and has the benefit of accepting American Express cards, its 2.85% transaction fee is quite high compared to GetDigs’s 1% fee. Therefore, a good strategy might be to combine GetDigs and Plastiq (or PaySimply if it makes sense), using the former for your rent payments and the latter for all your other bill payments.

Finally, while GetDigs will look to verify your lease agreement when you’re setting up the recurring payments, there’s nothing to say that you can’t arrange to rent half of your bedroom to your spouse for a nominal amount per month, is there? 😉

Paytm: Pay Bills with MasterCard and Earn Paytm Points

One final service, Paytm – available via a mobile app only – is also available to Canadians, although recent changes to their fee table have rendered it significantly less appealing than it was before.

Like Plastiq, Paytm has a large database of major billers like the CRA, municipalities, universities, and utility companies for you to choose from. You can also pay your cellphone and internet bill (although those billers typically accept credit cards anyway) as well as your brokerage account, loans, and even credit card bills (but those can only be done via bank transfer or Paytm Cash, to prevent people from taking advantage of loopholes).

The fees for using Paytm are as follows:

As you can see, American Express cards are charged a 3% fee, which makes Paytm an inferior option compared to Plastiq if you’re looking to meet the minimum spending on an Amex card.

Meanwhile, Visa and MasterCard credit cards are subject to a 2% fee, which makes Paytm a slightly better option than Plastiq or PaySimply if you’re looking to meet the minimum spends on a Visa or MasterCard.

Ultimately, it’s the American Express products that tend to have the highest minimum spending requirements, so the occasions when Paytm might be useful are few and far between – perhaps the $5,000 spending requirement on the TD Aeroplan Business Visa might be one use-case.

The other thing about Paytm is that it markets itself as more than just a bill-paying service; instead, it hopes to become your one-stop shop for all things related to your bill payments. To that end, it allows you to do things like set up recurring bill payments or earn “Paytm Points” for using the app; however, its fees have ultimately become too prohibitive to make it a meaningful player in the Canadian bill-payment service space.

Conclusion

Credit card signup bonuses are the best way to earn a large amount of points in a short period, and it’s often the case that the most attractive bonuses are tied to the highest spending requirements.

Fortunately, with the ability to pay bills with Plastiq, PaySimply, GetDigs, and Paytm, you’ll be able to knock out a good chunk of the spending while also earning points on your bill payments, and you won’t be letting these seemingly onerous thresholds hold you back from racking up the points.

Out of these services, Plastiq is definitely the leading player and gives you access to the widest range of payees. PaySimply is the closest challenger, offering a lower 2.29% fee on a more limited set of payees, while GetDigs can be a good solution for 1% rent payments using a Visa or MasterCard.

If you don’t have an account with Plastiq yet, consider signing up through our referral links if you found this article helpful. You can earn 50 FFDs with Plastiq after a cumulative $500 in bill payments by signing up via this link:

princeoftravel.com/plastiq

 

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