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.
At first, the higher spending requirements out there, such as the $5,000 in three months on the American Express Business Gold Card, can seem daunting to beginners. However, as you become more comfortable playing this game, the spending requirement becomes something inconsequential because you always have a plan in place to make light work of that $5,000 threshold. These methods typically fall outside of your “organic” spending, which include food & drink, entertainment, daily essentials, etc. – stuff that you would normally buy anyway.
I’ve written a post about some of these methods in the past, and today we’ll take an in-depth look at using bill-paying services to meet this particular set of needs. Two companies dominate this space in Canada: Plastiq and Paytm. These services allow you to use your credit card to pay for things that normally don’t accept credit cards – such as rent, mortgage, taxes, or tuition – thus simultaneously earning you rewards points while making a dent in your spending requirement.
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.
Services like Plastiq and Paytm 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. They also use promotions and referral bonuses to get more people to use their service more often, netting a small profit on most transactions.
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, say you’re shooting for the signup bonus on the American Express Platinum Card, which is a hefty 60,000 Membership Rewards points. If you pay a $3,000 tax bill via Plastiq at a 2.5% fee, that’ll cost you an incremental $75, which is a small price to pay when 60,000 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 (and also gets you your points sooner!)
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.
There are a few important differences between Plastiq, the veteran service that’s been around in Canada since 2013, and Paytm (pronounced “Pay-T-M”), the young pretender to the bill-paying throne. Each has its advantages depending on the biller, the card you’re using, and the amount, so it’s worth setting up an account with both services so that you’re ready to go when it’s time to pay your bills.
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 2.5% for every transaction. It 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, while they have many property management companies in their database to whom you can pay rent, 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.
You can also earn “fee-free dollars” (FFDs), which is how Plastiq rewards its users for referring other users to the service. A certain amount of FFDs allows you to pay that amount to a biller for free, without being charged a convenience fee. Here’s how the referral scheme works: every time you refer a friend to Plastiq, you get 1,000 FFDs after they make payments totalling $500 or more.
Furthermore, the person who signed up via your referral link earns 500 FFDs as well, after satisfying the same criterion. Therefore, if you refer a handful of friends to Plastiq, you may end up not having to pay any fees at all when meeting your spending thresholds through Plastiq!
Lastly, a significant benefit of Plastiq is that it’s one of the 40 eligible “suppliers” for the American Express Business Gold Card, on which you can earn 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. This makes it even sweeter of a deal to use Plastiq to meet the $5,000 spending requirement on the Amex Business Gold!
Paytm: Pay Bills with MasterCard and Earn Paytm Points
Meanwhile, Paytm – available via a mobile app only – does things a little differently, partly by design and partly because they were dealt a blow last year when Visa credit cards, for reasons unclear, started treating Paytm bill payments as cash advances rather than purchases. This meant that any bill payment done through Paytm on a Visa card will begin incurring interest immediately and will be subject to cash advance fees, defeating the entire purpose of using the service to earn rewards.
Soon after that, Paytm suspended Visa payments on their platform, meaning that now you can only use Paytm with American Express or MasterCard, in addition to bank transfer, debit cards, and “Paytm Cash” (which is just an outstanding cash balance on your account).
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. On the other hand, MasterCards can be used to pay bills for no fees at all, which makes paying bills with Paytm by far the best way to meet the spending requirements on MasterCards.
The caveat is that there aren’t that many Canadian MasterCards that have good signup bonuses – off the top of my head I can think of the MBNA Alaska, which requires $1,000 in spending to obtain 30,000 Alaska points, and perhaps the MBNA Best Western which sometimes offers 60,000 Best Western Rewards points upon spending $2,000 in the first three months (though not at the moment).
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 – more on that later).
With Paytm, you're limited to $1,500 in bill payments to a single biller per day, so larger bills will have to be paid separately over the course of multiple days.
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 lets you set up all your recurring bills and sends you payment reminders, allows you to pay bills straight from your bank account (even though you could easily do so via online banking), and incentivizes you to use the app with Paytm Points, an in-house points system that rewards you for your bill-paying behaviour. For example, you get 1 Paytm Point for every dollar in bills you pay, 1,000 Paytm Points for setting up your profile, a further 1,000 Paytm Points for referring friends to Paytm, etc.
The Paytm Points program isn’t very transparent, since there aren’t any hard and fast rules as to what the points are worth, but rather you can redeem points for various gift cards and merchandise at preset rates.
However, the intention is clearly to “gamify” users’ behaviour when it comes to paying their bills, and if you do intend to use the Paytm app to keep track of all your outstanding bills, you might as well earn some Paytm Points while you’re at it.
Plastiq vs. Paytm
Overall, Plastiq is definitely the better bet for those of you looking to use bill-paying services to meet challenging spending requirements. It has a lower convenience fee when it comes to American Express cards – 2.5% vs. Paytm’s 3%.
Moreover, the ability to refer your friends and earn FFDs, thus saving yourself the convenience fees when using Plastiq, is a lot more useful than the Paytm Points you’d earn for referring people to Paytm. Throw in the double points on the Amex Business Gold and the desktop functionality, and Plastiq becomes a welcome bonus chaser’s best friend.
That’s not to say you shouldn’t use Paytm at all – it remains extremely useful for hitting the minimum spend on a MasterCard, since it charges $0 in fees compared to Plastiq’s 2.5%. If you’re so inclined, you can also move all your bill-paying needs under one roof using Paytm and take advantage of the app’s additional features, like payment deadline reminders and the Paytm Points rewards scheme.
Getting Any Funny Ideas?
Bill-paying services like Plastiq and Paytm are easy targets for people looking to engage in manufactured spending (MS) – hell, I even talked about them in my previous articles on the subject. With Plastiq and Paytm, though, you may have a hard time pulling this off, because the companies are very alert to this kind of behaviour.
Paytm in particular had something of a baptism of fire when it first launched in 2017. Many people tried to overpay various bills, from utility companies to universities, and then ask the billers for refunds by cheque. This way, they’d net the credit card points on their “spending” via Paytm, before paying off their credit card bill using the refund money – a classic MS method.
Some billers were happy to cooperate and initiate the refund, while other billers told the MS practitioners to get lost and take it up with Paytm instead. All parties involved were understandably quite annoyed about this, resulting in, to name a few things, several universities mass-emailing their students saying that Paytm payments would no longer be accepted as a payment method, and Paytm themselves sending out an email to their users with the following excerpt…
Meanwhile, Plastiq’s been around the block a few times, and their people have a keen eye for suspicious activity. You can’t just add your spouse as a custom biller and call it “rent”, since Plastiq will demand to see a lease or a rental agreement. Likewise, sending money to yourself is a surefire way to get banned by Plastiq for good.
These companies provide a much-needed service for those of us who value our rewards points, and while you may get a few extra points here and there by venturing into MS territory, I’m not sure if it’s worth jeopardizing the ability to pay large bills with your credit cards going forward.
You can earn 500 FFDs with Plastiq after a cumulative $500 in bill payments by signing up via this link:
You can also earn 1,000 Paytm Points after paying a bill of $50 or more by signing up via this link and using the referral code PTM4422623:
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 and Paytm at your fingertips, 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.