The number of bill payment services that allow Australian businesses to earn points by paying with a credit card has steadily grown over recent years. These services allow ABN holders to make and schedule bank transfer payments using a credit card, with fees based on the service provider and card type. Payment services such as, B2Bpay, Payment Logic and Blue Chain give small businesses the opportunity to increase their credit card points-earn.
Tip: check out the best business credit cards here.
In this post:
What are the benefits?
Bill payment services are a secure online payment portal that allows businesses to pay invoices and other bills using existing credit cards as opposed to a regular bank transfer. The main benefits of using a bill payment service are as follows:
- Earn frequent flyer points or credit card points from your card issuer on all payments made using a points-earning card
- Free up cash flow by using your credit card terms to enjoy up to a 55-day interest-free period
- Earn full points on ineligible purchases including payments to the Australian Tax Office, telecommunications companies and insurance providers
- Save time by managing all your business expenses online via a single system
- Negotiate discounts for early payment with integrated systems
- Skip account keeping fees and pay per transaction
Australia’s top bill pay services
- Frequent Pay – Newest player offering the lowest fees
- Payment Logic – Australia’s leading payment platform
- B2Bpay – Offers an additional direct Qantas Business Rewards earn
- Blue Chain – Easy to use interface
- Yak Pay – Lowest fees in the Australian market
- Sniip – Available for personal use
- RewardPay – Double points when paying the ATO
- American Express Access Line – For AMEX cards
What about the fees?
The following table compares the credit card fees incurred with Australia’s most popular bill payment services (excluding GST).
| Visa | Mastercard | AMEX | |
|---|---|---|---|
| Payment Logic | 2.15% | 2.15% | 2.15% |
| B2B Pay | 1.2%-1.55% | 1.2%-1.55% | 2.20% |
| Bluechain | 1.4% + 50c | 1.4% + 50c | 1.95% |
| Yak Pay | 1% | 1% | N/A |
| Sniip | 1.5% | 1.5% | 2.2% |
| RewardPay | from 2.15% | from 2.15% | from 2.15% |
| AMEX Access Line | N/A | N/A | 2.15% |
Tax consequences of payment services
First of all, I must mention that I am not an accountant by any means. Every business is different, so it is important to seek professional advice regarding tax consequences in the following section.
Many business payment services advertise “after-tax deduction” or “after-tax rate” next to their full fees. From this, we must consider that in order to make use of these rates, the business expense must be considered deductible. This assumes that you’re prepared to pay the cost for the advantage of a bill payment service. The “after-tax rate” would be reducing your taxable profit by the cumulative amount of fees which is a cost to the business.
Summing up: my take
Bill payment services are a great addition to the SME toolbox. The platforms are relatively easy to use and can make life easier by bringing all business expenses into one single expense management system. While these services do charge fees, most of the time the benefits will outweigh the costs. The best benefit from our point of view is the ability to earn points where you would otherwise not, although some might not value points as much as we do at Flight Hacks. That said, earning frequent flyer points on business payments is another great way to get closer to that dream redemption!
