Small-business owners are constantly making payments to vendors. Even if those bills aren’t included in credit card reward bonus categories, a flat-rate card can still earn you double rewards, which is better than not earning any rewards — and those points and miles will add up over time.
It has become common for vendors to accept credit cards as a payment method, but not all do. Others may accept cards but tack on large processing fees. In these cases, what are your options?
American Express advertises a payment solution for vendors, and some third-party companies enable you to use a credit card for online payments, even at places that don’t normally accept cards. But will these work for your small business, and if so, are they worth the effort?
Vendor Pay by Amex
American Express has partnered with Bill.com to offer a payment solution called Vendor Pay. It facilitates the accounts-payable process for businesses, allowing eligible cardholders to automate their vendor payments using their Amex card.
Bill.com pays vendors using a virtual account number, letting you earn rewards on your payments. The basic plan included with your card membership can only be used by one cardholder, but you can pay a fee for more advanced plans if needed.
When this feature was launched, it sounded like a great option, but the vendor must accept credit cards for it to work. While you can use Bill.com’s wire transfer and other payment services, your Amex will not be charged, and you will not earn rewards if a credit card isn’t an option.
Plastiq
Plastiq is a third-party company that allows individuals and small businesses to pay their bills with a credit card.
You provide Plastiq with your billing information and recipient details. Plastiq pays the vendor by check, wire transfer or Automated Clearing House transfer, and your card is charged in return. Unfortunately, Plastiq charges a 2.9% fee that would wipe out a considerable percentage — if not all — of any rewards earned by using a card.
For many cardholders, Plastiq’s service fee will outweigh the benefits of using the service. However, if you must use a credit card for cash flow reasons, it’s a viable option for vendors who do not accept cards or charge an outrageous fee for card processing.
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Related: Plastiq review: How to earn more points and pay lower fees
Venmo
Venmo began as a person-to-person payment network that allowed individuals to transfer money to friends. It has since expanded and now offers a service called Venmo for Business that allows businesses to use its platform to accept all forms of payments from various issuers.
When paying a vendor (who has a Venmo business profile) with a credit card, you are exempt from the 3% surcharge that Venmo typically charges for credit card payments.
It’s important to note that if your vendor has a personal Venmo account and you pay using a credit card, you will be charged an additional 3% on credit card payments. Your transaction could also be coded as a cashlike transaction.
Cashlike transactions are coded as cash advances, which usually have a lower limit than your total line of credit and come with their own annual percentage rate and stricter repayment terms.
Cash App
Cash App is a P2P app that’s similar to Venmo. Cash App Business accounts accept all forms of payment, including debit, credit and some prepaid cards.
If your vendor has a Cash App Business account, you also forgo paying the 3% fee on credit card transactions; otherwise, if your vendor uses a personal Cash App, it’s better to pay them from a linked checking account.
Unlike Venmo, issuers don’t code Cash App credit card transactions as cashlike transactions that would fall within the umbrella of cash advances. That said, some might restrict which credit cards you can use with Cash App.
Based on online data, Capital One credit cards don’t seem to work with Cash App as a form of payment.
What cards should you use with vendors?
Some vendors may code transactions under bonus categories that offer enhanced rewards. However, many vendor payments won’t qualify for bonus earnings. In these cases, using a flat-rate small-business credit card is your best option.
The Capital One Spark Cash Plus and the Capital One Spark Miles for Business offer 2% cash back or at least 2 miles per dollar spent on every purchase, respectively, no matter the spending category. Some TPG readers, however, have reported issues connecting Spark cards to Plastiq.
For businesses with smaller budgets, the American Express Blue Business Cash™ Card is another option. You’ll earn 2% back on up to $50,000 in purchases each calendar year, and then 1% cash back earned is automatically credited to your statement.
Bottom line
If you work with vendors who accept credit cards, the right card can help you rack up rewards. However, there isn’t a perfect alternative if you work with a vendor that either doesn’t accept cards or charges a high processing fee. Avoiding the fees associated with the vendor or a third party like Plastiq is generally advisable.
Related: Considerations for your small-business credit card strategy
