Update 10/28/18: Plastiq now added the option of expedited check payment with payments delivered in 2 business days. The fee is 3% instead of the standard 2.5% Plastiq fee, plus there’s a $40 FedEx Priority Overnight fee, plus a $10 handling fee (handling fee is waived for payments $3k+). Could make sense for a large payment which needs to be paid by physical check.
We added a chart at end of the post which outlines all the current payment options with their fees.
Original Post:
Plastiq is a bill payment service who offers the convenience of paying almost any bill with a credit card, even payees who typically don’t accept a card, e.g. mortgage, contractor, gardener, insurance. The payments were historically done via check, with the exception of select payees found in their system (e.g. some mortgage providers).
Now Plastiq has launched robust electronic payment options, including ACH direct deposit, domestic wire, and international wire. (Link)
I went through the motions of attempting a wire and an ACH to learn more about how it works.
- The wire option has a $30 fee for domestic and $50 fee for international (payments above $20k might have higher fees) – that fee is on top of the standard Plastiq 2.5% fee. ACH and check options have a flat 2.5% fee.
- Within the process for setting up a wire they ask for an invoice of the bill being paid. When using the ACH direct deposit option they don’t ask for an invoice during the setup process, but I think they still manually review it and ask for invoice verification in some cases.
- One key difference is that ACH recipients get an email verification first to verify the account number, while wire recipients don’t need that. If you aren’t interested in trying to explain your recipient what ‘Plastiq’ is, wire could be a better option, though it is of course more expensive. I wish they could do away with that email verification step on ACH payments.
- Domestic wires will arrive the same day, international wires will arrive the next day, and ACH transfers will take up to 4-5 business days. Plastiq does offer an expedited next-day option for an additional $15. Mailed checks take around 10 days.
- Domestic wire, ACH direct deposit, and check can be done within the Plastiq system online. For international wires, contact [email protected] to get it set up.
Plastiq for Business
Plastiq has been pushing hard for businesses to adopt them in paying vendors and providers, something becoming increasingly realistic with the added wire and ACH options, and even international wire. The unique value proposition for businesses is multiple:
- Cash-flow. One of the biggest issue most retail small businesses face is keeping steady cash flow. Credit cards can give an extra month or two of float.
- Tax write-off. When paying a business bill with Plastiq which incurs a 2.5% fee, you can write off that fee. In effect, the actual cost to your pocket may be something like 1.5%, depending on your tax rates.
- Points. Like with personal bills, you’ll get credit card point. This is the biggest motivation for most of our readers. Technically, in the case of business payments, the credit card rewards may belong to the business, though in reality it’s sort of a gray area and I doubt many people report it that way. I wrote more thoughts on this in a dedicated post.
In the end, business owners will have to do the math to see if it makes sense for them. For example, a business owner who doesn’t have a cash-flow issue won’t find it as enticing as one who does.
Remember that Plastiq currently offers fee-free payments on Mastercard payments for the first $250 of each payment. Another angle would be to use CIP which has been working to earn 3x on Plastiq for all payees.
Much appreciation if you signup for Plastiq with our referral link.
