Plastiq Review: Pay Bills with Your Credit Card but Are the Fees Worth It?
Have you ever tried to pay a bill with your credit card online, only to find out that it wasn’t accepted as a form of payment? Not all companies accept credit cards for payment online.
Instead, you had to opt for a less convenient payment method, like online bill payment, or worse yet, a cheque in the mail. Not only is it inconvenient, but you also lose the opportunity of earning credit card rewards, if that’s important to you.
Thankfully, Plastiq is around to solve the problem, for a fee. In this Plastic Review, I’ll cover the basics – how it works, how much it costs, and whether the fees are worth it.
What Is Plastiq?
Plastiq is a fee-based service that lets you pay several bills online with your credit card, typically not accepted directly by the business. Examples include CRA income taxes, business suppliers, property taxes, rent, utility bills, and more.
Plastiq was founded by Eliot Buchanan, who came up with the idea after finding out that he couldn’t pay his college tuition with his credit card. He created Plastiq to solve the problem for himself and others.
How Does Plastiq Work?
The concept behind Plastiq is simple. You pay your bill (plus a small fee) through Plastiq using your preferred method: debit, Visa, Mastercard, Amex, etc. Plastiq receives the funds and then forwards them to the bill payment company using their accepted methods, i.e. cheque, wire transfer. Here’s how it works, in 3 simple steps:
- Set up a free account with Plastiq within minutes. Once your account is active, you can begin adding recipients or choose from Plastiq’s list of merchants.
- Choose how you will pay. You decide. Plastiq accepts all major credit cards, including Visa, Mastercard, and American Express.
- Plastiq sends the funds to the payee using their preferred method.
How to Get Paid Using Plastiq
Business owners can also use Plastiq to receive payment from their customers. Normally, for a company to accept credit or debit card payments, they need to set up a merchant account. The merchant services business facilitates payment, but the merchant has to pay a monthly fee for the service, not to mention a fee on every credit or debit card purchase they accept. These fees directly reduce the profit companies make on every sale.
Plastiq solves this problem by letting merchants receive credit card payments free of charge. They can do this because the fee is being charged to the customer who’s paying the bill.
Plastiq Fees
There is a fee to send money through Plastiq, and it’s significant. So you really need to make sure it’s worth the money. Here’s a list of Plastiq fees:
Payment Method Fee
Credit card (Visa, Mastercard, American Express) 2.85%
Note: Debit card / EFT / e-Transfer not permitted for Canadian users.
What Bills Can I Pay with Plastiq?
Plastiq Canada accepts payments in the following categories, although not every provider will be included:
- Utilities
- Mobile Phone
- Income Taxes
- Property Taxes
- Mortgage
- Insurance
- Tuition
Plastiq Benefits
Plastiq is not going to be helpful for everyone, especially when you factor in their fees. But they do have a few benefits.
Easy to Use
The Plastiq website is very easy to use. It only takes a few minutes to set up an account, and you can add your credit card information with ease.
Accept CRA Tax Payments
Income tax bills can run into thousands of dollars, but CRA doesn’t accept credit card payments directly. By using Plastiq, you can send a secure payment from your credit card for a slightly reduced fee of 2.5%. I assume Plastiq is offering a volume discount to CRA customers with this pricing.
Plastiq Drawbacks
There are some distinct drawbacks to using Plastiq, particularly when it comes to the fees. This is especially for Canadian users, who don’t get the same features as U.S. customers.
High Fees
Unless you’re earning a very high rate on your credit card rewards, Plastiq’s 2.85% fee is very steep for this type of transaction. In other words, there is almost always a cheaper way to pay your bills, with the only real advantage being convenience.
Limited Canadian Payees
While you can pay just about any bill through Plastiq, their list of Canadian partners is pretty short. This requires more work on your part, to make sure Plastiq has the necessary information to send the payment to the bill company.
Credit Card Payment Only
Canadian users only have the option to pay with their credit card – debit cards, e-transfers, and EFT are not available.
Visa and Amex Not Accepted for Mortgage Payments
In Canada, you can only pay your mortgage using your Mastercard – Visa and American Express are not accepted for mortgage payments.
Plastiq FAQs
The following Plastiq-related questions are frequently searched on Google. For your convenience, I’ve answered them for you right here.
How long does it take Plastiq to pay?
The time it takes the billing company to receive payment from Plastiq can vary, depending on the payment method. For example, if Plastiq has to send payment via a cheque in the mail, it could take a week or more to receive the funds. For that reason, always leave enough time for the funds to arrive before the due date.
Is Plastiq secure?
The Plastiq payments system provides the same level of security as the online banking systems used by your bank, including 256-bit encryption. CRA can trust Plastiq, so you should be able to trust it too.
Can I pay my taxes with Plastiq?
Yes! CRA is a Plastiq partner, and you can pay your income tax bill with your credit card using the Plastiq system. When you NETFILE your income tax return, CRA will give you the option to pay using Plastiq, and you’ll be able to login and immediately make your payment.
Can I Pay Myself Using Plastiq?
I’m not sure why you would want to do this, but the answer is no; you cannot transfer money to yourself using Plastiq.
Does Plastiq Have a Mobile App?
Currently, Plastiq does not have a mobile app, so you’re limited to using the desktop version of the website. Given that Plastiq is all about convenience, this feature would be a welcome addition in the future.
A Note About Using Plastiq to Earn Credit Card Rewards
A lot of people who hear about Plastiq will wonder if they can use it to rack up their credit card rewards, especially when paying for things like property or income taxes, or car insurance. The problem is that the 2.85% fee negates any credit card rewards benefit. Even the best premium credit cards only pay a 1.5% or 2% standard earn rate in Canada.
So, unless you’re getting a whopping 5% or 10% cashback on a limited-time introductory offer, there’s really no point in using Plastiq for the sole purpose of credit card rewards.
Is Plastiq Worth Using?
As you can see from this Plastiq review, convenience is Plastiq’s main selling feature. If a company doesn’t accept online payment via credit card, or you don’t yet have the funds available in your bank account to pay before the deadline, it makes sense to use Plastiq. But in most situations, the high fees mean that Plastiq may not be worth the cost.
If your goal is to maximize your credit card rewards for a big-ticket item, the only way you can really benefit is if you’re receiving a generous introductory rewards offer from your credit card company. But those are usually only offered for a limited time. My advice is to look for ways to pay your bills without incurring fees and use Plastiq as a last resort if the situation requires it.
