Your supplier doesn’t accept credit cards — now what?

Small business owners are constantly paying suppliers. Even if those bills aren’t included in credit card bonus categories, fixed rate card can still earn you double rewards, which is better than earning no rewards at all — and those rewards points and miles will increase over time.

It’s become common for vendors to accept credit cards as a payment method, but not all do. Others may accept cards but charge a large processing fee. In these cases, what are your options?

American Express Vendor payment solutions and a number of third-party companies allow you to use credit cards to pay online, even in places that don’t normally accept cards. But will these solutions work for your small business, and if so, are they worth the effort?

Amex Payment Provider

American Express has partnered with Bill.com to provide a payment solution called Paid Supplier. It facilitates the business accounts payable process, allowing eligible cardholders to automate payments to suppliers using their Amex cards.

Bill.com pays suppliers using virtual account numbers, allowing you to earn rewards on your payment. The basic package that comes with your card membership can only be used by one cardholder, but you can pay for more advanced packages if needed.

When this feature first launched, it seemed like a great option, but the provider had to accept credit cards for it to work. While you can use Bill.com’s bank transfers and other payment services, your Amex won’t be charged and you won’t get rewards if a credit card isn’t an option.

Plastic

Plastiq is a third-party company that allows individuals and small businesses pay their bills with credit cards.

You provide Plastiq with your payment information and recipient details. Plastiq pays the supplier by check, wire transfer, or Automated Clearing House transfer, and your card is charged. Unfortunately, Plastiq charges a 2.9% fee that will wipe out a significant percentage — if not all — of any rewards earned using the card.

For many cardholders, the cost of using Plastiq will outweigh the benefits of using the service. However, if you must use a credit card for cash flow reasons, it is a viable alternative to vendors who do not accept cards or charge exorbitant processing fees.

Related: Plastiq Review: How to Earn More Points and Pay Less

Venmo

Venmo started 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 payment from a variety of issuers.

When you pay a vendor (with a Venmo business profile) with a credit card, you’ll be 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 with a credit card, you will be charged an additional 3% for credit card payments. Your transaction may also be coded as a cash-like transaction.

Tokenized cash-like transactions are cash advances, typically with limits lower than your total credit limit and come with their own terms. annual percentage rate and tighter repayment terms.

Cash App

Cash App is a P2P app similar to Venmo. Cash App business accounts accept all forms of payment, including debit cards, credit cards, and some prepaid card.

If your supplier has a Cash App Business account, you also avoid the 3% fee on credit card transactions; conversely, if your supplier uses a personal Cash App, it’s better to pay them from a linked payment account.

Unlike Venmo, issuers don’t tokenize Cash App credit card transactions as cash-like transactions that fall under the scope of a cash advance. However, some may limit the types of credit cards you can use with Cash App.

Based on online data, Capital One Credit Card Does not seem to work with Cash App as a form of payment.

Which card should you use with your provider?

Some providers may code transactions under a bonus category that offers enhanced rewards. However, many provider payments will not qualify for bonuses. In these cases, use a flat rate small business credit card is your best choice.

The Capital One Spark Cash Plus and Capital One Spark Miles for Business offers 2% cash back or at least 2 miles per dollar spent on every purchase, regardless of spending type. However, some TPG readers have reported problems connecting the Spark card to Plastiq.

For businesses with smaller budgets, American Express Blue Business Cash™ Card is another option. You’ll earn 2% cash back on purchases up to $50,000 each calendar year, and then 1% cash back is automatically credited to your statement.

The last line

If you work with vendors who accept credit cards, the right card can help you earn rewards. However, there is no perfect alternative if you work with a vendor who doesn’t accept cards or charges high processing fees. In general, avoid vendor- or third-party fees like Plastiq.

Related: Considerations for Your Small Business Credit Card Strategy