Are third party payment services worthwhile for business expenses?

Credit Cards & Credit Card Programs
1

I’m looking for some help from those experienced in rewards programs.

So I’ve just been approved for a Qantas Premier Platinum card and signed up for the FF program and also the Business Rewards program, as I have a a small business.

This card is for personal use and I intend to pay as much as possible with the card to earn points. My question is, is it worth using a 3rd party such as pay.com.au to pay my personal rent, insurances etc as well?

They charge 1% on each payment. I’d be paying around an additional $50000/ year this way.

I plan to get another rewards card for my business that can earn Qantas points and earn on ATO payments. I can also pay my business rent and wages (around $220000/year) via pay.com.au. at the 1%.rate.

The points on the personal Qantas card are earned at 1 point per $ upto $10000 per billing period, then 0.5 points/$ after that.

I’m looking at the NAB Qantas Business Signature Card for my business. They say 1 point/$1.50 up to $50000/billing period.

The only thing I intend using the points for is flights.

So for around a combined $3500/year in fees I will earn roughly 300000 points.

The average child has better maths skills than I do so please correct me where I’m wrong.

Is this, if I’ve calculated correctly, a worthwhile endeavour? I don’t know how to value a Qantas point?

I’ll be receiving a total of 320000 bonus points to get me started.

2

Hi Scott and welcome,

Unfortunately, we cannot provide financial advice here on this website.

However, in general, if you have business expenses, it becomes very easy to generate points by channeling your expenses via point earning avenues (direct credit card earn or via third party payment services).

I have heard of many payment services that charges around the 1.5-2% mark depending on what card you can pay with. So if you are getting 1% charge, that sounds like a great deal.

As with all business expenses, you can tax deduct third party payment fees. That will being your nett cost down even further (probably 30% or so).

Hope that helps with you making the decision on whether it is worth while.

3

Thanks for the response. I appreciate not being able to get financial advice here. I was probably more interested in opinions from those who may have considered doing the same and whether they had done so or not. Especially opinions in regards to the 3rd party payment services.

I also don’t have a great idea of how to work out the value of the Qantas points? I do know that redeeming them for business class flights is probably the best use of them and that using their partner airlines could be even better value?

4

If you think a flight is worth $1000 (you are willing to pay) and the Qantas points required to redeem the seat is 50,000 Qantas points:

If we ignore taxes and point earned from if you paid cash for the flight,

Cents per point (CPP) = 1000 x 100 [to convert to cents] and divide 50,000 points
= 2 cents per point.

If you value Qantas points at 1-1.5 cpp, this redemption is worthwhile.

If you paid 1 cpp for your Qantas points via payment services or paying credit card surcharge, you want to be redeeming at a cpp greater than 1, for you to be ahead (worth paying for the 1 cpp to acquire points).

Hope that helps.

5

Sorry but that’s just confused me.

Wouldn’t you value the points at $1/point as that’s how they are typically earned. I don’t understand why you value them at 1c/point?

6

Paying 1% surcharge means paying $1 fee for every $100 but you will earn 100 points on a 1 point per dollar card.

So you paid $1 extra to earn 100 points. 1 dollar has 100 cents so you paid 100 cents : 100 points. Which means 1 cent per point (1cpp).

7

OK, thank you for explaining that. I did say in my original post that the average child has better maths skills than I do!

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