Payroll By Credit Card | Is It Worth It?

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September 5, 2022
payroll by credit card

Using your credit card to run payroll sounds like a great idea - but is it possible, and what are the perks and downfalls of using this type of solution to pay your staff?

This article will explore running paying payroll with credit card, the perks, the downfalls, and what companies will and won't let you do it. 

Can you run payroll by credit card?

You can; payroll by credit card has emerged as a smart way to earn points while paying for your employees. It's simple - employees get paid while the employers rack up reward points while incurring a fee on each transaction (2% to 2.75%).

However it should be noted - that you can only run payroll by credit card if you are located in Canada.

Is it worth it to run payroll by credit card?

It depends; payroll by credit card, specifically American Express, might be a clever way to earn points while paying for your employee, but the question is: are the fees worth the points? Do the benefits outweigh the costs? Let's explore different providers' offerings to learn more.

doing payroll calulations

Benefits from using a credit card to run payroll: 

Consider the return on points.

The most important factor to consider when deciding if it is worth it to run payroll by credit card is to establish if there is a return on paying the transaction fee. 

A fee of 2.75% on charges will reduce the potential gains on most credit card reward points.
Luckily, transaction fees depend on transaction size and can be reduced to 2% for transactions over $100,000. 

This will instantly reduce the transaction fee by $750 or 27%. Essentially, on a $100,000 transaction, the transaction fee is $2,000 and the Aeroplan points accumulated amount to 125,000 or 1.6 cents per Aeroplan ($2,000 / 125,000 aeroplan).

Now, what can 125,000 points get you?

The answer: 5 long haul flights in Canada and Continental USA! Depending on where you fly, the return varies.

For example, the average price of round trips between Vancouver to Toronto is about $550. Multiply that by five, which will cost $2,750, or a 37.5% return on the transaction fee ($750 / $2,000 transaction fee).

You can travel first or business class.

A massive benefit to acquiring travel points is the ability to travel first class or business class at the price of economy. If you like to travel in style, this is an affordable method.

What can 125,000 points get you in terms of first or business class? 

The answer:
 2 long haul business class flights and 1 long haul economy class flight in Canada and Continental USA. With the average business class flight costing $3,000, the total cost for the three tickets would be $6,500 or 325% return on the initial $2,000 transaction fee.

You could earn employee rewards.

Businesses that collect points can provide employees incentives such as flights on vacation as a bonus. 

Rewarding your top employee with a pair of tickets to Las Vegas will add a certain flair to your office culture while costing you less than actually paying for them out of pocket.

It could provide extra cash-flow.

Payroll is a significant expense, and there are times when a 45-day float can help with operations. In cases like this, running payroll by credit card could act as short-term financing for your payroll.

Should you run payroll by credit card?

The answer to this question depends on two main factors: the size of your payroll run and the amount you travel. Larger pay runs typically will have lower fees. You might also consider if you need short-term funding to stay afloat or manage cash flow.

In the end if you travel at least once a year and would incur travel-related costs already. Paying for your Aeroplan points (1.6 cents) then converting these points to flights may be less expensive than buying your tickets with cash for your business!

What software company helps me run payroll with a credit card?

With Push Operations payroll, you can easily run payroll by credit card using your Amex.  Although you will have to pay your merchant fees, Push rates on the market (depending on transaction size.) Using this method, you can rack up points and improve cash flow.

Can I use Amex for my payroll?

You sure can; Amex offers payroll rewards as part of the American Express program - that means that if you are a member, you are eligible to earn rewards when you submit your payroll. Try using payroll software to streamline the process.

I want to run payroll by credit card!

Great! To learn more about using Push for your payroll, and whether you will benefit from using your AMEX, just book a demo with us, and we will tell you all about it!

Want to learn more about how to set up, manage and run payroll? Check out our free guide!
payroll by credit card

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December 2020


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