Business owners have a lot of expenses, and now, they may have a way to get some of their costs back by using a middleman when they pay for payroll services. The business pays the middleman via credit card, which allows the company to rack up rewards points.
Employees still get paid and the employer earns rewards that can help offset costs or turn into incentives or travel for the employees. While it may sound like a win-win, it takes strategy to make the situation work in your favour.
Payroll by Credit Card (PBCC) is the brainchild of entrepreneur John McInnes. PBCC acts as an intermediary between an employer and a payroll service. The employer uses an American Express credit card to pay PBCC the amount of payroll it plans to pay its employees. This allows the employer to collect rewards points on that credit card. Then, PBCC provides the money to a payroll company, which disperses it to the business's employees.
Jeff Young, customer relations director at PBCC, says all major Canadian payroll companies are on board. For its service, PBCC charges employers 2.75 per cent.
"Not all of that ends up with us," Young says. "A lot of that is AmEx service fees."
The company decided to go with American Express because, as Young explains, "They have actual sales reps. If anything goes wrong with the card or the transaction doesn't work out, they can deal with that immediately," Youg says. "They also give more points with the card, offer tons of flexibility and of course, there's the prestige of the card."
it may appeal to business owners
The points can be redeemed for travel or gift cards. Business owners can keep the points for themselves, of course, but they can also use the points to reward employees. For instance, Young knows of one company that uses the points for emergency flights (e.g., if an employee has a death in the family) for its employees.
"There's not great value with gift cards, but American Express has partnered with Aeroplan and cardholders can transfer their points there," Young says.
"There are so many great uses for them," says PBCC client Christine Buhr, owner of Shakers Fun Centre in Calgary, Alberta. "It's not just the travel. American Express has a great rewards site and we can use stuff for staff incentives, as well as booking cars and hotels. Payroll is a fact of life, but this feels like a bonus for me as a business owner. It's a cool little perk."
rewards this way takes skill and patience
Stephen Weyman, a personal finance blogger at HowToSaveMoney.ca says PBCC is aimed at a certain clientele.
"2.75 per cent is going to reduce your potential gains for most credit cards," Weyman says. But, he continues, if you run a business and travel a lot (and like to fly first- or business-class), and you're willing to play the airline miles game, you can reap up to 10 per cent back in travel rewards -- maybe more, in some cases.
"It's not without effort, and it will only cater to a specific type of person who wants to take advantage of those high value rewards," Weyman says.
Young says the number of companies signed on in Canada tends to fluctuate.
"Some companies just join for a short period and then stop," Young says. "I think some people have dropped off with us because they feel they're not getting through the points as quickly as they want to."
And while Buhr is all for PBCC, she does warn that you have play the "game," as Weyman calls it, just right.
Buhr says that it's a bonus no matter what, but if you search out the deals, it's noticeably more beneficial.
"If you're really smart and watch the deals, you can increase that value so you're definitely getting more value than the little percentage you're paying for the service."See related: Payroll on plastic: Should you use a payroll card?, 4 things you should never put on a business credit card