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Hi all,
First post here, and looks like this would be an appropriate spot. If not, I apologize.
Starting a new business and I have a very good opportunity to run a lot of money through my card for expenses (margins happen to be low, but the gross is very very high), and figured I'd look into this to accumulate miles and build status. Not to mention, giving us an extra month to pay bills when customers and orders drag behind. I can't get into risky territory, but if there's a way to do this, it would help my travel hobby tremendously.
The problem is, unlike many businesses that make company purchases on various cards with no fee (i.e. buying new computers for an office), these payments have to go to China, and the only way to use a card is through a small handful of industry-accepted payment sites. Think akin to Paypal, but focused on large commercial purchases.
The problem is, these payment sites charge 3%+ to run a card, while ACH funding is fee free or damn close. With the going rate of miles & points being in the vicinity of $0.01-0.02 (at best), I'd be eating tens of thousands annually by using my card.
I've spent 2 months trying to come up with an idea, and so far only have the following:
1. I have a friend who works at Amex, and might be able to have them approach the vendor(s) directly to work out an agreement, likely which will sign away my ability to ever do a chargeback. I would be very lucky to get a break even rate this way, and that's if the vendor sees this benefitting their business. Unfortunately, they are stuck in their ways and prefer ACH or one of said payment sites.
2. Use a card that gives points back on travel bookings (i.e. 35% on Amex Platinum) to squeeze some more value out of points. I can't see this giving me more than $.027/2.7% value per point though, if my math is correct. More likely just 1.35% excluding unusually good flight deals booked on MR points.
Curious if anyone here has any additional tips or ideas. I can't possibly be the only business that is looking at floating some $500k+ and prefers using a card. But with that 3% fee, that's a mind boggling $15k thrown away
What 3% fee are you talking about when you're purchasing with a credit card?
Why would you ever think of doing a chargeback to a supplier in a business to business transaction?
It's common in my industry (logistics). Just an old world business where nobody wants to pay the fees. Sort of like how Paypal charges you depending on your settings.
It happens sadly. We haven't, but we've had customers do it for tens of thousands, and it's brutal. It's more about the risk on the bank apparently.
Yes, banks charge fees to accept cards, and OP has several factors that increase those fees. Rewards cards, business cards, and international transactions all have upcharges on the transaction fee. All depending on the processor of course.
Negotiating fee free credit card transactions is unlikely, because you are essentially negotiating a 3% discount on goods. Why would your vendor do that? Presumably you have already shopped for price, now you are trying to get more out of them.
Getting rewards back on that volume would be nice, but unlikely.
Yes, banks charge fees to accept cards, and OP has several factors that increase those fees. Rewards cards, business cards, and international transactions all have upcharges on the transaction fee. All depending on the processor of course.
Negotiating fee free credit card transactions is unlikely, because you are essentially negotiating a 3% discount on goods. Why would your vendor do that? Presumably you have already shopped for price, now you are trying to get more out of them.
Getting rewards back on that volume would be nice, but unlikely.
Yea it's definitely going to take a bit of work, if it's going to work at all. But, I am open to a discount if I can get close to break even.
A friend did get Square to lower their fees quite substantially though. Not sure if they're using investor money to capture more market share or what, but I believe he got them down to 1.5% or something unusually low.
My Amex friend has mentioned they have pushed lower rates to small businesses to help gain acceptance and shake the image of them being too expensive.
Yea it's definitely going to take a bit of work, if it's going to work at all. But, I am open to a discount if I can get close to break even.
A friend did get Square to lower their fees quite substantially though. Not sure if they're using investor money to capture more market share or what, but I believe he got them down to 1.5% or something unusually low.
My Amex friend has mentioned they have pushed lower rates to small businesses to help gain acceptance and shake the image of them being too expensive.
Yes, and in the past I have been able to negotiate interchange fees. Sometimes as being part of an industry trade group that was able to negoatiate bulk fees for members, other times by transferring my business from one bank to another.
The tricky part is you are trying to do something completely different. You want to try and see if your vendor can negotiate lower fees with the clearinghouse, and then pass the savings to you specifically. Maybe your vendor can negotiate lower fees, but they may not be willing to pass them along, they may prefer to lower wholesale costs instead. Or just take the savings and book to profit.
It is also possible that the logistics clearinghouse that you have to use simply doesn't want to negotiate fees with anybody.
It isn't a bad idea on your part, but you seem to be looking for a loophole that the entire world would like to exploit, and the banking industry does not want to open up. Good luck, but I suspect you are going to do what everybody else does, and pay via ACH and use your business card for incidental purchases.
Yes, and in the past I have been able to negotiate interchange fees. Sometimes as being part of an industry trade group that was able to negoatiate bulk fees for members, other times by transferring my business from one bank to another.
The tricky part is you are trying to do something completely different. You want to try and see if your vendor can negotiate lower fees with the clearinghouse, and then pass the savings to you specifically. Maybe your vendor can negotiate lower fees, but they may not be willing to pass them along, they may prefer to lower wholesale costs instead. Or just take the savings and book to profit.
It is also possible that the logistics clearinghouse that you have to use simply doesn't want to negotiate fees with anybody.
It isn't a bad idea on your part, but you seem to be looking for a loophole that the entire world would like to exploit, and the banking industry does not want to open up. Good luck, but I suspect you are going to do what everybody else does, and pay via ACH and use your business card for incidental purchases.
As a new business, not sure how much luck he'd have negotiating without a proven track record.
Yes, and in the past I have been able to negotiate interchange fees. Sometimes as being part of an industry trade group that was able to negoatiate bulk fees for members, other times by transferring my business from one bank to another.
The tricky part is you are trying to do something completely different. You want to try and see if your vendor can negotiate lower fees with the clearinghouse, and then pass the savings to you specifically. Maybe your vendor can negotiate lower fees, but they may not be willing to pass them along, they may prefer to lower wholesale costs instead. Or just take the savings and book to profit.
It is also possible that the logistics clearinghouse that you have to use simply doesn't want to negotiate fees with anybody.
It isn't a bad idea on your part, but you seem to be looking for a loophole that the entire world would like to exploit, and the banking industry does not want to open up. Good luck, but I suspect you are going to do what everybody else does, and pay via ACH and use your business card for incidental purchases.
Thanks - I suspect I'll be paying by ACH too short of a miracle.
I didn't think of negotiating the price of the shipment down...end of the day this vendor doesn't process the payment in house, it's done by a separate entity.
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