Another Hit To Manufactured Spending: Plastiq Fees Increasing To 2.85%

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The hits keep coming. There was bad news for manufactured spending a couple of days ago when GiftCardMall announced that they’d be limiting the cashback you can earn through shopping portals from $60,000 of spend per month to only $2,000.

Plastiq has done their part to make it harder to MS today by announcing that they’ll be increasing their fees from July 1, 2020.

The best way? Certainly a more expensive way from July 1.

Most payments are currently charged a fee of 2.5%, but from July 1 that’ll be increasing to 2.85%. While a 0.35% increase might not initially sound too extreme, that’s an additional $3.50 in fees for every $1,000 you spend. For those of you using Plastiq for high volume payments, those additional fees will add up quickly and will make the usefulness of their service a little harder to justify.

Plastiq had already reduced referral bonuses by 90% for both sides in May, so this is a second hit to their service in as many months. They closed a $75 million funding round only three months ago which more than doubled their funding total, so I’m curious if these changes are simply attempts to make their business profitable or if they’ve been burning through cash in the last three months and so are making these changes more out of desperation.

Either way, if you’re a Plastiq user then you’ll need to run the numbers to decide if it’s worth paying the 2.85% fee or if you have better options available to you. At the time of writing this, you still have another few days to take advantage of the lower fee, so it might be worth setting up some payments now to be processed by June 30 to lock in the 2.5% rate.

h/t Miles To Memories

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Aftrhrs

What is RVV

Bob

Sorry, my typo. I meant Reasonable Redemption Values (RRVs)

Bob

For me, it’s a rather straightforward proposition. Given my RVV for different point/miles (vice FMs – I actually average the assigned RVVs among different blogs to get mine – it’s less labor intensive than trying to build my own), the prior 2.5% plastiq rate resulted in overall positive returns on 5 cards that I hold (Chase UL, BoA Biz Adv Tvl (w/plat status), Discover IT Miles (1st year only), Citi DoubleCash, and AMEX Biz Blue Plus). The new 2.85% rate knocks the Chase UL and BoA Biz Adv Travel cards into negative returns; while keeping the other 3 cards at a still positive (but diminished) return. Plastiq still makes sense for me, but only if I reduce the cards I use with it. So Greg’s point is valid – the noose is tightening . . . Side note: I find FM’s RVVs as too conservative, undervaluing many of the points/miles programs. I understand Greg, et al’s rationale for their RVV calculations, but believe that being so conservative actually diminishes the utility of the different points/miles for those of us who are disciplined enough to use them for high value redemptions (e.g., international premium award airline seats) the majority of the time.

Rick

It’s worth noting that any existing *series* of payments set up before 7/1/20 (e.g. paying gardener on a monthly basis, etc.) will be charged at the prevailing rate in effect when the series was set up even if future payments in the series aren’t to be issued until after 7/1. Per a CSR I chatted with today, it’s my understanding that only new payments or series created after 7/1 will be assessed the new higher rate.

Bob

Great point! Now I need to setup those recurring payments as far out as I dare. Thanks for the tip!

Christian

This makes Plastiq a much more dubious proposition. I need to rethink the value I’m getting from spending on cards.

J J

I think that was always the plan. Get people hooked on to paying with credit cards and then pull the rug out.
That’s been the model for a while now whether it’s free trials, sign up bonuses, initial promos etc.

Gene

2.5% wasn’t a good deal to start with. Plus, for those who have valuable things to do with their time, MS mostly died with RedBird years ago.