RewardPay now lets Kiwis pay their IRD tax using American Express

Corporate travellers with a taste for the pointy end of the plane have long been drawn to American Express, with its cards often loaded with high earning rates and reward bonuses. Although the cards aren’t always accepted, there is a way around that in certain instances.

Making points easier to accrue is Australian fintech ‘RewardPay’, which allows cardholders to pay using AMEX even if the recipient doesn’t accept the card. And it recently made its New Zealand debut.

After nine years of refinement on the other side of the ditch, RewardPay’s online platform now gives Kiwi businesses the ability to make AMEX payments on IRD transactions (usually limited to bank transfer) and earn points in the process for a small, tax deductible fee.

More than simply boosting your rewards balance, it can also help free up cash flow.

Here’s what you need to know.

What is RewardPay?

Launched in 2016, RewardPay is an online payment platform allowing business-to-business users to accept and process transactions made with credit cards. In short, it allows you to use points earning credit cards on payments that’d typically be done by bank transfer.

Available only with American Express, the custom-built system enables businesses in New Zealand to make payments to the Inland Revenue Department (IRD) and ACC.

How it works

RewardPay essentially acts as a middleman between businesses and the third party they’re paying. It accepts the credit card payment for a small processing fee (to the payer, not the payee), and then pays the receiving party directly via EFT, usually in 1-2 business days.

The fee adds to the total cost of the transaction (being 1.67% for IRD payments and 1.99% for ACC payments). However, the cost of the service may be tax deductible, with IRD and ACC payments fees falling to as low as 1.2% and 1.43% respectively.

It’s important to note that RewardPay transactions only work when made with New Zealand dollars and to payees who carry on business in the geographical region of New Zealand. So, keep this in mind when making international transactions.

Setting up your RewardPay account is free and there are no ongoing costs – you’re only charged when you actually use the service. Simply visit the RewardPay website and sign up by filling in your details.

Then it’s as easy as selecting who you want to pay and popping your credit card details into RewardPay.

Benefits of using RewardPay

There are three main benefits to using RewardPay, and all of them will be music to the ears of any business owner – especially to those who are also frequent flyers.

Earn Membership Reward Points

As already mentioned, RewardPay lets you pay your business’ IRD and ACC bills with your American Express credit card, allowing you to collect reward points in the meantime.
Combined with a high-points earning card (such as the AMEX Platinum Business Card), this can add up to millions of points a year with no cap or limit to how many you can earn.

For instance, a small business paying $10,000 of GST and $20,000 of PAYE costs per month would pay a monthly fee of $501. This would earn you 405,000 American Express Membership Reward Points per year, which translates to 202,500 Qantas Frequent Flyer Points or 2,025 Air New Zealand Airpoints when applying the respective 2:1 and 200:1 conversion rate.

With Qantas, that amount of points would comfortably cover one return business class trip from Sydney to Hong Kong, and you would still have enough points left for a return economy hop from Sydney to Christchurch.

Free up working capital and cash flow

Paying the IRD or ACC with your credit card via RewardPay gives you up to 51 additional cash flow days for your business (when compared to paying by bank transfer), which can be an important benefit to small business owners who want an interest-free line of credit.

Better value for money compared to other payment options

While New Zealand’s IRD and ACC accept Visa and Mastercard payments at a 1.42% and 1.90% fee (as opposed to the higher 1.67% and 1.99% offered by RewardPay), the benefits of using AMEX cards are significant in terms of points earned – especially given New Zealand's 2022 government cap on interchange fees.

RewardPay: Who is it for?

Anyone with a New Zealand Business number (NZBN) can use RewardPay, which means any company regardless of the size and scale can earn reward points with it. However, paying the extra cost in fees may only make sense in some cases.

Whether you’re a sole trader, partnership or incorporated, RewardPay is mainly aimed at business owners who fly often and want to earn enough AMEX points from everyday business costs to cover their travel expenses.

If you are already using a Visa or Mastercard to pay your IRD and ACC bills and don’t really have a reason to earn reward points, then RewardPay will probably not appeal to you as much. However, you might still want to use it for the cash flow benefits.

While RewardPay is currently limited to IRD and ACC bill payments, we expect to see more point-earning possibilities as the service expands to other merchants and suppliers – as it does in Australia.

For more information, visit RewardPay.co.nz