Plastiq Might Be Processing Visa Payments as Cash Advance

Plastiq is a payment service that allows you to pay for bills, goods, and services, including rent and mortgage, with a credit card. You simply pay Plastiq, and they will send a check to the payee on your behalf. This means you can earn credit card points on payments to parties that usually don’t accept credit cards. They are especially useful if there’s a large minimum spending requirement you need to meet in order to get a sign-up bonus.

Payments through Plastiq have always been coded as “purchases,” which mean they earn points and are not subject to fees. However, it appears that they might now be posting as a cash advance when using a Visa card for payments. I tried to set up a payment to a construction company I’ve never paid before today, and got this message:

Plastiq may be coding payments as cash advances for new payees

Plastiq may be coding payments as cash advances for new payees

In my experience, for the same payee (never paid before), this message would show up for every VISA card I attempt to use. This message does not show up, however, when I am either (1) paying someone I have paid before with a Visa, or (2) using a MasterCard or American Express card.

I would recommend not to proceed if you see this message. Payments coding as cash advances are bad, because:

  • Banks impose a fee on cash advances. For example, Chase charges 5% or $10, whichever is greater
  • They do not earn points
  • They do not count towards minimum spend requirements
  • They carry a higher interest rate than purchases

Your cash advance limit may be different than your credit line. For example, for many Chase cards the cash advance limit is 20% of your credit line. To be safe, you can call the bank to lower your cash advance limit. This way, any payments that are coded as cash advance over that will be declined. However, Chase has been known to process certain payments as a “cash advance” in the pending period, and then when it’s finalized will post as a purchase. Lowering your cash advance limit means you won’t get to make these “potential purchases.”

In the meantime, it looks like MasterCard and American Express payments are not affected. This means you can still take advantage of the reduced fee promotion.

Have you seen a similar notice from Plastiq?

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  1. There’s an easy way around it. I made a small payment to my landlord using a MasterCard, waited for it to go through, and then made a payment using my CSR for the remaining amount and the message was gone. I called Chase to verify that it was posted as a purchase rather than a cash advance and they confirmed. It might take a few days but it’s an easy fix.

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