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Payments company Plastiq, which allows you to use credit cards to pay bills that don't normally accept cards, is raising its processing fee for most payments by about 14%.
In an announcement sent to customers, Plastiq cited increases in credit card interchange fees as a reason. Interchange fees, which are paid by merchants that accept credit cards, are one of the ways card issuers make money.
"Recently, several major credit card companies announced an upcoming interchange price increase (the cost of processing a credit card), which directly impacts our costs at Plastiq," the company said in the email. "This third-party increase requires our fees to move to 2.85%, effective July 1, 2020, for most transactions."
Plastiq works by charging your card in the amount of the bill (plus the processing fee), and then paying the bill recipient on your behalf, via either electronic payment or paper check in your name. The receiving party does not need a Plastiq account to accept payments.
Plastiq also lets you use debit cards to pay bills. The processing fee for those payments remains unchanged at 1%.
Many credit cards earn rewards that can at least partially offset Plastiq's processing fee. But the increase makes the fee harder to make up completely unless your spending helps you earn a credit card sign-up bonus.