News Story: Paper or Plastiq?

Plastiq - Keith Thomson, CFP®, CIM®, FCSI®This year, Canadians have a new option for paying taxes: Plastic (credit card). Jamie Golombek reports in “Will that be Cash or Plastiq?

Plastiq Inc., an online payment provider headquartered in Boston, MA, announced in March that Canadians can now pay their personal income tax to the Canada Revenue Agency with any credit card. This option is not only convenient (in comparison to using a cheque) but also offers the advantage of accruing reward points while paying one’s taxes.

To pay your taxes by credit card follow these steps reported by the article:

  1. Go to www.plastiq.com.
  2. Click “Pay Taxes Now.”
  3. Fill in your name, social insurance number, and what type of tax payment you wish to make to the CRA.
  4. Enter your email address to receive a receipt.
  5. Enter your credit card information.

What makes Plastiq successful is that the company is working with businesses throughout North America to fill payment gaps. In the past, credit cards have not been largely accepted by businesses for high dollar purchases because the merchant is responsible for paying a fee that is usually calculated as a percentage of the total transaction.

In addition to the Canada Revenue Agency, Plastiq has been working with merchants in the following industries:

  • Education
  • Boating
  • Automobiles
  • Real Estate

According to Jamie Golombek, “A search of Plastiq’s website shows you can pay your child’s tuition at some of Canada’s private schools that otherwise don’t accept credit cards. The University of Alberta in Edmonton and Calgary’s Mount Royal University both accept payment via Plastiq.”1

However, the credit card companies are not giving up their fee (percentage). With Plastiq, instead of the merchant paying the fee, the purchaser is charged a 2% (per transaction) fee. That 2% is of the transaction total.

While Plastiq does bring added convenience to large purchases, it isn’t free. In addition, it (Plastiq) can make it tempting to buy things you otherwise may not be able to afford. For instance, you may choose a more expensive automobile because you do not have to pay right away.

Keep in mind that you should always use credit cards responsibly. If you make purchases you can’t afford, you’ll end up owing the credit card companies, and they (generally) charge a high percentage of interest.

For example, if you don’t have the money to pay your taxes, don’t charge them using Plastiq. The Canada Revenue Agency’s interest rate for owed balances is only 5% – which is much lower than what most credit cards charge in interest.1

1https://www.thestarphoenix.com/business/Will+that+cash+Plastiq/8204938/story.html

This material is provided for general information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities mentioned herein and is not intended for, or available to, residents of the U.S.A. or its territories or possessions. Every effort has been made to compile this material from reliable sources however, no warranty can be made as to its accuracy or completeness. Please speak with your investment professional before acting on the information contained herein. All opinions expressed and data provided herein are subject to change without notice and do not necessarily reflect the opinions of Stonegate Private Counsel, a division of CI Private Counsel or its affiliates.


Keith N. Thomson

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