For most companies, accepting payments (and even running payroll) is seen as a cost of doing business – a line item to be minimized. But what if your payment flows could actually generate revenue for your business? Enter the world of payment and payroll rebates. By leveraging certain payment programs and strategies, businesses can earn cash back on Accounts Payable (AP) spend and employee card usage, effectively offsetting the merchant service fees you pay. In this article, we’ll explore how linking your payment processing and payroll with rebate programs can turn expenses into savings. We’ll show how companies earn rebates on AP and employee spending, and give examples of how these rebates directly improve the bottom line.
Turning Payments into a Profit Center
It may sound too good to be true – getting paid to pay your bills – but many organizations are already reaping these rewards. The key is understanding that whenever a payment is made with a credit card (or similar card-based product), interchange fees are generated. Typically, the merchant receiving the payment pays those fees to the card issuer and network. However, when you are the one paying suppliers or making purchases (like via a corporate card), you become the “merchant” in that scenario, and interchange fees are levied on your payment. Many card issuers, especially for commercial card programs, offer to share a portion of that interchange back with the paying business in the form of rebates or cash back.
In simple terms: if you pay your vendors or expenses using certain credit or virtual card programs, you can earn back a percentage of those payments as a rebate. This effectively turns your AP department into a revenue generator. Likewise, if your employees use corporate cards for travel or procurement, those card programs may offer cash back rewards that go to your company.
The result is a real, measurable ROI. Instead of payments just being a cost (e.g., writing checks costs staff time, ACH fees, etc.), payments can produce income. One article notes that “buyers earn cash-back rebates on qualifying payments to suppliers made via virtual card… Many AP departments earn enough cash-back rebates to offset their overhead and deliver value to the business.”In other words, rebate programs have turned accounts payable from a cost center into a profit center in some cases.
Let’s break down two major areas where payment rebates come into play: AP spend (paying your suppliers) and employee/spending cards (company card programs).
Earning Cashback on AP Spend (Virtual Cards & AP Automation)
Traditionally, companies pay suppliers via check or ACH bank transfers. These methods typically have low fees but also no direct benefits or rewards. However, there’s a growing trend of using virtual credit cards or payment portals to pay vendors. Here’s how it works and why it’s beneficial:
- Virtual Card Payments: A virtual card is a single-use credit card number issued typically for a specific payment or supplier. Companies use an AP automation platform or bank program to pay an invoice with a virtual Visa/Mastercard instead of sending a check. The supplier processes that card like a normal credit card transaction (paying their usual merchant fee). The magic is that the card issuer then gives the buying company a rebate – often a percentage of that transaction amount. For example, a program might give 1% back on all virtual card payments made to suppliers. So paying a $10,000 invoice via virtual card yields a $100 rebate to you (the buyer). These rebates can add up significantly when applied to large AP volumes.
- Why Would Suppliers Agree? You might wonder why a vendor would accept a card (and pay, say, 2-3% fee) instead of insisting on a check. In many cases, suppliers are willing because they get paid faster and can streamline their receivables. They may also build that cost into pricing. A key here is supplier enablement – identifying which suppliers are open to card payments. Many AP automation providers will actually help you enroll suppliers into a virtual card program, touting benefits like prompt payment and simplicity. Over time, more suppliers have become receptive as virtual cards become common.
- AP Automation Platforms: Companies like WEX, Paymerang, and Medius specialize in AP payment solutions. They often pitch that virtual cards can transform AP into a profit center. For instance, Medius advertises earning “1%+ cashback in monthly rebates on AP spend with no transaction fees for vCards”. That “no transaction fees” refers to the fact that the buyer doesn’t pay to use the virtual card – the supplier does – and the buyer gets a cut of that fee as cash back. Paymerang cited that among large businesses, virtual card adoption is already 70% because of these benefits.
- Example of ROI: Imagine your company has $5 million in payables annually that could be moved to virtual card payments. If even half of those vendors agree to card payments, that’s $2.5 million in card spend. At a 1% rebate, that’s $25,000 per year back to your company. Now compare that to what you might spend on merchant fees accepting credit cards from your customers. If your merchant processing fees for sales are, say, $20,000 a year, this rebate strategy just fully offset those costs and even left a surplus. Essentially, you’ve neutralized your merchant fees by optimizing how you pay your own bills.
- Added Benefits: Beyond rebates, virtual card payments can reduce AP processing costs. No check printing/mailing, more control (single-use card numbers with set amounts reduce fraud), and better float on your cash (you effectively get an interest-free period on the credit card before you pay the card bill). These efficiency gains save money which, combined with rebates, amplify the ROI. One guide highlighted that virtual card rebates are seamless and automated, requiring no extra paperwork, which saves time and money while earning rebates.
In summary, if you’re not leveraging AP spend rebates yet, it’s worth investigating. Work with your finance team and possibly an AP automation provider to analyze your vendor list. You’ll want to find out who accepts credit card payments and what rebate terms you can secure from an issuer. Many companies run these programs through their commercial card provider or bank. The ROI can be significant – companies have literally added tens or hundreds of thousands of dollars to their income by implementing virtual card payment programs.
Leveraging Employee Card Spend (Cash-Back Corporate Cards)
Another source of rebates is on the payroll/employee side, particularly through corporate credit card programs or paycard programs:
- Corporate Credit Cards: If your employees travel for work or make purchases on behalf of the company, you likely issue corporate cards or have them use business credit cards. Many business credit card programs offer cash back or rewards. For example, a corporate card might give 1.5% cash back on all purchases, or points that equate to a similar value. Often these rewards are issued as a statement credit or year-end rebate to the company (or sometimes, to the cardholding employee depending on the program structure). By choosing a cash-back oriented corporate card and mandating its use for all possible expenses, a company can earn back a percentage of all those employee expenditures.
Hypothetical: Your team spends $200,000 per year on travel, office supplies, and other expenses on the corporate cards. At 1% cash back, that’s $2,000 returned. At 1.5%, that’s $3,000. Not massive, but it’s essentially free money for doing what you’d do anyway – and it helps offset the costs of your AP or merchant fees. Some larger companies negotiate custom rebate arrangements on corporate card spend, especially if they have millions in annual volume.
- Paycards for Payroll: Companies with many unbanked employees or those who want to modernize payroll may use “payroll cards” (prepaid cards onto which wages are loaded each pay period). These payroll cards (often Visa or MasterCard branded) can have interchange when used, similar to debit cards. In many cases, the value proposition of payroll cards is more about saving on check issuance and giving employees immediate access to funds. However, there can be indirect financial benefits for the employer too. For example, some payroll card providers offset costs by interchange generated when employees use the cards at merchants. The provider might then be able to offer the payroll program at lower or no cost to the employer. In essence, the interchange revenue subsidizes the payroll service. While this isn’t typically a direct “rebate” to the employer, it does represent a saving – your cost of running payroll is reduced because of the card program’s economics.
- Employee Expense Management Platforms: Modern expense platforms (like Ramp, Brex, Airbase) issue company cards with cash back rewards and often tout that as a selling point. For instance, a card might give 1-2% back on all spend. If you integrate such a platform, you not only get better control and tracking of employee expenses, but the cash-back rewards are a form of rebate. Some companies even designate certain spend categories to certain cards to maximize rewards (though this can get complicated). The simplest approach is a flat cash-back card on all spend.
- Incentive Programs: Beyond pure payment card rebates, there are also accounts payable incentive programs run by banks where if you route a certain volume through their payment products, they give you an annual bonus. Always evaluate these offers: sometimes a bank might say “use our integrated payables solution for ACH/checks/wires and we’ll give you X basis points back on total payments” – essentially a rebate for using their system (they monetize behind the scenes on float or cross-sell).
To illustrate the impact, consider a mid-size company with $1 million a year in various operating expenses put on a corporate card at 1% back ($10k rebate). They also shifted $500k of vendor payments to virtual card at 1.5% back ($7.5k rebate). Together that’s $17.5k in annual rebates. If their merchant processing fees for customer payments were, say, $15k a year, those rebates completely cover the fees – effectively zeroing out the net cost of payment processing for the business. This is the ROI of payment rebates in action.
How to Get Started with a Rebate Strategy
If this concept is new to your organization, here’s a quick plan to explore it:
- Analyze Spend: Work with your finance/AP team to quantify how much you spend on vendors and what payment methods you use. Also tally corporate card spend and payroll methods.
- Talk to Providers: Speak with your bank or card issuer about rebate programs. If you have a corporate card, what rewards does it offer and can they be improved for your usage? For AP, do they have a virtual card program? There are also third-party providers specializing in AP rebates – get proposals and compare.
- Supplier Outreach: Identify top suppliers that you currently pay via check/ACH. Would they take card? Sometimes you might negotiate slightly different terms (maybe you pay a few days sooner if they accept card, to incentivize them). Providers often assist with this enrollment process.
- Implement Controls: When rolling out card payments, ensure you have proper controls and reconciliation in place (so payments are applied correctly). For employee cards, set spend limits and policies so usage is optimized and doesn’t get out of hand.
- Calculate Net Gain: Weigh any additional fees versus expected rebates. For instance, some virtual card platforms charge a fee or a rev share of the rebate. Make sure the net is still positive and worthwhile. In most cases it is, but good to verify.
- Monitor and Report: Track the rebates earned monthly. Seeing that cash back number grow can motivate further participation. Celebrate internally that Finance turned a cost into a revenue stream!
Real-World Example
To cement the idea, let’s look at a hypothetical real-world style example:
Company X is a mid-sized distributor. They pay about 200 vendors regularly. Historically, 90% of payables were via ACH or check. They also have about 50 sales reps with corporate cards for travel. They decide to adopt a payments rebate strategy:
- They implement a virtual AP card program. In the first six months, they get 60 vendors (representing 40% of AP spend) to accept virtual card payments.
- Those payments total $1.2 million annually, with a 1.2% rebate = $14,400 back to Company X per year.
- Additionally, they switch their corporate card to one that offers 1.5% cash back and ensure all possible expenses go on it. Annual card spend of $300k = $4,500 back.
- Combined, Company X is now getting $18,900 per year in rebates that they never had before.
Their merchant processing fees for customer sales are around $20,000/yr. So effectively, the rebate income nearly covers it. From an accounting perspective, they might choose to net these out – viewing the rebate as an offset to fees. Or just treat it as miscellaneous income. Either way, it’s a big financial win.
One payment industry article summed it up nicely: virtual card rebates can “effectively turn payments into a source of revenue for accounts payable teams.”Not only do they save money, they can truly generate profit. And while virtual cards are a main driver for AP, don’t overlook employee card spend which can also chip in extra cash back to your firm.
Conclusion
In a world of tight margins, finding creative ways to save or earn money is crucial. Payroll and payment rebates represent a clever strategy to improve your company’s financial efficiency. By earning cashback on the money flowing out of your business, you can offset some of the fees on the money flowing in.
Think of it as two sides of the same coin: on one side, you pay merchant fees to accept customer payments; on the other side, you can receive merchant fees (as rebates) when you become the payer. Optimizing both sides leads to a net gain.
To maximize ROI:
- Use supplier payment cards or platforms that reward you for spend.
- Maximize corporate card rewards for all company expenditures.
- Ensure these programs are well-managed so they integrate smoothly with your operations.
The end result can be substantial. Some companies report six-figure rebate revenues after fully embracing AP spend programs. Even smaller businesses can see meaningful offsets – every dollar reclaimed is a dollar added to profit.
So, if you haven’t considered how payments can save (or make) you money, now is a great time to start. The landscape of B2B payments is evolving, and those who take advantage of rebates and incentives are effectively turning payment processing from a pure cost center into a balanced equation or even a new revenue lever. That’s smart business – and it’s exactly the kind of tactical move that can set you apart in a competitive market.
Remember: The goal is not just to cut costs, but to recapture value. Payments and payroll will always involve some costs, but through rebate strategies, you can make sure a portion comes back to you. In the best cases, you might fully cancel out your merchant services costs, achieving the dream scenario: having your payments essentially pay for themselves.
