Whenever one of my friends enters the work force, my first advice is usually to apply for a credit card as soon as they can. Unless they owe me money. Then my only advice to them is to eat instant noodles for a month so that they can pay me back.
But seriously, I cannot overstate the benefits of having a credit card, especially in Singapore, where it’s not only easy and convenient to use, the cashback rebates are great, and you can use it for just about anything – except those large regular payments. Like paying your kid’s tuition fees, insurance premiums, condo maintenance fees or even rent to your landlord. Those, you pay in cash, bank transfer, or cheque.
Isn’t it funny that your biggest monthly payments, the ones that could be earning you lots of air miles or cashback rebates, are often the ones you can’t use your credit card for? Yet, it’s not surprising – most of these services that you pay for are to a single person, not a big company. They wouldn’t bother with the hassle of applying for a credit card merchant account. After all, that’s not only going to be inconvenient for them, it’s going to cost them too. But those days may soon be over.
Now there’s a way to start earning cashback rebates or air miles from your rent and school fees!
CardUp is a new service that allows you to make payments for your condo maintenance fees, rent and rental deposits, insurance premiums as well as school fees to schools such as NIE, NUSS, and other private educational institutions that currently do not accept credit cards.
The concept is so simple – instead of making payment via cash, cheque or bank transfer to your school or landlord and earn nothing, you instead pay CardUp with your credit card and earn air miles and cashback rewards. CardUp then does a bank transfer to your payee on your behalf.
And yes, it’s secure and more importantly, it’s legal.
That sounds like a pretty sweet deal – so what’s the catch?
Because it’s a legitimate service, there are three terms and conditions involved. But hopefully, you’ll agree with me that neither of these caveats are deal breakers.
Firstly, there is a fee involved, but we’ve found that the rewards earned on your card could well outweigh the fee. CardUp’s currently charging 2.6% of your transaction amount as a fee. That means you only pay $26 more for a $1,000 transaction. But what’s better is when you realise there are credit cards out there that allow you to earn up to 5% cashback for online transactions. That means your school fees could now be earning you a net cashback of up to 2.4%, or $24 for a $1,000 transaction!
What’s more, CardUp rewards regular users of their service through various discounts and waived service fees, so you might end up earning more than you initially thought.
Secondly, the type of payee that you can use CardUp for is currently limited to rents and rental deposits, tuition fees and other education costs, insurance premiums, and condo maintenance fees. However, CardUp is in the midst of looking to provide the ability to pay for a variety of fees and charges including car servicing, HDB fees, mortgages and even income tax!
Lastly, and this is a small issue compared to the first two, CardUp only allows Visa and MasterCard and currently does not accept other brands like American Express. Fortunately, as I mentioned above, there are several cards which reward you generously for online transactions, so you’re spoilt for choice.
That’s great, I’ll convince my landlord to sign up with CardUp!
The best part is, you don’t have to! Because of the way CardUp works, your payee does not need to register with their service or make any changes to the payment methods they currently accept. All you need to know is their bank account number.
This makes CardUp much more appealing compared to a payment service like PayPal, for example, which charges the payee for the service.
I’ve heard of a similar service to CardUp. What’s the difference?
iPaymy is another service that was launched earlier this year that works in a similar way. It mainly positions itself as being an end-to-end Property Management platform, which means if you aren’t a tenant, agent or a landlord, most of their services aren’t going to be relevant to you.
iPaymy’s fees were slightly higher than CardUp when they launched, but they have since reduced them to match CardUp’s 2.6%. What is really a lot more important to take note of is the difference in what the two platforms allow, and that is really the key difference.
Cardup’s service allows users to setup recurring payments, which essentially means that you just need to input the details once. You can also manage your scheduled payments via Cardup’s dashboard, which allows you to edit payment details such as the payment amount and due date, and even cancel scheduled payments. iPaymy, on the other hand, only allows one-off payments, which means that users will have to perpetually go in every month to make payments. This, as you might already be thinking, is extremely annoying especially for payment that recur on a monthly basis like rent, condo maintenance fees, insurance premiums, etc.
I’m sceptical about this type of service. I’m sure banks will soon be clamping down on them.
It’s wise to presume that banks wouldn’t appreciate their credit card rewards systems being utilised this way. After all, they’ve already limited our ability to earn rewards from EZ-Link transactions, brokerage or securities transactions, and often remind us that the definition of an “eligible charge” is ultimately left to the bank to decide.
That said, CardUp was recently selected as one of 9 startups for UOB’s FinLab accelerator programme, which implies that UOB not only does not view these service as disruptive, but wants to work with them in a complementary fashion. It’s also reassuring to know that the other local banks are also of the same mindset, with both OCBC and DBS also running their own fintech accelerator programmes this year. CardUp was also one of 20 global finalists in the Monetary Authority of Singapore’s FinTech Festival that was hosted at the end of 2016.
What do you think of a service like CardUp? We want to hear from you.