Using Square to Manufacture Spend in Canada

Update: I’ve heard the AMEX IS shutting down people for cash-like transactions to meet minimum spends with Square, so I would avoid using Square illegitimately, and only related to real business expenses or sales.

I’ve received lots of reader questions and emails about the new HOT offer for the American Express Business Gold Rewards Card, which now offers 40,000 Membership Rewards points as a signup bonus.

One of the biggest questions I’ve received is meeting the minimum spend requirements, which is $5000 for the first three months of card membership. It looks like a lot, but if you split it out it’s only $1666 per month for three months. I’m hoping most of you here generate $1666 or more a month. But if you don’t, there might be a way to chop a few thousands dollars off the spend by leveraging manufactured spend. Manufacturing spend is generating charges through the card, but getting the money back through the process, resulting in free miles and free spend.

Square is a company that offers credit card processing solutions. One of it’s coolest products is a card reader dongle you can plug into your smartphone to swipe credit cards, which saves you (if you’re a business) the hassle of getting a bulky credit card processing solution.

Square Reader

Square Reader

Usually, there are fees involved in credit card processing, but Square is running a promotion offering $1000 in free processing. Furthermore, they’re also running a referral program, that allows you to get an additional $1000 in free spending for each friend that signs up for Square as a new customer. They’ll also get $1000 in free processing for signing up through the refer-a-friend link. You can get your own link after signing yourself up.

Square Referral

Square Referral

Normally, processing fees for swipe transactions are 2.75%. Even at that rate, that’s pretty reasonable even to meet the $5000 amount with no hassle. That amounts to $110 after the $1000 for free processing. If you refer even one friend, that goes down to $82.50, not to mention any regular expenses you have that can be charged to the card, unlocking a ~$600 signup bonus.

Word has circulated online that Square shuts down people for freezing and shutting down accounts for fishy activity. However, I think paying your roommate/parents/colleagues/partners for legitimate expenses such as rent or other legitimate expenses should be okay. I haven’t received the credit card reader yet, so I don’t know how sensitive they are on payments, but I will do a follow-up post when I do using the reader to charge my credit card. I will be applying for the Business Gold American Express, so I likely will be attempting use Square to meet part of my spend.

Square does verify your identity when you sign up, so you can’t make accounts for your pets and your good friends in Nigeria who are requiring your assistance in retrieving a huge fortune.

For people who do have trouble making the minimum payments, it might make sense to get Square (which is free), signup a few friends to increase the amount of free processing that you get, and then cycle payments for legitimate expenses to meet spends. By no means is this a permanent manufacture spend solution in Canada, but it’s essentially free miles for the first $1000 of spend. You can sign up for Square through my link.

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  1. You will get shutdown. Anything over $200-$500, Square will monitor very closely, and in some ways, close your account or freeze/delay your funds if they think you are doing peer to peer payments. They really are looking for legit businesses to use their services. I am over 1+ year old square user.

  2. I’m worried that the above comment is true. I signed up for square a couple of days ago to do exactly this but I have a business so wanted it for my business anyways. I was hoping that not too many people would get onto this so that Square and Amex wouldn’t shut down this loophole but since it’s on your blog now, too late. I have a blog too and didn’t post this as I was too paranoid. I know people in the States have used Amazon payments to do MS but they’re shutting down peer to peer payments as of Monday Oct 13 so there goes that loophole for Americans and Square is likely close behind for us.

    • I certainly do worry too, but it’s free so definitely worth a shot. Even if they are cracking down heavily on P2P, it’s still useful for businesses, and you’re right about that. I don’t quite think my blog is big enough to shut this “opportunity” down…

  3. I had, the above mentioned experience, with square … be very aware, in special, they will
    simply escrow your funds forever, without any reason, citing ‘fraud review’, which is bs ..
    it worked great for 2-3 months, … as soon as we had a 3rd cycle … funds held .. escrow …. annoying, and whats’ worse, it generate a bunch of cascading flags ( via e-pos ), forcing
    you to deal with the flag-card entity, then .. get back to scamSquare, .. Dont take my
    word for it, go to their site, find a telephone number, and talk to a human …..

    great blog. happy flying.

  4. You are kind to say your blog is small. I read it and love it!
    I think it’s worth a try and Serg, you said you got shut down but it was great for a few months, I only need it for a few months for the credit card MS but for my business I will need it long term so worry that it will get shut down for legit trx too.
    I got 2, one for personal and one for my biz (had to supply GST number to Square). I bought things for my business with my personal credit card and wanted to pay myself back or in essence, buy the goods from myself with the Biz Gold Amex. I don’t know how Square will treat this trx. I didn’t want to use Square for the whole 5k but considering that I have bought over 5k worth of stuff for my business with personal credit cards, I don’t see why it wouldn’t be a legit way to transfer those expenses onto a business credit card buy buying the items from myself. However, scared of Square.
    I could also pay my partner and link to his bank account.
    I think people who cash out gift cards, do too many trx, get greedy, etc. are more at risk but let’s see what happens.
    CanadianKilometers, please share your experience with us.

  5. I assume that by now you’ve read that people are having their Amex Biz cards and Square accounts frozen for using it for MS? Also, they’re under FR. I think paying yourself 5k to meet the spend is ridiculous and whoever would do that is asking for it. Anyways, thought I’d let you and your readers know that on FT, another blogger and frequent poster said he used Square for his 5k spend and has his Amex account frozen and got a call that he’s under FR.

  6. Hi,
    I was wondering if that promotion is still available? I’m planning on signing up for square and would love to take advantage for the referral promotion.

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