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.
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.
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.
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.