Manufactured Spending opportunities in Australia

[zainman]

Hi Guys.. long time lurker but don't post a lot.. Thanks for all the great content that you guys put together!

Have been reading about this concept on FT and seems to be quite popular in USA. Was wondering if anybody has had any success doing such things here in Oz?

For anybody who is not aware, its basically generating points by using things like Amazon Payments (AFAIK this is unavailable in Australia), or gift card schemes etc.

Any tips tricks or suggestions? Something you may have thought of or tried? (if it worked or failed?)

Thanks

 

[moa999]

And due to the regular occurrence of credit card surcharges in Australia there are many less opportunities for a free lunch.

 

[Yoz]

Something you may have thought of or tried? (if it worked or failed?)

Always wondered whether it's possible to have a small business that processes payments through PayPal to generate credit card reward points.

Citibusiness Gold Credit Card
$1 Spend = 1.25 Reward Points = 1.25 Qantas Frequent Flyer Points

Cost of Example Flights
Sydney to London (Business Class) = 128,000 Pts + $378 (Taxes)
Sydney to London (Business Class) = $6792 (Paid Fare)

Value per QFF Point
= ($6792 – $378) / 128,000
= 0.050109
= 5.01 cents per point

Which results in...
128,000 Points requires $102,400 of CC Spend
$102,400 of CC Spend will incur $1536 in Transaction Fees
Add the Flight Taxes of $378
= $1914 for a Business Class Flight
= 28.1% of the $6792 RRP
​

Potential killers here are:

• Will PayPal care that you are funnelling cash through your own merchant facility?
  
  • If yes, you can always 'trade' with a friend who owns a small business
    
• Will this have any tax implications?
  
  • If yes, can you provide the 'customer' with a documented refund via Direct Deposit?

It seems workable in my mind just based on the small online retailer that I run.. As far as I can see there are no obvious safeguards to stop a friend from processing 12x $10,000 transactions per year which are refunded a week later through Direct Deposit - the final refund of which would be $1536 short for transaction fees

 

[zainman]

So basically $1536 gets us 128,000 points? Quite interesting and well done!

Have you tried this on a smaller scale first to actually see if it may work and if it PayPal has any issues with this? Personally I don't see a problem!

 

[docjames]

Search for "cat" and "taco" and you should find a useful thread.....

 

[Mal]

Have you tried this on a smaller scale first to actually see if it may work and if it PayPal has any issues with this? Personally I don't see a problem!

Paypal don't look kindly at this type of "use"...

 

[kpc]

Search for "cat" and "taco" and you should find a useful thread.....

Westfield comes to mind....

 

[dalereardon]

Have seen on FlyerTalk that some banks or credit unions let you open an account and fund it from your credit card and many of them post as a purchase rather than cash advance hence you earn lots of points.

Any Australian banks or credit unions that do this? US ones no good as need US ID etc to open the account.

Dale.

 

[Yoz]

Search for "cat" and "taco" and you should find a useful thread.....

So this person may or may not be my new hero.

Paypal don't look kindly at this type of "use"...

It's hard to say.. I thought about this as soon as I got my Citibusiness Gold because the point-earn-point-value seemed higher than the merchant fees.

As far as I can tell each part of the chain would think as follows:
PayPal: As a business will be unlikely to care due to the fact they are receiving their cut and not paying for the reward points. May potentially report you to a financial authority on suspicion of money laundering but given you are not laundering money it should be fine.
Citibank: Are paying for the reward points but again they are profiting on the whole so unlikely to raise a fuss if for isolated incidences. If it becomes widespread I would expect they really begin to care. At most from Citi I would expect they ask customer service to notify you of 'suspicious activity' in an attempt to work out what is happening.
ATO: As this inflates your sales revenue it increases your liability to pay GST/Income Tax which I would guess is offset by showing that you refunded the money via direct deposit. Would probably look stupid/suspicious but again I am not too sure what they can do about it.

Again, my main concern would be any tax implications followed by what PayPal has in their T&Cs.

Fwiw. I believe this system would get you QFF Points at 1.2c/pt give or take.

 

[Mogul]

If you get caught I hope you like bending over as basically you are obtaining a reward by deception.

 

[Beta4Me]

If you get caught I hope you like bending over as basically you are obtaining a reward by deception.

How is this so?

 

[Yoz]

If you get caught I hope you like bending over as basically you are obtaining a reward by deception.

I haven't bothered to check each stakeholder's terms and conditions but I assume it would be the first thing to do if you were going to do it.

Having said that I would be surprised if any of the stakeholders have something in their terms and conditions expressly preventing this; and therefore I doubt you would get 'bent over' if you did this.

Someone will eventually bother and we will find out =P