It is exasperatingly true that most business owners will experience at some point in their life: much of your largest recurring costs cannot be charged on a credit card. Rent to your commercial landlord, bills to contractors, utility bills, tax payments these are typically ACH-only or check-only, and so all that spending earns you zero credit card points, regardless of how well you have planned your points program.

Melio is created to address that very issue. It is a bill payment solution designed to fit U.S.-based companies allowing you to direct qualified business payments via a credit card when the vendor doesn't have a credit card system at all. You use your card to pay Melio and Melio uses the money to pay your vendor in any way they like to receive money.

New users can now also receive a welcome bonus of up to $230 simply by signing up and with a first deposit of at least $500 or more. Of that more later.

When the Fee Makes Sense and How Melio Works

The mechanics are quite simple. When you use Melio with a credit or debit card to pay, a 2.9% processing fee is charged. When you use ACH bank transfer, it is free up to five times a month using the normal plan. Your vendor is paid through whichever method is best to him or her: ACH, check, or other options.

The key consideration that must be made by the majority of business owners when determining the viability of Melio is that 2.9% fee. In the vacuum, it would be unattractive to pay 2.9 percent to make a payment. However, context makes a big difference in the calculation.

When you are trying to reach a credit card welcome offer that needs, say, $10,000 or 15,000 of spending in the first few months, and your normal business spending is not getting you there, Melio allows you to redirect rent and contractor payments, as well as supplier invoices, to that limit. That 2.9 percent fee will cost you approximately 145 on a $5,000 deposit that can so easily be recouped when the welcome bonus you are earning is in the form of points or cash back worth 500, one thousand, or more.

The mathematics is also in your favor concerning big-spend bonuses attached to cards that you already hold, such as annual free night certificates activated upon spend of 15,000, or elite status activated upon spend of 40,000. When you need to make a few thousand dollars to reach a threshold that provides real value, Melio can bridge that gap in only one payment.

A cash flow advantage is worth mentioning as well. Melio will pay your vendors now, and you will not pay your credit card issuer until the end of your statement. That can give you up to 45 days of effective payment that can literally come in handy when businesses are dealing with seasonal cash flow or when they are waiting on receivables.

The $230 Welcome Bonus

Users who are new to Melio and sign up with a qualifying link and a initial payment of at least $500 and any payment method they choose will get a deposit of $230 directly into their bank account. The process is straightforward: you make an account, provide your bank account details as a payment option, attach a bill or an invoice, and send your first payment.

That $230 deposit is equivalent to the required processing fee incurred on approximately 7,900.00 of credit card payments at the normal rate of 2.9%. When your initial transaction is a $500 rent payment or contractor invoice, you are taking a huge bonus in proportion to the amount of transaction. It is among the more welcoming introductions in business tools at the current time.

Some key terms to be familiar with: the offer is limited to new Melio users and a minimum of first payment is $500 or more and the promotion does not apply to accountants clients and businesses that are served by accounting firms within Melio platform.

Who May use Melio and What may be paid

Melio can be used by almost any business located in the U.S., and even by sole proprietors. The platform deals with a broad spectrum of acceptable business payment methods, and the potential payment types are even more diverse than what most individuals assume. Examples of common use cases are commercial rent, utilities, SaaS and software subscriptions, legal and accounting, contractor and freelancer, inventory and supplies, tax payments, franchising fees and maintenance services.

Some of these categories are not allowed personal payments are specifically excluded, and some businesses such as gambling, multi-level marketing, and the sale of regulated products such as tobacco, pharmaceuticals or weapons cannot use the platform. Neither payroll transactions nor paying independent contractors or 1099 workers are allowed, but otherwise, it is good to pay.

Visa and Mastercard business cards are accepted on the credit card side, and they are universally accepted on eligible types of payments. The use of American Express card is assisted and restricted to a few industries such as education, government, rent, utilities, professional services, construction and few more. There is no acceptance of prepaid cards or gift cards.

Price and Subscription Plans

Melio has a free plan called Melio Go that will cover an unlimited number of credit card payments at the 2.9 percent rate and five free ACH transactions per month. Paid plans (Melio Core and Melio Boost) can be added at a monthly fee, and include extra functionality, to businesses with larger ACH volume, multiple users, or more complex workflow requirements.

The free plan will suffice to most small business owners and sole proprietors who are just using the platform to meet credit card spending limits or welcome offers. No rush to upgrade, but as your operational needs increase to levels that are beyond the free tier.

One underestimated aspect: when you have more than one business, Melio allows you to operate all of them with one login. It is easy to add a new company via the account dashboard and each business entity is independent and this is also understandable as each new business can have its own welcome bonus.

What to Be Aware of

This is the true cost of doing business here, at 2.9 percent, and it must be always calculated against the value you are extracting on the other side. It is also clever to pay the fee to strike a welcome offer that is multiples of the fee. It is more difficult to justify paying the fee on routine transactions that do not yield outsized rewards value, and, in such situations, free ACH is nearly always the preferred option.

Another thing to remember is that Melio payments will be treated as the merchant type of the platform itself rather than the type of payment. It means that a rent payment made via Melio will not always lead to a rent or any other real estate bonus category on your credit card it will likely make you a general business service. Add that to your card choice when making payments.

The Bottom Line

Melio is a truly useful application to owners of the U.S.-based businesses wishing to redirect credit card expenditure to areas where they would otherwise earn no rewards. This 2.9% is actually a reality, but it is often well-earned when the bonuses, welcome bonuses, or other large spend benefits you are winning are greater than the processing expense. The entry point is even more appealing with the new user bonus of $230. Melio is a tool to be added to your arsenal in case you are developing a points strategy based on business spending.