How Credit Card-Enabled Bill Pay Actually Works

In the first article in this series, I explained why Bill Pay by Card is becoming more common among small businesses. For many owners, the idea raises an obvious question: how does it actually work if the supplier doesn’t accept cards? 

The answer is that bill pay platforms sit in the middle of the transaction. They allow the business to pay with a credit card while ensuring the supplier receives funds in the format they normally expect – typically as a bank transfer or cheque. 

The process is simpler than many business owners assume, but there are several steps happening behind the scenes. 

Here’s how the process works, step by step: 

Step 1: Upload the Invoice 

A business enters a supplier invoice or payment request into a Bill Pay by Card platform, such as Peloton Technologies. This could be a supplier invoice, rent payment, contractor fee, tax bill, or professional services invoice. 

The invoice – or a contractual agreement – is an essential step for bill pay as the credit card regulations require that each card transaction have an audit trail to a particular supplier payment. 

Step 2: Pay with a Credit Card 

The business charges the amount to a credit card. This is where working capital flexibility and rewards come in: the business delays cash outflow and may earn early payment discounts, rewards points, cashback, or miles. 

This model is often referred to as credit card-enabled bill pay or card-based invoice payments. 

Step 3: Supplier Gets Paid 

The Bill Pay platform converts the card payment into the supplier’s preferred method: 

• EFT or ACH (Canadian / US bank transfers) 
• Wire transfers (domestic or international) 
• Cheques 

Bill Pay providers often perform any required currency conversions as well. The bonus here is that those providers who process larger volumes, such as Peloton, can typically offer lower conversation rates than standard small business banking rates, stretching the business’ dollar even further. 

From the supplier’s perspective, the payment arrives exactly like a traditional bank payment. No new accounts, no card terminals, no changes to accounting systems. 

In other words, the platform handles the complexity of converting a card payment into a traditional supplier payment, and factors in both domestic and international requirements. 

Why This Matters in Canada 

Canadian businesses still issue millions of cheques annually, and much of B2B payment activity remains manual. Not to mention, Canadian businesses are already highly comfortable using credit cards – 80% are already using credit cards for operational purposes.  

By extending that and using card-enabled bill pay: 

• Businesses can consolidate payments 
• Improve reconciliation 
• Gain control over cash flow 
• Save money on FX and international payments 
• Earn even more rewards or cash back 

For example, a Toronto-based retail chain paying multiple inventory suppliers each month can move hundreds of thousands of dollars in supplier invoices onto a card, freeing up liquidity while simplifying reconciliation across locations. 

My next article will explain why all platforms are not created equal and what small businesses should consider when choosing one. 

In the meantime, feel free to check out Bill Pay by Card with Peloton Technologies.