Paying your UPS and FedEx invoices isn’t always as easy as it should be. There's various payment methods to choose from, each with different rules that you're forced to follow.
It's important to understand which payment method is the best for your business. Because if you're not using an optimized payment method, you could be missing out on cost savings opportunities.
With UPS and FedEx, not all payment methods are created equal.
We'll dive into the details below, but first, let's go over the various forms of payment offered by both carriers.
UPS defines its payment methods as:
- Electronic Funds Transfer (Debit EFT): You can arrange to have payment electronically requested and automatically debited from your bank account. This payment method can be used in conjunction with any billing and payment schedule.
- Electronic Funds Transfer (Credit EFT): You can arrange to have payment electronically requested and automatically withdrawn from your bank account. This payment method can be used in conjunction with any billing and payment schedule.
- Check: You can send checks through the postal service with the UPS-provided remittance statement. This payment method can be used in conjunction with any billing and payment schedule.
FedEx defines its payment methods as:
- Electronic Bank Transfer (EFT): You can have payment transferred from your banking institution to a FedEx bank account.
- Direct Debit: You can have payment automatically withdrawn from your bank account by providing FedEx authorization to pull payment via Direct Debit.
- Check: You can send your check through the mail with the FedEx provided payment summary.
UPS and FedEx also claim to accept credit card payments. FedEx’s website states “all major credit cards accepted” while UPS lists American Express®, Discover® Card, MasterCard® and VISA®. Additionally, the UPS website states that credit card payment can only be used for shipping costs, not to pay for duties and taxes.
Here’s where it can get a little tricky for UPS/FedEx customers with large shipping volumes: Over a certain spend threshold, credit card payment requires corporate approval, and UPS/FedEx commonly push back on this request. For other shippers, they simply won’t allow credit card payment at all.
Why? UPS and FedEx cite the additional merchant fees for processing payment as the reason why credit cards aren't accepted. They do, however, offer a common alternative - you pay for the merchant fees by way of them adjusting (increasing) your discounts.
It’s pretty ironic that after decades of rolling out rate increases and introducing new surcharges/fees for shippers, that UPS and FedEx would claim they’re unable to absorb the merchant fees associated with accepting payment by credit card. They’ll gladly impose whatever increases they deem necessary on their customers, yet, they’re hesitant to incur a small transactional fee for streamlining the payment process for those same customers. Not exactly ideal customer service.
UPS and FedEx are inconsistent with how they enforce who they "allow" to pay with credit card. Sometimes, it all boils down to your carrier rep.
To recap, UPS/FedEx might not accept credit card payment from you because it costs them more than they're willing to pay. Yet, your rates have increased by 75% in over the past decade. In 2022, UPS and FedEx both advertised their annual rate increase at 5.9%, but in reality its impact was much more. This free report that details the 2022 rate increase. View it or download it here. Regardless, the rate increase easily covers more than any credit card transaction fees they’d incur.
If you’re already “credit card approved” and are paying UPS and/or FedEx with a credit card - congratulations. If not, however, be aware that your carrier may attempt to use a request to pay by credit card against you in future contract discussions.
Shippers who are looking to secure credit card approval may be met with resistance. We’ve seen many instances where a carrier has attempted to increase a shipper’s rates as the response to a credit card approval request. The most common carrier “reasoning” is that the payment method was taken into consideration when structuring your current contract (although that ‘consideration’ probably wasn’t communicated).
But remember - all of the surcharges, fees and annual rate increases are much greater than any merchant fees incurred by UPS and FedEx if you were to pay by credit card. And like any other “negotiable” within a carrier agreement, there’s a way to secure the ability to pay by credit card without consequence.
Lojistic can even pay your carriers on your behalf. With our ReadyPay service (audit + refund recovery + GL coding + pay) we manage it all - saving you time and maximizing savings.
Have questions? Our team is happy to assist with anything related to payment methods, getting better rates and bigger discounts, refund recovery, or really - anything that has to do with UPS and FedEx shipping!