Save the Tax: B&H's "Payboo" Card

[Full disclosure: I'm a B&H Photo affiliate. Purchases from B&H through my links benefit me. So I'm not an objective outside observer here. —MJ]

Desperate times call for desperate measures. In October of 2018, B&H Photo, as a result of the South Dakota vs. Wayfair Supreme Court decision, began collecting sales tax on interstate sales in 22 states. This put it at a disadvantage compared to some of its competitors.

As a corrective, B&H is today implementing a give-back program for its customers called "Payboo." It struck me at first as a rather odd name, but at least it's unique rather than anodyne, which is practical in the Age of Google. Under this plan, you apply for the B&H Payboo credit card and use it to make your purchases at B&H. You still technically pay sales tax (this is important because it means you are not required to self-pay the tax in your home state, as you are now), but B&H pays you back by applying an equivalent reward instantly at checkout, thus effectively nullifying the sales-tax hit for you.

Implementation will vary from state to state, and Payboo doesn't affect international sales. (I'll just mention that it's especially good news for those of us living in New York and New Jersey, because we were hit with sales tax even prior to the Wayfair decision, on account of B&H has "physical presences" in our states, and now we get relief through Payboo.)

You still must apply for the card, but once you do, the tax-back reward is instantaneous at point of purchase, whether you're in the superstore on buying online. For more information, check out B&H's FAQ page about the new program. To check if your state is affected, click on the "Check Savings" link near the top of the page at the link and enter your Zip Code. Note that people in some states were already not paying sales taxes.

But beware—be sure you don't carry a balance. The interest is very high.

I had a credit card only once in my life, when I got my first "real" job in the 1980s. I quickly racked up debt to the limit, compulsively buying the then-new supercool Compact Discs, or CDs, which now slumber in boxes in the barn. (Smart purchase decisions, Mike.) The debt then took me two years to pay back. The lesson was clear: credit cards are not for me. I haven't had one since—all I've had for the past 30-odd years is one debit card.

But I buy a lot of things through B&H, so I think I'm going to make an exception this time. Tax relief for photographers—or at least for this photographer—that's a cause I can get behind.

Mike

Original contents copyright 2019 by Michael C. Johnston and/or the bylined author. All Rights Reserved. Links in this post may be to our affiliates; sales through affiliate links may benefit this site.

B&H Photo • Adorama

(To see all the comments, click on the "Comments" link below.)
Featured Comments from:

Dave (partial comment): "Good luck if you make a late payment. The fine print says the APR is 29.99%! Any tax savings will be eaten up—and then some—by the interest charges. Nice idea by B&H, but as is said, the devil's in the details."

Mike replies: I added a sentence cautioning about this to the post.

Geoff Wittig: "This may seem bizarre, I realize. But I don't actually mind paying the sales tax. No, really. Follow my logic here. I love my photography toys, but honestly they represent a luxury purchase. I live in NY State, and the sales tax I pay at B&H goes to pay for things like highways, schoolteachers and the State Department of Environmental Conservation. (Okay, it also goes to pay for tax abatement for grifting billion dollar corporations, but you get my point). So I'm not sure I feel happy about helping B&H dodge a bit of social responsibility. As the saying goes, taxes are the price we pay for civilization."

Bob Rosen: "B&H is not going to 'dodge a bit of social responsibility' by not paying sales tax on your purchases. As it states in paragraph four of their FAQ, they will continue to 'remit sales tax in accordance with state laws and regulations.' Obviously, this program appears to be an agreement between B&H and Synchrony Bank, and the tax credits given to customers will somehow be reimbursed to B&H out of the income Synchrony hopes to make on their sky-high interest charges to anyone foolish (or careless) enough to carry a balance on their account."

John Camp: "Not paying sales tax is the reason that we no longer have camera stores in many towns—I just bought a Z6 kit over the Internet and saved a bit more than $200. That's why people in NY buy cameras from Samy's in California, while people in California buy cameras from B&H in NY. The country really needs a federal sales tax on Internet purchases, with the money then divided between the states according to population. Right now, sales tax is an extremely difficult issue, because with local options, a single state can have hundreds of different sales tax rates, depending on where a person lives, because of local tax options. A single federal tax (that also barred state sales taxes on Internet sales) would avoid that problem, and probably bring back some local stores."

Comments

[Michael Kohnhorst]

It's worth mentioning that if one carries a balance on the Payboo card the APR is a whopping 29.9%.

[James]

...... and we can still start the purchase process thru the TOP link so Mike gets recognition......

[John Krumm]

I might consider it if they had a no-interest option when payed back within a year, but I don't see that. Here's the fine print: ** For new accounts: Purchase APR is 29.99%.

That's very high, much higher than a tax, so if you are not good about paying your balance in full, this is a bad deal.

[kirk Tuck]

Be careful Mike. Read the disclaimers all the way to the end. The APR for new accounts (when carrying a balance...) is 29%. An outrageous interest rate when jumbo CDs are only returning 2.85% or less... That's quite a spread.

I wondered how they would pay for the sales tax until I saw the terms.

Compound interest can be your best friend or your worst enemy.

[William Schneider]

B&H doesn't collect sales tax for Ohio, so I'm not eligible for the card.

At the urging of an accountant, I still self-report and pay the sales tax at tax time each year. I don't want to risk an audit.

Being squeaky-clean levels the playing field for local photo businesses. Their prices aren't that far from B&H prices when sales tax issues are equalized.

[Dave]

Good luck if you make a late payment. The fine print says the APR is 29.99%! Any tax savings will be eaten up - and then some - by the interest charges. (And the politicians think payday loan stores are abusing customers. Obviously the banks throw more money at them than do the payday loan companies.)

Nice idea by B&H, but as is said, the devil's in the details.

[Greg]

I got the email but assumed it was ranting against the new rule. But because of all these crazy kickback cards I have too many already. In fact I have one now (Costco) that requires me to do something to get my money back and haven't done it yet.

But I guess they are just trying to cash in on the change. No doubt they'll get their money back through a deal with the bank in people pay enough interest.

No free lunch.

[Stephen]

I'm with Geoff. Taxes are, like car insurance, health insurance, and even (weird, I know) a Costco membership, a way to pay a little in order to get a lot - schools, highways, police forces, discounted prices on consumer goods...

[Kenneth Tanaka]

I admit that I have severely limited my purchases from B&H when they began collecting Illinois' 6% sales tax a year or so ago. I genuinely miss them, as they are the best photo store I've traded with in the past 20 years. (Adorama is, however, a close-enough 2nd.)

But much as I miss B&H I'll not be signing-up for their private credit card with the almost-usury rates, underwritten by the vaporous, and somewhat notorious, "Synchrony Bank" of Florida. You probably shouldn't either.

[c.d.embrey]

Taxes are just another cost of doing business. No big deal.

Me, I've never bought from a N.Y. store—I support my local businesses. I also use Instacart (local supers), not Amazon Fresh, for grocery delivery.

[James Weekes]

Of course the easy way to avoid the exorbitant rate is to set up autopay for the full balance every month. I have done this for years and it saves a lot of worry.........and money.

[scott kirkpatrick]

Weird! I applied for the "card" (which can only be used at B&H. And was automatically turned down! Maybe when I filled in the question about my monthly income with the lowest plausible number, I lost it. Also, the sign up form tries to sell you credit insurance, which lets you defer payments indefinitely, but leaves the interest accumulating. FLAMMABLE -- USE WITH CARE!

Update: I found out why I was not approved. It seems my state (TX) is one for which B&H is not yet collecting tax.

[Richard Parkin]

The people who constantly complain loudest about taxes are mostly the super rich who could well afford to pay them ;-(

[Chris Kern]

Geoff Wittig: I'm not sure I feel happy about helping B&H dodge a bit of social responsibility.

Actually, B&H is continuing to collect and pay sales tax on behalf of out-of-state residents. This new credit card in effect offers purchasers a discount equal to the sales tax.

[Ben Rosengart]

@Geoff Wittig: I'm not sure there's any tax dodging happening here. B&H is still obligated to collect and remit the tax, as they specifically mentioned in their email to me about this. The discount comes at the expense of B&H, or perhaps the backing bank, not the state.

[Chip McDaniel]

As Geoff Wittig states correctly above, Justice Oliver Wendell Holmes did state that "Taxes are the price we pay for civilization." in his dissent to Compania General de Tabacos de Filipinas v. Collector of Internal Revenue, 270 U.S. 306 (1929).

But there is also another fundamental principle involved here. That is the question question that made us a great nation, "What's in it for me? ;-)

Actually, I share Geoff's view, but I think we are in the minority. We are in the age of "What's mine is mine; what's yours is negotiable."

[Mark]

Goeff, maybe I'm missing something but I believe B&H are still making those tax payments to the states and then giving you a discount on the item to cover the difference. This doesn't appear to be a tax dodge to me.

[Marvin Van Drunen]

Re the Geoff Wittig comment:

As I read it, the tax is still being paid to New York by B&H. But B&H is making a refund to the customer.

M. van Drunen

[James]

Don't knock it - it is B&H giving customers an extra bit of discount.
That sales tax still goes to the appropriate state.
Seems to me that if someone needs to spread payments, they should do the math and see if it works for them.

[SteveW]

I agree with Geoff in regards to sales taxes.

Payboo seems an innovative marketing strategy by B&H. The sales taxes will be collected and distributed legally. The credit card (Payboo) will give rewards points of like value, so in essence B&H is discounting their goods by the value of the sales tax dollars.

But they'll likely make up for it if the marketing of Payboo increases sales volume, and a significant percentage of cardholders end up carrying a balance.

[Ray Hunter]

Kudos to Geoff Wittig for an utterance of common sense and good citizenship!

[John Krill]

Here is why I will not get the card. They require your SSN. In California they allow you to give your Driver Licence number.

I rarely see a need to fork over my SSN.

As far as the sales tax goes you should see the rate in Palm Springs. 9.25%. So I'm curious what B&H will charge.

[Paul Mc Cann]

I clear my credit card every month. I simply put a reminder in my calendar with a heads up 1 day prior to the due date

[James McKearney]

The sales tax does get paid. B&H simply credits you with the same amount. Quoting from their website, "B&H will collect and remit state sales tax in accordance with state sales tax laws and regulations."

[Dan Khong]

One way to avoid paying late fees and interest charges is to transfer money to the credit card company immediately after purchase.

Seems a bit silly but the penalties far outweigh whatever opportunity losses you suffer. Most times the money is sitting in the bank waiting to be splurged on photo gear.

I always buy through TOP. Let B&H pay for some dog food.

[RayC]

I'm with Geoff on this in general, tax avoidance schemes generally tick me off because they seem to dodge social responsibility. I also find that many of the same people complain about the state of our roads, schools, etc.

This is a bit different of course because the tax IS being paid. Instead this a well known process where a number of people will fall behind and pay usurious interest rates instead. Now this could be a good deal for those who are rigorous about paying this off and thus saving some money and perhaps in some small way cutting into the profits of Synchrony.

[hugh crawford]

Note that as far as I can tell you give up any insurance or extended warranty protection that many credit cards offer on purchases, and you are not dealing with Amex, Visa, or master card.

In an interesting privately branded credit card / photography / everything is related note, I was going down a credit card rabbit hole yesterday and discovered that Anne Geddes issues her own credit cards!

https://www.crediful.com/comenity-bank-credit-cards/

I wonder what interest she charges?

[Actually they seem to be just prepaid VISA cards with her images on them--lots of different images.

But that's an amazing find, I would never have guessed this was a thing some photographers do. --Mike]

[alan]

Well yes but what about the snooker?

I don't think I've seen anything to match that final.

[Kristine Hinrichs]

I don’t know how they are at a competitive advantage as all internet sales are subject to sales tax. Also Synchrony Bank is the same bank that Amazon uses - and provides 5% cash back so for a Wisconsin resident like me with a 5.6% tax the benefit is just .6% - not enough to bother with. I’d also suggest that people looking at this investigate whether it includes the standard one year warranty extension for purchases made with the card. With my Costco Visa I get cash back and an additional two years of warranty protection. That seems like a better deal.

[Earl Dunbar]

I agree with Geoff and (especially) John.

[Dennis]

I doubt that Synchrony is providing (all the) funds to B&H, as Bob suggests. They're probably benefiting by not paying 2-3% to other card companies. But B&H got big as a discount mail order business. MAP pricing (or whatever the technically correct term is) leveled the playing field for small, local businesses by preventing the volume retailers from selling at a discount. Avoidance of sales tax kept some buyers shopping online, rather than buying locally and now that benefit is gone.
Lately, big online retailers have been offering freebies in bundles to make it more attractive to buy from them. This looks like another way that B&H can try to get back to their traditional model of taking less profit in exchange for volume. (Amazon, Target, Best Buy and probably others have had store cards that offer 5% in cash back credits for a while).
They're collecting and remitting sales tax; they're charging list prices; they're just offering an incentive to use their credit card.
The thing that strikes me as a little odd is that the card provides no benefit to buyers in states where B&H does not collect sales tax. I don't know if there's a legal reason for that, but you'd think they'd offer some kind of incentive to use their card (and avoid having to pay the fee to other card companies) and gain loyal buyers. I wonder if they'd avoid some controversy by doing 5% across the board, rather than a state-by-state percentage.

[Henk]

B&H must be expecting that a lot of people will be using it as a credit card, resulting that these people will be charge the APR of nearly 30 percent. They will pay the cash-back for those who are rich enough to pay the full amount directly and thus profit the most of the tax avoidance construction. I think it's disgusting.

[Richard Parkin]

So, if I’ve understood all the helpful comments here, it’s just another way to transfer money from poorer/less well organised people to richer/more organised people. Nothing new there :-( .
(Not saying that is B&H’s intention, it’s just the way the system works.)

[Robert Roaldi]

No one ever wants to pay taxes but everyone wants all the benefits of a modern society. How is that going to work?

[Chris]

All UK credit cards offer consumers the option of automatically paying off the full amount each month, which makes them into a sort-of-delayed debit card. It's not for everyone, but for those who carry a reasonable balance, it's a load off the mind. I use it for all my cards; when there's a particularly heavy purchase that needs to come from savings, I try to transfer the amount from savings to the card as soon as possible, so I don't get hit going into overdraft...

Does Payboo offer that sort of option?

[Jason]

Getting some facts on the table here:

-This is what is called a store brand credit card. -Synchrony Bank is the issuer.
-29.99% is a bit high for a max APR, it's probably set that way because Synchrony will underwrite a bit of a wider range than a normal credit card. Just pay it off on time, already.
-Synchrony also gets a 'discount' from B&H. When you buy $100 from B&H, they pay B&H 9x%.
- the discount B&H pays Synchrony is going to be less than what they pay to accept regular credit cards, which probably costs B&H about 4%, so B&H is saving a bit of money vs. regular credit card.
- Read the T&Cs, I would expect the credit card protections are not as generous as a general purpose credit card (e.g., MC/Visa/Amex)
-I would bet that you can set it to autopay the full balance.

On a final note, if you can get qualify for a credit card, you should always use that over a debit card, unless you are so broken you cannot stop yourself from spending above your means (e.g., 20-yr old Mike).

By using a debit card instead of a credit card you are:
a) missing out on rewards
b) missing out on extended warranties and purchase protections
c) missing out on 30 days of free money
d) and exposing yourself to a lot more risk if something goes wrong with the transaction (say a merchant goes bankrupt) and/or your card gets stolen.

[Dave]

I think it’s great that B&H is using this innovative idea to save customers money. As several folks have pointed out this does not deprive the states of sales tax revenue. And there are no charges to you. You just have to make sure you pay on time and pay the full balance each month. If you can’t, then don’t buy the item. One last note regarding debit cards versus credit cards. Your maximum liability for fraudulent use of your debit card is $500. But it’s only $50 for credit cards.