Saturday, December 8, 2012

Pardon Me, My Hipster Is Showing

I pulled this straight from the pages of facebook (get it? pages? because faceBOOK? yeah, I know, but I tried real hard), a conversation started by one of my business-owning friends (who incidentally also works a full-time job), and one that I thought I would pass along because secretly I'm a hippie:

TIP ON BUYING LOCAL: try to pay with cash if you can. Yeah, I know, it's a pain in the ass, but having worked retail and knowing people that own their own businesses, here’s a secret: businesses have to pay 4-5% to credit card companies to process the transactions. Debit cards are better, but not much. According to one of my business-owner friend, a small store has to sell over $80K in product to take home $25K/ year. Yuck.

Even the big stores don’t love it: when I worked at Target, we could only use our employee discount if you paid with cash, check or the Target credit card (which is why so many stores push their cards – they save on fees). You weren’t allowed to use any other cards because Target then had to pay processing fees on it.

A popular misconception is that many stores build those fees into their product price, but that’s not necessarily true. I’ve never known a store to do that… I’m not saying they don’t, but it’s a practice I’ve never heard of. It’s a cost they deal with and generally just have to absorb simply to stay in business.

From another store-owning friend:
"I would rather pay the fee than lose the sale. But I absolutely do not factor card fees into my prices. It's just a convenience I offer my customers and I'm willing to cover the fee to earn/keep their business. I keep my profit margin as low as possible because it's already nearly impossible to compete with big business on my prices - if I raised my prices even by 2-3% to cover the fee, I probably wouldn't compete at all."
If you go to a gas station and buy a pack of gum and nothing else, and use your card, they have lost money on that sale. The reason they can do this is that it usually evens out due to the sell-through of higher-dollar items.

So even though stores are willing to eat this cost to provide you with the convenience of being able to use a card, it helps them so much more if they don’t have to pay it. They’ll take the cards to get the sale (I never carry cash, and I frequently have to avoid some places simply because I  don’t have cash on me… one of our local delis started taking cards and it was awesome, but I feel like an asshole every time I use one) but they’d love you even more if you paid a different way.

Just a PSA from some of my friends to all of you. Any facts listed above are from them, I do not claim to have done any fact-checking, but from my own past life in retail and working my 9-5 as a wholesale vendor and interacting with buyers and stores... it sounds about right. What I'm saying is, don't argue with me if the numbers are wrong, IT'S NOT MY FAULT and SO HELP ME I WILL BRING THOS FRIENDS OVER HERE TO ARGUE BACK WITH YOU.

Zen. I must have it.

In hindsight, I think I'm more of a hippie than a hipster, which is an odd revelation to have. I'm learning new things about myself every day.


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Stephanie Fink said...

But... but the evil credit card companies kick back a small fraction of my fees to me in the form of rewards! And the stores aren't giving me any incentive to use another payment method. If they'd give me 2% off or something, i'd consider it. Until then... sorry, imma keep being a jerk.

terra said...

I used to always, always pay with cash, but now I rarely, if ever, have cash on me and I feel like an asshole every time I go to WaWa and get a cup of tea and a granola bar and then pay for it with my card.

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