Thursday, October 13, 2005

Credit Cards - Curse or Blessing?

Dang credit cards, they are a blessing and a curse! I love that I hardly have to carry cash around, and I hate it when I don’t have cash and I stop somewhere that won’t take my card. Bank cards/check cards are even better, as long as you have the money in your account you can use them interest free, and some even let you earn “points” or cash or frequent flyer miles or whatever, just like credit cards. I’m sure you all can relate!

As a business owner, I feel the same way about them. I don’t know how a business can survive in this day and age without accepting credit cards. Since, like I said before, I hardly ever carry cash anymore. And I know I’m not alone! Yet, it drives me crazy when someone buys one item that’s less than $5 and uses their credit card (sometimes I even catch a glimpse of cash in the wallet). On one hand, I’d rather have them shop here than go somewhere else. But on the other hand, I barely make any money on an item that low in price when it’s paid for by credit card. Most often it’s a $2.99 comic book, which with tax is $3.14. 15 cents goes to the government in tax, $1.50 goes to pay for the comic book itself, about 10 cents goes to UPS for having it shipped to me; so, I’m already down to $1.39. Then the credit card charges come in: 26 cents just to swipe the card and 2% off the total, including tax, of the sale, which in this case is 6 cents. Now I’m down to $1.07. That’s 43 cents lost for a single comic book purchase, almost 30% of the profit! And I haven’t even gotten into the monthly fees just to take cards, or the extra swipe fee if it’s an American Express or Discover card. But, like I said, I’d rather have $1.07 than ZERO.

Why not have purchase minimums? You might ask. Well, because we could get a major fine or even loose the ability to take credit cards. See, the credit card companies: MasterCard, Visa… they don’t care how much I loose. They want their money! In the contract every single shop owner signs with their credit card processing company there is a portion that states that businesses must accept cards for every purchase, regardless of the amount of the purchase. If someone reports the business for having a “minimum charge” the business can get a fine from the credit card company, or if enough complaints come in they can loose the ability to accept credit cards. I have gone to a couple of places and they told me I didn’t meet the minimum to use my credit card. I let them know that I’m a business owner too, I understand why they set a minimum, but it’s against Visa regulations, and if they could just take my card this one time, or I’d have to report them to Visa. Both places took my card – one had to call a manager over, the other tried to tell me they’d give me $10 back and charge me the $10 difference I needed to qualify for the charge swipe, which worked out fine since it was a hair salon and I was going to have them charge me $10 more to tip the stylist anyway. But I still let the salon gal know that she should really tell her boss about the rule because the next time I’d call Visa. The way I see it, if I let people charge $3.14 I sure has heck better be able to go to someone else’s business and charge $18 or $25. The rules apply to us all, and it costs them less of a percentage to swipe my card at those totals than it does for me at $3.14. Why should I be the only one afraid to get busted by Visa?

I’ve heard of others that charge a fee for swiping a card for a purchase under a certain amount. Now, I’m not sure if that’s against the contract or not—I haven’t drank enough coffee to get through that entire fine-print legal lingo. That would help offset some of the cost, but again, I think it could turn off people who shop here. I know if I had someone tell me that I might be a bit irritated, unless it was a common practice at all businesses, which it is not right now, at least not around here.

No one uses checks anymore, or at least very few. We like checks. They deposit the same as cash, and as long as they don’t bounce on us, they don’t cost us any extra. But I hardly use checks, and I think most men are even more notorious for not using checks (men are a majority of our customer base). And once checks have cleared they are more secure for the business owner too, since they are cash money once they clear. Where credit cards, while going into our business account every night, can be disputed by the card owner for up to 30 days after the purchase. When the purchase is disputed, the money is taken away from us as quick as it went in, and is on hold until the dispute is worked out. Now, we’ve never had a dispute here, and I figure most retail doesn’t (these happen more with ordered merchandise and payments for services), so that’s good, but just knowing they could be is an added risk. But, like I said, I hardly ever use checks myself—always the card, so I can’t blame anyone else for doing the same.

In short, credit cards are essential for both a consumer and a business. How someone goes around without a credit card or bank card I will never know. And how a business can be successful without accepting credit cards confounds me. But the next time one of us, me included, goes to use a credit card for an inexpensive item instead of cash, remember how much it costs that business to take your card. Appreciate that they stick to the rules and take your card for such a small amount, but reprimand any business that has a minimum, even if you have met or exceeded it. If we all try to be more conscious consumers, and maybe if we all try to keep $5 cash in our pockets for those lower tag purchases, we won’t have to pay so much for the items we buy, nor will the business we enjoy shopping in.

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