How Credit Cards Effect Small Business


While we live in a credit card forward society, we don’t often think about its impacts on small business. Every online purchase, in-store purchase and everything in between, has a price attached to it. When we, as consumers, know the true cost of credit cards, we can make informed and impactful choices. 


Each card that gets run through our terminal has a certain percentage that we have to pay for the “privilege” of accepting the card. Depending on the company and the rates, it can be anywhere between 1.5% and 6%, and even in some cases 8 or 9%. So every single CC payment costs us 1.5-9% to process. The more prestigious the card, and the higher the points rewards, the higher rates we pay. Visa and MasterCard aren’t rewarding you…we are. While it is nice to save up for that vacation, new TV, gift cards and more, it comes at the cost of small, and large of course, businesses. 


On a personal level at All Things Being Eco, we typically have 50-60% of our transactions a day paid by credit card (CC). On average we process 30-40 transactions per day. For simplicity sake, lets say there are 21 CC transactions per day.


Now let’s work with a pretty average day of $2000 in sales. That’s some great refills, maybe a few pairs of jeans and a bag or two. When I look at my daily deposits and withdrawls online, a day like that will have anywhere between $40 and $75 in fees. That’s one day. While it doesn’t seem like much, multiply that by 6 days a week, 52 weeks a year, and you have between $12,480 and $23,400 in fees a year. Looking at last year, All Things Being Eco accrued approximately $17,000 in fees alone. That’s equivalent to at least 750 labour hours, or two huge orders of clothing for a season, or it’s being able to offer to staff, more paid vacation, renovations, innovations and so forth. While it is ultimately the responsibility of a retailer to accept CC’s, it is a huge cost and burden for convenience. 


As a consumer, it is understandable to want to rack up those rewards points, and it’s also not always easy to live within our means and we end up relying on CC’s (especially these days). While that is in mind, I sincerely encourage you to think twice when you pull out that card. Its burden on small business is huge. It takes away profit on already slim profit margins. Cash is always preferable…it has zero fees attached. It creates instant cash flow and income for small business. Use debt when you can. A debit transaction usually has a 5 cent service charge. Reasonable! Manageable! Fair! CC, not so much. Save your CC for billion dollar a year profiting big box retailers, online shopping or booking vacations and hotels…but please, oh please, when possible, save the small store. It’s simple to ‘boop’ your card at the machine, but each ‘boop’ costs. Bricks and mortar are struggling and every dollar makes a difference. I always encourage people to #votewithyourwallet, and this is one of those opportunities to make a tangible and measurable impact. Your local coffee shop, independent retailer and restaurant will appreciate it…greatly. 

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