Cash, please!

We have one of those signs at the check out area in our store asking people to pay with cash on purchases under $8. Most people don’t even notice it. And truth be told, we don’t even say anything unless it’s a ridiculously low dollar amount where the customer wants to use a card.  I’ve seen people pull out a card for a $1 purchase.

In an electronic world, few people carry cash anymore, and even fewer people carry a checkbook!

But in actuality, we’re only asking people to accommodate us by paying with cash. That’s because we can’t require it. The credit card companies have seen to that. We’re not allowed to refuse a card in any instance. Nor can we charge an additional fee for a credit card/debit card purchase, though I’ve had that happen to me on numerous occasions.

But part of the reason we have the sign there is to educate our customers. See, most people are unaware that banks and card companies charge retailers fees to accept credit and debit cards.  In an amazingly convoluted manner, there are different percentages for different types of cards (personal, business, rewards, debit, credit) and for different companies (MC/VISA, Discover, AX). Then there’s the fee just to “call in” the charge. This doesn’t even cover all the charges associated with internet purchases. It’s so complicated that, even though I have to deal with it, I couldn’t accurately explain it to you.

What I can explain though, is that at the end of the month, those card companies take a big chunk of my sales right out of my account. Ouch.

But what most people don’t realize is that the smaller the sale, the relatively larger the portion that goes out the window. Say for a $2.95 card, on average, about $.35 goes to the banks, or 12%.  On a $1000 wedding order, it’s more like 3.5%. While that’s still a very large amount, it’s the nickels and dimes that kill us.  Every time someone pulls out a credit or debit card for a $3 purchase, I cringe. And I wonder if they know what they’re doing to the cost of items they purchase.

Because it doesn’t take a rocket scientist to realize that retailers have to recover those fees in some way, and that typically means that prices have to go up. They have to recover their lost earnings in some way. Credit card companies are also looking for ways to recover their lost earnings, all the while offering miles, money back and anything else they can think of. It’s not out of the goodness of their heart. The money comes from retailers, which ultimately means it comes from you and me, the consumer.