By March Twisdale
You may have noticed that young folks working the register tend to automatically assume customers will pay with a card. This happened at C&P Coffee a few weeks ago. As I was tapping on the screen, my brain started to ping at me. Only when I handed my $20 bill to the girl, and she said, “Oh! You’re paying cash,” did I realize what was wrong. You don’t need a screen when you have green!
As we laughed, I handed her a slip of paper explaining why cash matters, and I said out loud, “I always try to pay cash.” The owner behind the espresso machine whipped around and said, “I love that! Thank you!”
I stepped around the counter to chat further with the C&P Coffee owner. She pointed out that their “profit margin” on a single cup of coffee runs about 30 cents, which matches the “per transaction” fee charged by most banking institutions. Meaning, when you buy a cup of Joe and pay with a card – they earn nothing. Zip. Zero. Nada. And, depending on the card and the “rewards” it offers its users, the store could actually end up losing money.
There are a lot of “behind the scenes” credit card and debit card fees. Every business owner I talk with mentions something new, leaving all of our brains spinning. Here’s what isn’t confusing. These “fees” serve as an ever-increasing “Bank Tax.” Meaning, we are paying for the privilege of using our own money. It’s like an extra sales tax – except we don’t vote on it, and the money does not go into our communal treasury.
If you use plastic to purchase $50 worth of produce at the Farmer’s Market, your bank collects $1.80 from that farmer. If 40 other customers that day do the same, that farmer loses $72 in profit. Over the market season (20 weekends), that farmer pays a bank tax of $1,440. All because we’re avoiding the “inconvenience” of stopping at the ATM, which is a 30-45 second walk away?
Here’s the good news! Unlike government taxes, these bank taxes can be avoided. So, why don’t we? Because of the so-called rewards. Most people with a strong “plastic habit” are making a mathematically intelligent decision. My sister-in-law recently told me, “We pay for everything with our credit cards, to get the air miles.” If this makes sense to you, don’t feel bad. Reward card campaigns are well-funded, heavily researched, exquisitely planned, and expertly promoted. They’re also predatory.
David Hinchman, owner of Vashon Print & Design, has been a great source of insight and detailed information with regard to the back end of these transactions. As he put it, “Nothing is free.”
The hard truth is, businesses pay a fee every time we use plastic, and that fee counts as a “cost of doing business.” Business owners can’t afford to pay these fees out of their own pocket, so it gets embedded into the price of goods and services.
If you think this is a small issue, think again. When local business owners showed me their electronic system tallies this past month, it was not unusual to find that 90% of transactions were plastic. Maybe we should shop like our parents shopped and use our island’s many ATMs?
This summer, adopt one new habit. Hit up your favorite ATM when you come into town & give it some love! Then go shopping, and smile at your local business owner as you hand them bills, and not fees. Together, we can make a notable dent in the cost of doing business and living on this Island, and that’s a great goal for all of us to have.