By March Twisdale
Nowadays, you can walk into almost any business, whip out your preferred form of plastic, and buy what you want. If you’re over 50 years old (like I am), you remember when this was anything but normal. But, here we are, and the question is: “Do we want to stay here?”
If you’ve been keeping up with our series on cash versus plastic, you already know there are transaction fees (which I call “Bank Taxes”) for every business transaction involving plastic. This month, I began looking into how it all works. So, let’s talk about Credit Card Processing Companies.
If you read my article online (at vashonloop.com) you’ll find useful hyperlinks, such as this one, referencing an article by Forbes Advisor, updated October 17th, 2023, directed at business owners who face the “new normal” of needing to offer a plastic purchasing option to customers.
When we step up to a business’s cash register (note the name – “cash” register), we expect there to be a card reader on the counter. How did it get there? The business owner pays for it, and not just once. Credit Card Processing Companies offer their services on a monthly fee basis, and they’re not cheap. This Forbes Advisor POS System Cost Guide goes into detail. “POS hardware costs range from $0 for a simple card reader to more than $1200 for a complete retail register, [and] paid POS systems offer more robust features for advanced inventory tracking, restaurant operations, marketing, loyalty programs, and other specialty business needs [ranging from] $50 to more than $200 per month.”
But, what’s a business to do? Forbes says, right up front: “It’s practically impossible to do business these days without accepting credit cards.”
To be clear, I’m not bashing these systems. Back in June, while talking with David Hinchman of Vashon Print & Design, he made the point that these systems track all the available data, saving him many hours of laborious accounting each month. They even track how people pay. It’s these systems that make it so easy for Island business owners to pull up their “cash versus plastic” stats. In May and June, when I began this series, customers had a serious plastic habit, with a 90/10 split. But that’s changing.
Since we started this series, here are some comments I’ve received from Island business owners. “People are starting to pay with cash more often.” “Island customers bring it up, saying they’re trying to use cash more than plastic.” “There’s a lot of interest and people are talking about it.” “I have customers who say, oh wait! Then they run to the ATM and come back and pay cash.”
This is great news. The proverbial ball is rolling! And there’s a movement afoot to create additional incentives for Islanders to pay cash. It’s completely possible for us to achieve a 50/50 split between cash and plastic by Spring of 2024. Keep your eyes peeled for details in the December Loop!
For now, I want to raise customer awareness of what our Island business owners are dealing with. The “convenient” world of plastic is rife with fees that, according to Frank Kehl of Merchant Maverick, “can be a burdensome expense for your business.” Even worse, “most merchants pay too much for them because they don’t understand how they work.” In Merchant Maverick, we learn that “processing fees” are made up of (1) variable interchange fees, (2) assessment fees, and (3) a processor markup. Nor can you dodge “Bank Taxes” by using your Debit Card. Unless you’re at a store that offers cash back (like grocery stores), your Debit Card processes like a credit card. That’s why there’s a VISA emblem on your Debit Card.
In other words, the only true way to avoid incurring “Bank Taxes” for your favorite Island business owner (and yourself, as these fees cause product prices to rise), is to pay with cash.
Remember to give your favorite ATM a lot of love, grab the cash you’ll need for the day, and have fun painting the town green!