Every time you swipe a credit card for a purchase, the business has to pay a small processing fee to the credit card company.
When calculated over time, the accumulated fees can affect profitability as more and more consumers use credit cards, local business owners say.
But there is a solution: Pay with cash or a check more often. That is the message of a new local movement dubbed Local 2 Local Checks & Cash Initiative.
A group of Montezuma County business owners are trying to raise awareness of the increasing costs to their operations because of the trend toward a cashless society.
“We are not discouraging credit cards because that is a modern reality, but we want to inform customers that when they use them, not all of money spent is going to support the business,” said Tucker Robinson, owner of WildEdge Brewing Collective in Cortez.
He said the brew pub paid $7,000 in fees to process credit card purchases last year, revenue that could have been used to purchase supplies and support staff members.
According to a survey by Local 2 Local Checks and Cash Initiative, a small sampling of self-reported data from area businesses showed that 78% of transactions are done with payment cards that charge a fee.
Based on 2016-18 Cortez sales tax data, about $23 million is spent in Cortez every month, said Cortez Chamber of Commerce Director Rocky Moss. If 78% of that figure is assessed the typical 3% credit card processing fee, it would add up to millions of dollars leaving the local economy every year.
Moss said the extrapolated calculation is just a rough estimate that provides a hint of the impact. The group plans to conduct more comprehensive surveys and polls to fine tune the data.
Brandon Shubert, co-owner of Stonefish Sushi & More, reports that use of credit and debit cards is currently 94% of all transactions, compared with 40% in 2010.
If people make an effort to pay with cash more often, the money businesses save helps them survive and grow. Cash benefits the local economy overall, organizers said.
“Hopefully, our customers become the best partners in the campaign,” Shubert said. “The more we explain, and the more people use cash and checks, the more money stays home.”
As a way to encourage more use of cash, organizers are hoping to persuade local banks to install more ATMs in business districts.
Rising fees from credit card companies are getting the attention of national companies.
In April, Kroger Co. announced it would stop accepting Visa credit cards at 142 Smith’s supermarkets and 108 fuel centers across seven states because of “excessive transaction fees,” according to a news release.
Mike Schlotman, Kroger executive vice president and CFO, said, “Visa’s credit card fees are higher than any other credit card brand that we accept.”
“Grocery is a competitive business, and our ability to keep prices low for our customers depends on controlling costs,” said Kenny Kimball, president of Smith’s.