Why don’t all stores accept credit cards?
It’s not cheap for small store owners to accept credit cards. Not only do they have to pay set up charges, buy or rent equipment, get a dedicated phone line or other connection for the equipment and often pay monthly fees, they also have significant per transaction fees.
On average a small retail store has to pay somewhere around 20 cents per transaction plus 2% of the transaction amount whenever you pay by credit card. That means when you pay for your meal at the local deli, $0.30 of that $5 goes towards credit card processing fees.
30 cents may not seem like much but it adds up. You also have to consider the full $5 of the sale isn’t a profit to the merchant, in most cases closer to $1 of it is. That’s a 30% decrease in income. So be polite and use cash for your small purchases.
Manuel said,
November 9, 2007 @ 11:52 am
I believe this charge depends on the agreement the merchant has.
If the charge is purely variable, then the ammount doesn’t matter.
And there are other benefits for the merchants in accepting cards:
1) increases liquidity as the payment will be immediately accessible in his account (again this depends on the agreement) . i.e he can use it to purchase his goods immediately
2) reduces the risk of theft
3) reduces the risk his employees will deviate cash
4) lead shoppers to spend more
About this subject, there’s a very interesting study by the Sveriges Riksbank: “The Costs of Paying – Private and Social Costs of Cash and Card Payments”.