Swipe fees add additional challenges to local businesses

Credit card services can be ultimately costing the business owner and customers
Credit card services can be ultimately costing the business owner and customers

by Christy Parrott

My best friends call me Cash: the famous line from the movie Black Sheep may have several of Kremmling’s local business owners nodding their heads in agreement. Over the years, several “main street” shop owners have had to adjust their policies to alleviate the costs their business incurs due to the increasing use of credit cards and the fees attached to them. Each time a customer swipes their debit or credit card to make a purchase, that business pays an interchange fee to the credit card company.

Credit card companies typically charge a business 2-4 percent of the purchase price (in addition to monthly usage fees). Such charges can easily be absorbed by larger businesses enjoying higher customer volume, but for smaller, local businesses the effect is substantial. Marcia Wyatt, owner of Flowers by Marcia, explains, “On something like a balloon, which is a two-dollar purchase, my credit card fees are fifty cents to a dollar, so I might as well just give it away.” While Wyatt often does give balloons away to her younger customers, she shares that her credit card usage fees have ranged from three- to seven hundred dollars per month. And she’s not alone. Many businesses selling smaller items risk losing money due to increased fees. “For a dollar-seventy-five cup of coffee, I get charged,” owner of Big Shooters, Stephenie Scholl notes. “We’re forced to have a four dollar minimum on charges, or we’ll lose money on our coffee. The alternative is to raise our prices.” Si m i l a rly, flowers by Marcia has tacked on the credit card fees to the overall service charge in order to turn a profit. And even businesses that usually charge higher rates for larger services have been affected. “We’ve considered raising our prices to reflect the credit card charges,” Stands salon owner, Jennifer Hooks shares.

Already surviving on small profit margins, the increasing amount of fees also makes it that much harder for small business owners to pay employees higher wages (meanwhile, rent and the price of goods are steadily rising). Wyatt shares she often doesn’t make minimum wage working in her own shop. Confusing the situation even more, it’s difficult to account for credit card fees into monthly budgets, because different cards charge different amounts. Adventures in Whitewater Front Office Manager, Shelly McManus explains, “Fees depend on what type of card it is. Bonus cards, or cards with miles, with those types of cards, usually the more perk to the card holder the more fees can be charged to the business.”

So, while large credit card companies market their convenience and benefits to customers, they gain money through both business fees and consumer interest rates. “Between the consumer and retailer fees, the credit card companies have us all over a barrel,” Scholl clarifies. This is nothing new. Laws passed in 2010 have attempted to alleviate credit card charges through transparency requirements, yet those same laws allowed an increase in fees for small debit transactions. As more and more consumers reach for their debit or credit cards, the fees add up. Scholl notes, “Fifteen years ago I’d have a dozen credit card charges to deal with. Now, I have over one hundred fifty credit and debit transactions per day.”

Certainly, credit and debit cards do offer benefits, and local companies with smaller volume and larger purchase a mounts don’t feel the effect as much as retailers carrying small-ticket items. Plus, as Jim Miller, owner of Blue Life Ltd, notes, businesses have to chose between accepting multiple forms of payment to provide the best service to their customer, the guarantee of a credit payment versus the uncertainty of whether a check will clear, all the while knowing, “Those credit card companies are as bad as phone companies, hiding mystery fees in to everything.” Additionally, it’s likely tourists who create the largest credit or debit card usage. But consider, it’s the people who call Kremmling home that will be affected if one of the longstanding businesses shut down. As Grand County’s demographic shifts, there’s a stronger possibility that a larger company can swoop in and take over, charging even more for that morning cup of joe. Monica Cary, manager of Last Time Round thrift store says, “We do not accept credit cards. We send people across the street to the money machine and they always come back with cash.” Getting in the habit of carrying cash for local purchases would help keep costs down for both consumers and businesses, as well as keeping money in local hands not New York pockets. As Monica Cary suggests, a few thoughtful steps can make a big impact.