It’s that time of year again… the days get shorter, the apples get riper, the tourist season winds down, and local businesses review their financial position and prepare for the leaner winter months.
As we review the Co-op’s books this Fall, we’re reminded that we’re still paying between 22 and 24 thousand dollars every year in “card processing charges.” Why? It’s not because we’ve been late with our business VISA payment; it’s just the way that credit cards and debit cards work. When you buy something with your credit card, you don’t owe the VISA or Mastercard company anything — unless you don’t pay the full balance due at the end of each month: then they charge you interest. But even if you are careful to pay it off on time every month, they make money on your transactions another way. They charge the vendor a percentage (usually between 2 and 5 percent) on every credit card transaction. We all enjoy the convenience and security of cashless payment using credit cards; vendors want to support this option for us, because otherwise fewer people would visit their stores; but the catch is that the credit card company gets to “skim” our transactions with the vendor.
For big businesses with big margins, the payoff to VISA and Mastercard is hardly perceptible. But small local businesses with slender margins can feel it. The amount we paid in card processing charges from March to August of this year was about the same as we spent on small equipment purchases for the cafe, store and bakery combined. It was three-quarters of what we spent on repairs and maintenance. There’s a significant difference, though: when we spend money on equipment or repairs, the store tangibly benefits; but when we hand over money to VISA or Mastercard as their “take” on credit card transactions, it disappears off-island and we get nothing for it. So, once again, the finance committee asks Co-op members: Would you consider making a conscious choice not to use that credit card when you pay at the till? When you have out-of-town guests and visitors, could you encourage them to do likewise? In order of benefit to the store, preferred payment methods are:
- Establish a charge account and charge your purchases to it. This gives you all the convenience of cashless shopping and benefits the store by building up a cash reserve from which we can purchase inventory. Charge accounts are a way of making a short term zero-interest “microloan” to the Co-op. We never spend this money on anything but store inventory, and it really helps our cash flow over the winter.
- Cash. Cash is readily available from our ATM out front. When you get cash from our ATM, the store actually receives a share of the small fee, so you help the Co-op every time you use our machine. The twenties you spend in the store go back into the machine for other Co-op members to spend in the store: they stay on the island.
- Pay with your debit card. When you use your debit (ATM) card we also get charged a percentage, but it’s smaller – usually less than 0.25%. If you have both types of card and you really like the convenience of plastic, please consider using the debit card instead of the credit card.
With best cooperative wishes
Your Finance Committee
De Clarke, Treasurer; Eric Hargrave, General Manager; Marilyn Fitzmaurice, Accountant