Is the prevalence of credit and debit card payments driving small businesses into the ground?
In mid-May, Quechee Mobil Mart was forced to close its doors for good, as it filed for Chapter 7 bankruptcy status, and store-owner Sheryl Trainor has laid the blame on credit and debit card acceptance fees.
According to a recent report from NACS, Trainor informed Vermont Standard that the factor that had the greatest impact on her company’s financial situation was the prevalence of credit and debit card use in today’s society, accompanied by the high cost of accepting such payment methods.
Another c-store owner, Mike Pearce, who owns Mike’s Store and Mobil gas station, agreed that the prevalence of card use has greatly impacted the industry, and he claims that the majority of sales in his store are paid for with plastic, NACS reported.
Pearce also argued that profit margins are low on much of the merchandise sold in his store because credit card companies are charging retailers between $1 and $4 per transaction. Pearce stated that on small sales his store actually loses money because of the swipe fees.
“The American public is deceived into thinking that the convenience of not carrying cash and the benefits of cash back and airline points have no negative consequences, only benefits,” Trainor added. “They are wrong.” Trainor pointed out that at her store, credit card fees ranked second after labor costs in terms of expenses.
“In a business where the bulk of my sales (gasoline) yielded little more than pennies per gallon,” Trainor said, “losing half or more of those pennies in swipe fees and other charges to the big banks and credit card companies, guaranteed a broken business model.”