Payment Shift – Debit vs Credit Cards
Most people that follow us on Social Media and/or read our blog posts know that we are a local independent business. As such, we know firsthand how valuable it is that we support local businesses at all times, not just during pandemics, global economic collapses, etc. We want to see these businesses around because they are part of the community.
When local independent businesses are doing better than just surviving, it adds a vitality and a diversity to our local communities that national/multinational corporations don’t. A larger portion of the money going through these businesses goes into the local economy compared to what national and multinational corporations contribute to our local economy.
In some cases, large corporations may have a negative impact on the local economy when they get grants, tax relief, infrastructure built to service them, etc that are not accessible to the small independent businesses. The local municipality and the province put in funds for that corporation to set up in the local area. Those corporations can become very detrimental to the local businesses who become pushed out of the market.
Examples of this are strategies like Starbucks who will buy out leases of other coffee shops when they want that location; Walmart or shopping centres building on inexpensive land but the city needs to spend money on intersections, services, and such; et – south Edmonton Common being the poster child of this.
We are trying to keep as much money in the local economy as possible, when possible. We are asking you, our customers, to take an active role to help us reduce the amount of money we currently send away each month to the credit card companies through our Interac terminal.
In 2020, we sent 33,493.93$ to Interac, international credit card corporations, and national banks to be able to use their services via the debit/credit card terminal. This was an average of 2,791.16$ per month. Of these costs, about 52% is by Visa and 40% by MasterCard. Debit only accounts for 8% of all costs going through the Interac terminal.
BUT the dollar values of those costs are telling.
Visa only accounts for 27% of the total sales going through the Interac terminal and MasterCard represents 23%. I am sure most of you have quickly seen that those two credit cards only make up 50% of the sales going through the terminal yet they represent 92% of the credit card/Interac costs.
If we could shift a portion of the Visa and Mastercard costs to debit or cash, we could reduce the money we are sending off to these faceless corporations. It is within your control, our customers, to choose where to send the money. We can send it off to the corporations outside our community or some of it could stay here in Edmonton.
This is not about us trying to grab more money from you through this shift. This will be a balanced arrangement. We will allocate 2,800$ for this cost every month and it is within the power of our customers where this money goes. Do we send the money to these corporations or does some of it stay here in Edmonton?
The deal is, (drumroll please!) that every dollar we can reduce below this $2,800 will be diverted and directed to a local non-profit/charity/institution. We will do this for one year and assess the program after that point.
To sweeten the pot, we will commit to matching the dollar figure of the money diverted up to $250.
For example, if we reduce our monthly charge to $2,500/month, we will allocate the $300 not being sent to the financial institutions PLUS we will add an additional $250 of matching funds for a total of $550. If the fees were reduced to $2,000, we would contribute $800 of the diverted dollars PLUS the $250 matching funds for a total of $1,050. Every month we would send these diverted funds and matching funds to an organization to support their work in the local community.
How does that sound? Is this something that you wish to support?
How can you help with this initiative? Please consider using a debit card instead of a credit card to pay for your purchase. If you do need to use a credit card & there is an option, please consider using a card that has no rewards attached. (Credit card companies/debit machine merchants charge us a premium for these cards since it is businesses and you that are ultimately paying for these ‘points/rewards’).
We are not asking you to donate any money towards this initiative but rather just chose a different method to pay us for the products you buy from us – other than credit cards.
We encourage you to do this at any small independent local business and it would help them. That small savings of the transaction fees could make a significant difference between a business surviving or closing.
When I am out shopping, I make a decision on what card that I am going to use. It makes a difference and it is appreciated by all of us small businesses. I also carry cash.
I want as many small local independent businesses to prosper as possible.
This program will start on October 1st, 2021.
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