Originally published March 9 2005
Credit card use for small ticket items a detriment to some merchants
by Mike Adams, the Health Ranger, NaturalNews Editor
Marcia Levi, owner of Chocolate Moose, a downtown gift shop, complains that customers are using credit cards for increasingly smaller purchases, often cutting their profit margins in half. This trend is due largely to a recent push from credit card companies to encourage credit card use for all purchases, large or small. These companies estimate that $1.32 trillion is spent every year on purchases less than $5.
For years, Marcia Levi refused to accept either credit or debit cards for purchases under $10 at her downtown gift shop, Chocolate Moose.
Customers still complained, so two years ago she gave up on any minimum.
"People come in and charge $2.25 for a card or $1.75 for jelly beans," said Levi, who co-owns Chocolate Moose with her sister Barbara.
Marcia says credit and debit card fees can erase more than half the profit on small purchases.
Faced with a saturated market where just about everyone who wants a credit card has one, the companies have set their sights on what by one estimate is the $1.32 trillion in cash spent every year on purchases less than $5.
Emboldened by consumers willing to download songs at 99 cents a pop or cell phone ring tones at $2 apiece, card companies are courting fast-food chains, taxicab companies and parking-meter manufacturers that have traditionally accepted only cash.
Even American Express Co., whose cards are associated with expense accounts and luxury purchases, teamed up with PepsiCo Inc. to roll out credit card-accepting vending machines last year, mostly in casinos, malls and convention centers.
To woo these merchants, at least the high-volume ones, card companies started lowering the fees they charge them.
"Card companies tapped out the low-hanging fruit within the merchant community," said David Robertson, publisher of the Nilson Report, a payment card trade journal.
"Now they're going after merchants that have been reluctant to accept credit and debit cards."
On a recent visit to McDonald's, Keo used her debit card to buy a cheeseburger and a yogurt parfait.
Later, she used it to buy a pack of cigarettes at one convenience store and a bottle of soda at another, she said.
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