I have to admit that I’ve gotten very comfortable using my credit card. Too comfortable. Yes I pay it off every month so I’m not using it for “credit” per se–just for convenience. It’s nice to see a summary of my expenses, for understanding where my money goes. That convenience doesn’t cost me anything directly, but in thinking about it I’ve come to realize that it costs the retailers a lot.
Now if we’re talking a huge, publicly held company, then I look at it as a cost of them doing business with me. But when it’s the small business entrepreneur restaurant owner down the straight who makes the amazing Taiwanese double sauce noodles for me week in and week out, then it doesn’t quite feel right.
I got curious about how much it might actually cost them, and found a website, truecostofcredit.com which shows you the cost for a variety of cards, if you let them know which one you have. So looks like for a restaurant, factoring in the per transaction cost fee, and then the percentage fee, it’s about a 5% fee to the merchant to pay for my noodles on the credit card.
Having just spent about half a year working closely with a variety of small businesses, I know how much of a difference 5% can make–for a restaurant that’s taking in $400K a year, that’d be a $20K difference, which can mean a lot to a hard working local entrepreneur.
For me it’s become an easy choice: do I want that 5% going in the pocket of the owner, or the pockets of the huge bank’s executives and shareholders? When buying local pay cash! It’s fun, it’s easy, it makes a difference.