In various facets of the business world, I’m still often surprised to see some businesses that do accept credit cards and others that don’t. As technology has progressed, we’re seeing mobile swipe capability for smartphones while some businesses still don’t accept credit cards at all. Just the other day, I was picking up a pizza at a new Italian restaurant and I was surprised to see the “cash only” sign at the register. While it wasn’t a problem for me, as I always carry cash, I was watching frustrated customer after customer being directed to the nearby ATM to get cash out. My presumption is that the establishment either a) gets a cut of those ATM fees (LOL) or b) perhaps the costs they’re realizing for credit card transactions are just too high. Sometimes fees can eat into sales by 3-5%.
Thinking about why their costs are too high, they could easily account for this by either just having those costs reflected in their pricing or doing a more in-depth review of the top merchant accounts out there. In the Italian restaurant example above, I wonder if they’ve performed the calculations (with many assumptions needed of course) as to how much in lost sales this no credit card policy has cost them. I know some people, as a matter of practice will not come back because they only carry plastic and are probably annoyed at the hassle and cost in having to withdraw cash. As a fledgling startup, the small business my partner and I run on the side started accepting credit cards right off that bat. It’s an online business of course, but it wasn’t difficult or expensive to set up at all. The speed and assurance of instant payments is worth the nominal transaction fee to us.
Anyway, just some thoughts on credit cards in the business world, back to ETFs next post!