Many retailers look at the fees they pay to accept credit cards as a cost rather than a profit center. This is from a recent article, “Joe Vuskovich just flat-out decided to no longer accept credit cards at his Yats on College restaurant. “It’s stupid. I’d rather give the food away rather than give it to those (credit-card companies),” said Vuskovich, co-owner. He does accept card payments at his other three locations, which he says have a more corporate clientele who may have to buy with credit cards.” Read the whole article here.
My opinion is that he is may be losing business by not accepting credit cards. In this day and age many people want to pay for their purchases with a card so that they can get frequent flyer miles or get reward points on their card. If all other things are equal, a consumer may just decide to go somewhere else where they can get their rewards.
Also, I have read many studies over the years that show that people that pay with plastic tend to spend more than those that pay with cash. This is especially true with American Express cardholders. Depending upon a merchants’ profit margin, the higher average ticket may more than compensate for the credit card fees.
As long as a merchants profit margins are higher than the processing fees, it seems that the merchant is making money by accepting credit cards and it is a profit center rather than a cost of doing business.
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