Letters

I enjoyed Michael Wright’s article on card charges [“New Credit Card Surcharge Rules Befuddle and Burden Business Owners,” 27east.com, September 4]. At the core, GBL 518 is a “Pay What You See” law. In other words, customers should not be surprised at the point of sale, regardless of whether a merchant may levy a card fee or not.

We understand that card acceptance costs draw attention because they generally appear as a single debit at month end, often a surprise if not budgeted for in advance. There are certain tools that can adjust for this surprise, one of which is a net deposit, thus eliminating any month-end debit. Still, card fees do amount to a nontrivial expense for many merchants.

Ultimately, all business expenses — whether insurance, labor, rent, fuel or COGS — should be factored in when setting prices. If an insurer raises premiums or a supplier increases the cost of raw materials, a merchant will naturally adjust prices accordingly to maintain margins. Card acceptance is another business expense, especially considering over 95 percent of purchases are on cards, as the article alluded to.

Objectively, card acceptance is a relatively inexpensive method of converting goods and services into revenue. With just a tap, dip or swipe, customers can pay in their native currency, access credit lines for larger purchases, and you, as the merchant, can receive payment approvals within seconds, with funds deposited into your bank account the next day. You needn’t know who the cardholder is, let alone meet them in person.

Cash, too, has embedded costs: theft, loss, cash handling, wear and tear on vehicles traveling to the bank, the owner’s time spent away from the store making deposits, and the lost opportunity to increase revenue because customers can’t make larger purchases using their credit lines.

The Federal Reserve calculates that cash acceptance costs are around 1 percent of sales and have an average charge size 50 percent less than cards. Retail and hospitality consultants IHL Group estimates these costs to be over 4.7 percent. Cash is far from free.

Further, there is empirical evidence that charging customers to use cards not only creates a poor customer experience, but it also reduces server tips, decreases cardholder spend, increases abandoned sales (customers leaving at the register), raises the risk of fines for noncompliance, and decreases repeat business. There are many customers who stop visiting certain merchants altogether after being surprised by additional fees at checkout. Those are sales and customers that never return.

Good or bad, cash is no longer king.

Michael Nardy

Electronic Payments

Calverton