By Admin, BuyLocalBG.com, BuyLocalBg@gmail.com/
Wednesday, February 26th, 2014 11:00 AM CST
I know it seems odd that a company like Kentucky CPS suggests to pay cash for items when they make money off credit card processing. Well, that’s what we love about local businesses like Kentucky CPS. They want what is best for their clients. We know sometimes you just forget cash or can’t make it to the bank before shopping. We understand. Still the fact remains, The Durbin Amendment, enacted in October 2011 as part of the Dodd-Frank Act, set a cap on the amount financial institutions can charge merchants to process debit card transactions. Before the Durbin Amendment, retailers paid an average of 45 cents every time they swiped a debit card. Now, the max card companies can charge is about 21 cents per transaction.
That sounds good for retailers and good for business until you look at the unintended consequences of how credit card companies have responded to the legislation that has limited their ability to charge for processing services.
In the wake of the Durbin Amendment, card companies have done away with discounts they used to give on transaction fees for small amounts, usually under about $10. Now, companies such as Visa and MasterCard charge many small merchants at the max rate of 21 cents.
Most of all it means the profits of many of our local restaurants and bakeries are paying more and making less every time you swipe your card. National companies like Redbox added a $.20 extra fee to make up for it. If you are buying a set of tires or paying for cup of coffee, the interchange fee is the same. The Government intervention in the interchange system will most likely boost profits for giant national retailers but it will clearly harm the interests of our local businesses that deal in small tickets. Sometimes you can’t help but to use a credit card. If you can, try to use cash for those under $10 to help our local businesses.
If you are a local business that is trying to save money on processing, contact Kentucky CPS. Locally you can contact them at 270-303-4982.