Scribbles

I’d like the notion of moving towards a cashless society. Unfortunately the credit card companies aren’t willing to price their fees accurately to reflect true risks. As a result, we all suffer. But right now I don’t want to talk about credit card companies. I found an idea to for small businesses to cope with them.
 
Small businesses often put restrictions for customers who pay with credit card. Most of the time, they tack on an extra fee, not a large fee, somewhere in the neighborhood of 50 cents. Other times, they put a minimum spending limit. They do so to protect their margins; each transaction costs approximately .30 + 3% of the total amount. For the small shops that conduct many small transactions, say a burrito joint selling $7 burrito meals, 50 cents represents about 7% of the total transaction, making it unbearable (note, my small business also has to deal with the credit card fees). As a customer, I don’t like paying the extra fee, but I get it, so I grumble to myself, pay cash and get on with life.
 
But the other day, I encountered an ingenious workaround. This dessert tea shop, Cha for Tea, offered a 5% discount from my total bill if I paid cash. Absolutely brilliant. I felt great about paying cash under the illusion of saving money, as opposed to silently griping about forced to pay cash. Of course this is all psychological. But I felt great and empowered. And the tea shop managed to avoid its margins on a $5 drink getting chipped away by greedy financial oligarchs.
 
So if you’re a small business where credit card fees chip away your margins, adjust the prices to make this option equivalent to the 50 cents surcharge for paying with plastic. Shift your customers’ mindset so they feel smart for paying cash. And for the customers who want convenience and earn Starwood points, they won’t feel bad. It’s win win win. Yes, Mad Burrito and all the taxi drivers out there, this is for you.