Paper or Plastic…Money, which one costs more?

Our society has become one which relies on plastic on a daily basis. I’m not talking about the plastic dishes or toys I’m talking about the plastic in your wallet.  Specifically, debit and credit cards.  I cut up my two credit cards eight years ago, but like everyone else I began to use my debit card for convenience. But no more.  If I am concerned enough to watch where my money goes why should I be so self-centered as to not consider how my actions are affecting the people I do business with.

We all know prices have been rising every where on every thing we purchase.  When you think about the places you shop, they have had to pay more for the deliveries of their products, heating the buildings and so on.  Working in retail a few times in my past I know that prices are adjusted to cover the cost of theft as well.

But one thing I hadn’t thought about is the cost of using my plastic when I shop.  Each merchant, small or large, has to pay to accept our debit or credit cards.  Costs they incur include:

  • rental of processing equipment
  • support fees,
  • individual transaction fees
  • and payroll to reconcile the statements when they arrive

Merchants pay 2% to 4% of the sale on each transaction. If you add up every person who walks through the store using plastic to pay, that seemingly small percentage for your business adds up.

Of that 2% to 4% Visa and Mastercard get 1.25%, Credit Unions get much less.

If a business can afford to purchase the processing equipment outright they can expect to pay $250 to $900 per machine.  When I counted the number of machines at my local grocery store that’s 12 machines at the check outs,  2 more at customer service, and 1 more at the cafe inside the store.   Using a low average price of say $400 per machine (for simplicity) that means my grocery store may have paid $6000 just to have the machines in their stores.

When you pay for a purchase under $15 with your debit or credit card the merchant pays 21 to 24 cents per transaction. That’s a lot.  Guess who pays this increase?  We do.  The prices of the stores inventory goes up to cover these costs.

In simplifying my life, I paid more attention to where my money goes.  But it was only recently that I considered the cost to the merchants, especially the small businesses, when I use my debit card.

Paper or plastic?  I’m going to choose paper — money from now on.


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