Buying Local: How You Can Help Even More

best way to support a small business buy local cash vs. credit card

When Covid-19 shut down most shipping lines, and products from overseas were delayed or cancelled, most people began to see the value in local businesses even more than pre-Covid days. Then when local shops were shut down, more people began to see the value in keeping productions local and not relying so heavily on foreign manufacturers. We need to bring jobs back home, and we need to keep our American businesses healthy and strong.

Buying local is essential for strong economies. Covid-19 again highlighted just how many small businesses are in the United States and the extent to which they keep America strong by providing jobs. When small businesses had to close and furlough or fire employees, the unemployment rate skyrocketed to unprecedented heights.

We all know that buying local is essential. It is the small mom-and-pop business that is, and always has been, the backbone of America. That hasn’t changed, but it is being threatened not only by Covid-19 but also because of people’s buying habits.

Being mindful of how you make purchases can also help small businesses survive and grow. Most people nowadays carry only credit/debit cards. While these are convenient for the consumer, they can be harsh on the retailer. By making a few changes, you can help small business keep more of the money they make, which means being able to hire more employees, give raises, increase product offerings and services, etc., etc.

Cash is the number one preference of all retailers. With cash, retailers keep 100% of the profit. Cash includes checks. Next in the hierarchy of payment methods is debit cards. Typically, debit cards charge the retailer a fee to process. This is the second most desirable payment method. The least most desirable method is the credit card, although this is the most desirable method by most consumers.

Credit card companies are brilliant in their tactics. In addition to the high fees they charge the consumer for carrying a balance, they also offer great incentives for people to use them. Who pays for those incentives? It is the small business. Depending on what the credit card company is offering as an incentive, they can charge the small business anywhere from 1% - 2.9% (or more) against the purchase which cuts into the business' profits.

American Express is the best example of these tactics. American Express charges small businesses such high rates that most of us cannot accept American Express. American Express is the company that started the Small Business Saturday (the Saturday after Black Friday), a day when consumers are to shop locally. During this Covid crisis, American Express is encouraging consumers to shop local, and when doing so, American Express will give money back to the consumer. Again, where is that money coming from? The very businesses that American Express is pretending to be helping--the small business.

Citibank is another nemesis to the small business. They have a current campaign that has been running for months showing a consumer paying for an item costing less than $5.00 with his high point credit card. The consumer gets his points; the small business gets barely anything. I wrote to Citibank and my letter was returned. Then I sent an email to the CEO about its harmful campaign; no answer. It is obvious that this company cares little about the damage it is causing the small business.

Let’s look at an example: let's say you buy a $10.00 item. The small business makes a $5.00 profit on that purchase if you pay by cash or check. If you charge that purchase on a high-incentive credit card, the small business would only make $2.10 on that purchase. Using American Express, that purchase may only yield a $1.50 profit. As you can see, in order for a small business to survive, the volume of sales would have to be enormous in order to maintain and grow the business when consumers rely on credit cards.

Of course, I cannot presume to tell people what they can and can’t do when making a purchase. I am asking, though, for people to become aware of and make an informed decision when approaching the counter to pay for a purchase. If the purchase is for a small amount, like $10.00 or less, please consider using debit or cash. Whenever possible, help your small businesses survive by being a caring consumer and helping them to keep more profit in the shop and not with the credit card companies.

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