We live in the 21st Century where people tweet, surf the web while on the move and generally act quick and faster than before AND we seem to be falling out of love with cash rather fast – the credit card is clearly where it’s at!

According to the Office of National Statistics, the number of debit card transactions in the UK was ten times higher in 2004 than in 1991 levels. Over the same period, credit card usage increased almost three fold.

So how does this apply to the small retail shop business you may ask? Well a shop is charged several fees for the privilege of accepting credit cards. The shop will be charged a commission by their bank of anywhere between 1%-3%+ of the value of each transaction paid for by credit card. The shop owner may also then have to pay a variable charge, which is basically a small percentage of the total transaction, for taking payment by credit card.

Of course the multi outlet merchants are able to use their buying power to drive down these variable costs to very small amounts, but for the small retailer no such benefit exists and therefore in some instances of very low-value transactions, use of a credit card will significantly reduce the profit margin or cause the shop-keeper to lose money on the transaction.

So the question these small shop businesses have to ask themselves is do they set a minimum payment level before they take a credit card, say £5, or even charge a “credit card supplement” of x pence on each order under a certain amount, OR they could just accept these transactions as part of their costs to retain the right to accept credit card transactions overall and get a customer sale.

Where do I stand? Well my local shop will not take anything by card under £5 yet its competition charges 35p for all orders under £10. The former possibly works, the later for me does not.

I think that a small retail convenience store stands or falls on the word ‘convenience’. If an obstacle is put in the way of a customer buying they will go elsewhere. We know this happens online where we all strive to reduce the clicks to order so why is ‘real world’ any different?

Related posts you may wish to read:

1. How a small business can get started on Twitter
2. Online food delivery, progress or a killer of the local village shop?