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Tuesday
Dec012015

AmEx & Small Business Saturday: When the Tumor promotes it's Host


The prize for the most backhanded campaign
 may well go to the "Shop Small" & "Small Business Saturday" initiative by American Express patronizing local businesses. Credit cards are an increasing, added cost without added value for small businesses given that their customers have been mostly paying cash historically. Amex takes a staggering 5% cut out of merchant's revenues, being by far the most expensive mode of payment for merchants and a serious drag on small business sustainability and margins. Amex campaigns under the pretense of supporting small businesses while promoting credit card use among their customer base. Credit card proliferation weakens local businesses that almost have become an endagered species and ultimately damages our urban culture. Shop Small and Pay Cash.

Reader Comments (4)

On the question of freedom for the consumer/customer, does a cashless society not provide for more flexibility and liquid investment? I do not visit restaurants and establishments that do not take credit cards, as it is just too much of a hassle to carry cash or to go to an ATM. Small businesses that accept credit cards get a higher volume of business from me, and I am apt to spend more money. Credit cards bring me freedom and unchain my lifestyle. Small businesses should simply bake in the credit card fees and think of those fees as an investment in modernity.
Good points, Michael. I agree, credit cards are a great convenience but they are expensive and shouldn't be mandated. The expense could easily be offered as an itemized cost, just like a desert on a restaurant menu or the cost of a wire transfer. If you love to pay with Amex, add 5% to your individual bill (the catch: passing the fee is contractually excluded for merchants). Due to that clause, merchants are forced to socialize credit card costs between users & non-card users. Not only are costs socialized, but cardholders also get an added kickback out of the merchant fee in form of a "cashback" or "miles reward". In it's current implementation, cards are programmed to extract an increasing share out of local commerce without adding appropriate value and most of the costs are absorbed by others: merchants and cash-payers. Cards may work for e-commerce or large purchases, however, if the premise is to strengthen small business and de-centralize the economy, Amex & Co. is the problem.
Dec 8 | Registered CommenterStefan
Highlighting the "negative" aspects of credit cards on small business is short sighted. Should we also have a dialogue about small businesses not accepting checks for purchase payment due to the added (bank transactions) expense? Or insurance, security systems, electricity...? We are a small business. We stop accepting checks for payment and began (over 3 years ago) using paypal (credit/debit/bank transfer) as our only method of payment. Clients like it and this "convenience" has increased our business. It is 2012. I do not believe that the use of credit cards is the reason it is tough for small business to compete and succeed.
Jan 22 | Unregistered CommenterTed
Thanks Ted, really appreciate your comment. I am not critical of the technology but the lack of freedom with pricing. If merchants were able to charge 3% more to credit card holders the problem would be solved ...
Jan 23 | Registered CommenterStefan

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