to take advantage of a special CreditCardProcessing.net offer – our highest ranked processor Flagship is offering a $50 AmEx Gift Card Lowest Rate Guarantee!
Consumers Reverting to Cash for Small Purchases
According to research done by Javelin Strategy & Research, consumers are reverting back to cash for small purchases, despite aggressive incentivization by credit card companies to charge.
The research shows that 79 percent of consumers utilized paper money in the last week. In contrast, only 65 percent used a debit or credit card.
This comes as a relief for vendors that specialize in small purchase items like coffee shops that have weathered the unintended consequences of the Durbin Amendment to the Dodd-Frank Act, which capped debit swipe fees at 21 cents. Previously, merchants would pay a small percentage of the total cost in swipe fees where a $1 cup of coffee would incur a transaction fee of a few cents. But after the Durbin Amendment took effect, banks decided to charge the entire 21 cents for any transaction, including that $1 cup of coffee, which ate into profits.
Since merchant are not allowed to pass swipe fees onto the consumer nor can they require minimum purchases, many have been biting the bullet on small purchases, though many still break the rules. Other ways merchant circumvent paying fees is by ditching card transactions all together and install an ATM in their place of business, which some customers take as an insult.
Javelin also found 70 percent of consumers believe the banks are actually benefitting from the regulations instead of vendors. This public sentiment most likely arises from highly covered news reports of Bank of America’s proposed $5 monthly debit card usage fee, which was abandoned after public outcry turned the plan into a public relations disaster.