Blog: Credit Card Minimums Killed the Radio Star

 

The corner store down the street from me in the North End recently raised their credit card minimum to $15. I like them and their prices are fair, but I often find myself schlepping to the grocery store or  going without rather than spending the minimum. For the bakeries and sandwich shops near by it’s a similar story.

I want to shop these stores, but the high price of using my plastic keeps me away.

A lot of people are happy to shop local, they find real and emotional benefits from supporting their neighborhood stores. Further, most people understand that credit card companies aren’t exactly doing these business any favors. But, at the end of the day, especially these days, people are living on budgets and thinking with their wallets—and minimums are driving sales down and leaving customers with a frown.

It’s tough to compete with larger businesses like Dunkin Doughnuts and CVS that can absorb credit card fees. On the other hand, it’s tough for consumers not to get upset when they only want a Coke and an candy bar, but find themselves without any cash.

Until recently charging minimums has been against the contract that Visa and MasterCard make small businesses sign in the first place. Though it’s likely this rule will soon change. So that’s great news for small businesses, especially when you consider that according to The National Association of Convenience Stores: “its members paid $7.4 billion in swipe fees last year, making it the second-largest industry expense after labor.”

Then again, no one likes spending more than they have to. And, as people continue going cashless there is a simple problem facing these local businesses: the more customers are forced to pay minimums, they more they may choose not to shop at all.

On a back road in upstate New Hampshire I came across a small convince store with a very simple solution: “if you spend under $10 with a card,” a sign at the register read,  “we accept 25 cent donations to cover the cost.” I was surprised and delighted with this option. I didn’t have to spend more than I wanted to, and I felt like I was investing in this store—who doesn’t like helping out the little guy?

These types of solutions are what small businesses need to retain and grow their customers. It’s great to appeal to the best in people, but it’s also offering a benefit for them. On the one hand they get their purchase relatively hassle free and on the other they have made an investment in your business they can feel good about.

Final Thought:

Getting a Facebook fan page or Tweeting coupons are both tactics in a larger strategy of engaging your customers in a more human way. But there’s no reason we can’t practice this idea more during face-to-face interactions as well. My advice on this, look your customers in the eye, explain the issue and let them into the solution.

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