Credit Card Machine
In my country there are some stores that
charge a surcharge when you pay using a credit card
it is usually a certain percentage of the total amount
you are charging to your credit card
about around 7-10% of the amount
Credit card holders are told not to tolerate such stores
and to report these incidents to them
Honestly, I find it excessive too to have to pay a surcharge
just to be able to use a credit card
Though if you think about it,
by using a credit card you are delaying the payment
to the store until such time that the bank your credit card came from
forwards to them the payment for the item you purchased
So to the store owners, the cost of the delay in payment
could mean the difference between the cost of their money
on the day you made the purchase
and the cost of their money on the day they were paid by the bank
for the item bought using the credit card
But I learned something else besides these
I found out that credit card companies
require store owners who avail of their credit card swiping machine
to reach a sales quota
and if they don’t reach that quota
they are charged a penalty
So it kind of goes like this
Store owner avails of a credit card swiping machine
by paying for the initial fees
credit card company requires store owner to
meet a monthly sales quota in order to continue using the machine
without having to pay a penalty
so for every item sold by the store owner
by customers who use their credit card to pay for items
credit card company gets a sort of commission
if, for example, store owner’s sales quota amount is 100,000
and was only able to reach a sales amount of 75,000
store owner is required to pay credit card company a fine of around 3,000
on top of the commission credit card company earns for every item sold
But if store owner reaches the 100,000 sales quota
credit card company only earns their commission from each item sold
What’s the sad thing here?
Well, if you are a small store owner the 3,000 is a lot of money
If I was a store owner, I wouldn’t mind having to give
the credit card company commissions for every item sold
using their credit card swiping machine
But being a small store owner I cannot guarantee
that I would be able to reach their sales quota monthly
given the fact that I have a small store
that offers only products to a niche market
For the 3,000 penalty for not reaching the required sales quota
could be cash I could add to my overhead expenses
This scenario reminds me of the 300 deducted to savings accounts
that fall below the required minimum average daily balance
You money would earn 0.5% interest annually in the savings account
So if you had 100,000 for a year in your account
at the end of the year it would earn 500 less taxes
that are already deducted before the 500 enters your account
but if your account falls below the required minimum average daily balance
the bank deducts 300 from your account by the end of each month
it falls below the minimum average daily balance
For your money to earn 500 in a year
you need to leave your 100,000 in your savings account untouched for a year
But if your minimum average daily balance goes below the required amount in a month
You can lose 300 every month
Fees are fees
and services are services
But sometimes I wonder if it would be possible
for these financial institutions
to take a look at their fees and penalties
and redesign them to be less “financially painful”
After all, they have numerous customers
and if all the penalties of these numerous customers
are put together
that would be a lot of money
And we are in a country where 300 is equivalent to 10 kilos of substandard rice
And 3000 is enough to pay an employee’s partial salary
If the store owner is a big business owner
the 3,000 penalty is tolerable
But for a small store owner
not being required to pay a huge 3,000 penalty
is a kindness
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