Rewards Points are Hurting Small Business
Why “Points” for Consumer Use of Credit Cards Hurts Merchants
As consumers, we all love rewards points and cash back incentives for using our credit cards. It’s no wonder that credit card issuers have made these rewards a cornerstone of their marketing strategies. But have you ever stopped to consider the impact that these points have on the merchants who accept credit card payments? In this article, we will explore the ways in which rewards points can hurt merchants and why we need to be more mindful of how we use our credit cards.
Rewards Programs Encourage Consumer Spending
Rewards programs are designed to encourage consumers to spend more money using their credit cards. The more you spend, the more rewards points you earn. While this may seem like a great deal for consumers, it can be a burden on merchants. Credit card companies charge merchants a fee for every transaction they process. This fee is typically a percentage of the transaction amount. The more you spend, the higher the fee charged to the merchant. When merchants have to pay these fees for every transaction, it can add up quickly.
Rewards Programs Increase the Cost of Doing Business for Merchants
When merchants accept credit card payments, they must pay a fee to the credit card issuer. This fee is typically a percentage of the transaction amount. In addition to this fee, merchants who accept rewards credit cards must also pay for the cost of the rewards program. Credit card companies charge merchants a higher fee for rewards credit cards to cover the cost of the rewards program. This means that merchants who accept rewards credit cards have to pay more in fees than those who don’t. These higher fees can make it difficult for small businesses to compete with larger businesses that can absorb the additional costs.
Rewards Programs Can Negatively Impact Merchant Profit Margins
When merchants have to pay higher fees for credit card transactions, it can negatively impact their profit margins. This is especially true for small businesses that operate on thin profit margins. The higher fees charged for rewards credit cards can eat into their profits and make it more difficult to stay in business. Some merchants may choose to pass the cost of the rewards program onto consumers by raising prices. This can lead to a decrease in sales as consumers look for cheaper alternatives.
Rewards Programs Can Lead to Higher Prices for Consumers
When merchants have to pay higher fees for credit card transactions, they may choose to pass those costs onto consumers by raising prices. This can lead to higher prices for consumers who use credit cards to make purchases. While this may not be a significant issue for consumers who only use credit cards occasionally, it can be a burden for those who use credit cards frequently. Higher prices can also lead to decreased sales as consumers look for cheaper alternatives.
In Conclusion
Many Merchants are choosing our CASH DISCOUNT PROGRAM to help offset these exorbitant fee’s without raising bases prices. If you have questions about how the program works, or to enroll, give us a call or message us and we’d be happy to explain.
