Convenience of plastic comes at a price for businesses, consumers
"Paper or plastic?" is the common question asked when shopping at some local stores.
The question now has a double meaning — "Cash or debit or credit card?"
More consumers are using plastic when paying for purchases instead of cash or writing checks.
One swipe through a machine takes less time than writing a check, showing a form of identification, and waiting for approval. Also, more consumers are stretching their shopping dollar by charging groceries, fuel, and other necessities to make their paychecks go as far as possible.
These days, retailers are being charged a significant fee every time a customer uses a plastic card.
Debit cards have become more popular with consumers because instead of writing checks, purchases are automatically withdrawn from the customer's checking account with merely a swipe of the card and a PIN (Personal Identification Number) or signature.
Credit cards have been available to consumers for many years, providing an alternative to paying for purchases with cash or check. This gives consumers the ability to make payments on purchases or make one monthly payment.
Area grocery stores have seen a significant increase in the use of plastic cards.
Rick Turner at Peabody Market said he was all for the use.
For him, debit card fees are less than credit cards and vary by company.
About 25 percent of his customers use plastic.
"For the percentage retailers pay, they would be stupid not to accept them," Turner said, adding he considers those charges part of his overhead.
At Vogt's Hometown Market of Hillsboro, Jerold Vogt said they see approximately 60 percent of their customers using debit cards; fewer use credit cards.
"We don't have to pay any fee for debit cards but pay a percentage on every credit card," he said. The percentage ranges from two to four percent of the sales.
During the past two years, those fees have increased.
"We prefer debit cards over checks," Vogt said.
For Linda Carlson of Carlsons' Grocery of Marion, she's seen debit and credit card fees increase more than 50 percent.
At the Marion store, she sees 20 to 25 percent of her sales paid with plastic with more debit cards being used than credit.
Lyman Adams, manager of Ampride convenience stores in Marion and Hillsboro and Cooperative Grain & Supply said his company pushes for customers to use the co-op charge card instead of other cards.
"Accepting credit cards has become an expensive venture but it is widely used," he said.
Adams explained that when it comes to the sale of fuel, the market allows stores a five to 12 cent per gallon margin of increase.
"When a customer uses a credit card, we hope to make a penny per gallon," Adams said. "Any margin you hope to gain, you give away on credit card fees."
That's the reason co-op credit card holders get a three cent per gallon discount for fuel when they use the local credit card.
Debit and credit cards also are being used more on the other side of the business for feed and other supplies sold by the elevator.
The company pays a fixed rate. The fuel supplier processes the charges for Ampride.
"When gas was $1 per gallon, three percent (the amount paid to the credit card company) was only three cents. Now that fuel is $4 per gallon, that three percent is 12 cents per gallon," Adams said.
Those fees are even more significant for larger purchases like furniture and carpet.
Baker Furniture and Carpet of Peabody has to pay 1.56 to 2.3 percent of the total purchase in credit card fees.
"There are different variables depending on whether it's a debit or credit card, and if it was swiped or keyed," Becky Kyle said.
Credit card companies offer perks which encourage customers to use them, she said. The higher the balance, the more interest will be collected and the more the card is used, the more service fees go in the pockets of the credit card companies.
"There have been times we have asked a customer to write a check for larger purchases instead of using a credit card because of the high percentage," Kyle said.
For example, on a $600 sofa purchased with a credit card, Baker Furniture could have to pay nearly $14 for the transaction. Add up numerous transactions like this during a week and a company could find itself shelling out several thousands of dollars.
"Consumers are using plastic more and more for the convenience," Kyle said.
In order to keep up with the times and meet customers' needs, businesses know they have to continue to offer the service despite the fees.