Forget plastic: Cash is the new cash

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Minimum purchase policies for credit cards becoming more popular

By Brent Schanding

Twenty-four cents was enough to almost break Lola Perry.

She’d just gone to a Bedford grocery to replenish her food supplies after January’s ice storm, and after spending about $35 in food stamps there, she realized she’d forgotten tomatoes.

When she returned to the checkout, the clerk initially rejected Perry’s card and asked her to spend at least $5 for her electronic transaction. Perry was less than a quarter shy of that limit.

“They told me to get a pack of gum. That’s not food,” she said. “I didn’t need it. We’re not supposed to use our food stamps for things we don’t need.”

Perry, who relocated here with two children a few months ago, says she depends on food stamps and other social services to make ends meet. Since resources are growing scarcer, she said she confronted the grocery store manager with her concerns.

“When you’re on a low-budget income every penny counts,” Perry said. “It didn’t seem like a big deal to them, but it was to me.”

Country Mart owner Felicia Flaherty told the Trimble-Banner she sympathized with the woman. Afterall, food stamp customers make up most of the store’s customers, she said.

“If all they have left is $2 on their card I can’t refuse that sale,” said Flaherty, who decided to reverse a store policy that set minimum purchases for electronic transactions –– including credit, debit and food stamp cards.

“I just can’t see doing that,” even if it means losing a fraction of each sale to fees assessed by food stamp processors and credit card companies, she said.

Flaherty’s policy may be an exception to the growing trend of minimum-purchase requirements. Some gas stations in the region have begun offering modest discounts to those who pay in cash or use PIN-activated debit cards at the pump. Other small business owners have adopted a cash-only policy.

In January, Marathon gas stations in the county stopped accepting credit cards for purchases less than $5. A sign posted at the Midway Stop N Go station on U.S. 421 says the cards also can’t be used to purchase lottery tickets, money orders or newspapers.

Randy Webb, manager of the Bedford Marathon Stop N Go at U.S. Hwys. 421 and 42 said credit card companies charge a fee for every swipe. According to some card companies, the fee can be as high as 50 cents or $1 for each transaction. That means a small business owner is actually losing money from smaller credit card purchases, like a pack of gum.

“We’re not in the business to lose money,” Webb said. “We can’t lose on each transaction. These stores don’t run on dollars, they run on pennies.”

While Flaherty said Country Mart shoppers usually spend several dollars there, Webb says his profit margins depend mostly on small single-item sales, like drinks.

If the store didn’t set a minimum-purchase amount on those items, it would be “shooting itself in the foot.”

Webb said he’s handled only two customer complaints since the policy went into effect. An ATM at the store allows Bedford Bank debit cardholders to withdrawal cash for smaller purchases without fees, Webb said, which makes it easier for those who don’t carry dollars in their pocket.

It’s not illegal for business owners to adopt minimum purchase policies for credit card transactions –– although some companies like Visa and Mastercard discourage those practices in vendor contracts. If merchants have a problem with paying credit card fees they’re likely to stop accepting cards altogether –– or pass those costs to the customer.

Webb says that would translate to a 22 percent increase on all items at his store.

And it’s unlikely many consumers would be happy about that.