Good Credit

written by Brooke Porch, customer service associate

 

On August 1st, the Co-op instituted a new policy, instituting a $10.00 minimum for all credit card transactions. Below outlines a few of the reasons the Co-op has decided to make this change.

EXPENSIVE CREDIT FEES

Every time a customer uses a credit or debit card, the Co-op must pay the associated bank or credit agency a variety of fees, including connection fees (even if the transaction is declined or the wrong PIN is entered) and a transaction fee on credit cards that is a few percentage points of the total transaction.

The big number to keep in mind is 1.5%. That is, 1.5% of our gross sales (top-line) income goes straight out the door to service our electronic transactions. One way to think about it is that if you purchase $100 worth of goods, the Co-op will only receive $98.50 to buy more goods, pay the rent, pay the utilities, pay the employees, and etc. These electronic benefit transfers are like a silent thief in the night, just stealing money away.

More-consumers-pay-credit-card-bills-on-time-BTA3IVT-x-largeOPPORTUNITY COST

Another way of viewing electronic benefit transfers – EBT – data is in comparison to the Co-op’s bottom line profit. Our year to date EBT charges total 182% of our bottom line profit! Profitability should be important to all Co-op customers but especially to our members since our members collectively own the Co-op.

These EBT charges ought to be considered an opportunity cost. We could do other things with that money. We could lower prices on goods; we could offer more special events; we could expand our business. The reality of the Co-op is that we operate on razor-thin margins. Any expense which consumes 1.5 percent of gross sales is cutting directly into our bottom line in a big way.

UTILIZE HOUSE ACCOUNTS

Thus, the $10.00 minimum is just one part of a grander strategy that involves shifting more transactions from credit towards cash and cash-equivalent. House accounts are a great way to avoid these costly fees and makes shopping at the Co-op even easier. House accounts are available to all members upon signing up. Once opened, you will be able to debit your transactions from your account and receive a monthly statement of account activity. Funds can be added to the account easily, using cash, check or even a card.

The Co-op wants to thank our members and customers for your understanding in our decision. If you have any further questions, please contact Aliya, our Business & Finance Manager, at comptroller@swarthmore.coop

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