I found this article interesting as it represents an often overlooked stumbling block for many small businesses that rely on electronic financial transactions. For those considering the use of debit or credit card payments as part of their business model, the fees paid by stores for using the network each time a card is swiped can drastically reduce the profitability of a sale. This article highlights the struggle of a convenience store owner near my home who has struggled to remain profitable due to the current fee structure.
Although his business is likely very different than those we will be developing in class, I see one very key similarity. The fees tend not to weigh the actual transaction amount, but accrue each time a sale is processed. For a social venture endeavoring to meet the needs of many people, typically operating with narrow margins on low cost goods, careful considerations need to be made when considering how customers will pay for your business’ goods or services. While electronic payment is easy and flexible, causing it to be glorified as a superior solution for many businesses, the costs might not outweigh the benefits in some cases.
The article discusses how new legislation may be enacted in the near future to make these fees less burdensome on small businesses. If electronic transactions are a consideration in your business mode, payment methods may represent an important aspect of how your business will change over time. As laws change and the cost structure shifts, it may be a great example of how a business model can plan strategic transitions to best take advantage of the current market environment.
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