The virtue of paying with money

Question One:  Do you remember how to pay with cash? Do you remember what it’s like to remove dollar bills from your wallet, hand them to a cashier, watch the cash register drawer spring open, and wait for the cashier to count your change?

Question Two:  When was the last time you bought something from a locally owned independent retail store?  And the time before that?

The two questions are related.

We Americans sanctify Small Business (capitalized) only a little less than Apple Pie and Motherhood, but we abuse small business without mercy.

I’m most familiar with the way regulators do this, especially New Mexico state regulators, where rules are made and enforced as if business owners had no need to spend time operating their businesses but had all the time in the world to fill out forms and figure out what the rules mean, because the people who made the rules made no effort to explain them clearly, to coordinate any rule with any other rule, or to make compliance simple or efficient.  I have written about this before and will no doubt write about it again many times, so today I will not amplify.

ABC’s evening news recently ran a feature series asking, “What’s made in America any more?”  I’m asking, where do we buy it?

Based on my informal and unscientific survey, it seems that the locally owned storefronts mostly belong to service businesses, where personal attention is required and where trust matters:  businesses like hair salons and auto mechanics. An awful lot of nail salons are operated by Vietnamese and Thais, and I suspect this is not due to some obscure Asian cultural tradition but rather the very American tradition of new immigrants finding opportunity in independent business, and today the opportunity is in manicures and pedicures.

The loss of independent retailers is not only because of regulations, and it’s certainly not just economy of scale.  It’s the decisions we make as consumers.  We have come to rely on advertising, familiarity, big box convenience, and the assumption that the big guy or the national chain has a slightly better price.  In the process we are losing local autonomy, individuality, local tax base, and something that concerns me especially, the habits of responsibility that go with ownership.  But you know that.

Another factor might be the way we pay.  When you buy something with cash money, a complete transaction takes place between you and the seller. You have paid your money, the purchase is done, and the seller now has dollars that he can use to buy something else.  But when you swipe that convenient little piece of plastic, you have added at least three parties to the transaction:  your bank, the store’s bank and a national clearinghouse.  They all get paid, and the cost is buried in the purchase price.

Current news reports are raising awareness of these costs because of changes resulting from the Dodd-Frank financial reform law enacted last year.   But I decided to write about this because of a personal plea from a small business owner.  She said, simply, that absorbing the cost of debit card fees is another blow to her ability to stay in operation — another straw on that poor camel’s back.

In the past, when a business owner asked me to pay in cash, I thought it was to avoid paying gross receipts tax.  And maybe it is.   But right now I’m wondering whether these added transaction costs are doing us any good, and I’m thinking nobody needs to use a card for a $10 purchase.  Including me.  So next time I come into your store, I’ll plan to have a few dollars in actual money with me.

Triple Spaced Again, © New Mexico News Services 2011


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