With more and more of us than ever using plastic to pay not only for high-price items but also for everyday purchases like groceries, small businesses are suffering by having to pay card-related fees. In the first three quarters of this year I averaged 2.7% of my gross revenue spent on Merchant Fees and bank processing fees.
So when you get the check for your nice dinner and you add your gratuity of 15-20% and then you are charged your states sales tax which is 8.1% in Las Vegas, know that the merchant pays somewhere between 2 and 4 per cent on processing that total transaction; dinner, gratuity & sales tax. Did you think that the credit card companies were actually paying for those reward points? The more lucrative the reward program that you are in, the more the merchant is charged to process the card.
It does not stop there for the business owner, the gratuity along with the servers $8.25 per hour are calculated in the payroll taxes, social security and Medicare matching's, as well as a percentage charged for workers compensation insurance and payroll processing fees.