I love coffee shops. Â I’ve been frequently our local coffee shop, Java Groove off and on for several years now and have found that it’s a really good place to meet clients and friends and also to sit and get some work done (almost as good as theÂ BVRoastery). Â The coffee is good, the environment is relaxing and comfortable and they have lots of power outlets!
As I was in there the other day, I was paying for coffee with a gift card from my mother-in-law when the owner asked if I had purchased the card or if it was a gift. Â I told her it was a gift and she said great and reminded me that I couldÂ reloadÂ the card with money and that if I did that, it could save her money on credit card fees. Â Which, when you’re buying lots of $2 cups of coffee, can really add up for her and any merchant making lots of small sales. So, I started to think about the cost difference to her comparing 10 cups of $2 coffee. Or, when customers buy $20 worth of coffee.
I’ve done a lot of research into credit card fees recently and while they can vary, I decided to use round numbers. 3.5% and $0.30 per transaction and we’re gonna exclude tax to make it simple.
Case the first: One person buys 10 separate cups of coffee. Â They pay $20. Â It will cost the coffee shop merchantÂ $0.37 for a cup and they will make $1.63. Â Spread that out over 10 cups of coffee and it cost the merchant $3.70 and they make a profit of $16.30. Spread that out over 100 cups and it costs the merchant $37 and they make $163.
Case the second: Another person buys a gift card for $20. Â That costs the merchant $1 and their profit on 10 cups of coffee is $19. Â Then, comparing to 100 cups of coffee and the merchant makes $190 and it costs them only $10.
So, by buying gift cards and loading them up in bulk instead of using your credit card for each $2 cup of coffee you purchase doesn’t cost you a thing, but it saves the merchant a lot of money over time – or about $27 over 100 cups of coffee.