Buying products from your local merchants, whether it is food, jewelry or gifts, is a great way to support your local economy and make Maine businesses stronger and more profitable. The buy-local movement in Maine is getting stronger. We support our local businesses. That is a great way to support your community and our state!

However, there is another step that we could all take to make our local businesses even more profitable and stronger, while creating more local jobs. And it won’t cost you one penny extra. So what is this that will make your local businesses stronger, make your community’s economy stronger and cost you absolutely nothing?

Let’s expand on buy local: Buy local and pay local!


Some of you may be wondering what I mean. It is really a simple change, but we have all gotten out of the habit of carrying cash.

Simply pay your local businesses with cash. Why? Because every time you use your credit card – or your debit card – when you make a purchase at your local business, you are reducing their profits, sometime very significantly.

We have all become more addicted to using plastic than ever. The level of use of credit and debit cards varies depending upon your age group, but it is becoming a time where few people carry cash, and even fewer use it.

Sure, you get all those “rewards” for using your card, but at what cost? When you use your credit or debit card, your local business ends up paying. While card processing fees vary, a typical rate is around 3 percent of the amount of the sale. Small local businesses can’t negotiate rates like a large national player. You can bet that Wal-Mart pays a lower fee than your corner store.

So, what does that small 3 percent mean to a local business? I did some quick research on the restaurant industry for the sake of comparison. Using industry figures, there are over 250,000 privately owned full-service restaurants in the United States.

The type of restaurant – for example, a high-end steak restaurant versus a more modest family-style restaurant – does make a difference in their net profit margin. Typically, full-service restaurants make between 4 percent and 6 percent net profit on their sales, according to national figures.

That doesn’t sound like a lot, does it? It isn’t. But that figure is after the business owner has paid all of their expenses, including wages, payroll taxes, the costs of goods, insurance, license fees, etc.


Let’s look at the differences to the restaurant’s bottom line if all customers use credit cards, versus what happens if all transactions were made with cash. If the restaurant revenues are $400,000 per year, what would happen?

In the restaurant where everything is paid by credit card, the net profit is 4 percent ($16,000), and credit card processing costs the restaurant about $12,000 each year.

However, if all of the sales were in cash, that $12,000 would now become part of the owner’s profits. At the restaurant where all sales are paid by card, the restaurant will have an annual profit of $16,000. The all-cash sales results are very different. Profits are now $28,000 on the very same sales level! That’s almost double.

Of course, each industry is different, and these are industry figures, not a specific business. But the principle is the same: Paying cash makes your local business more profitable and your community stronger. If a business owner whose customers pay in cash now goes out and does the same himself, we could build our economy.

How much could we keep here in Maine? That would require that we look at more detailed sales information. However, in 2015 the state of Maine collected $89 million in sales taxes, which, at 5 percent, means there were $1.78 billion in taxable sales alone. If half of those sales were paid with a debit or credit card, it means $26,000,000 in card processing fees that we could have kept here in Maine.

Shop local – and pay local, too!