How paying with cash benefits your local economy

Small businesses reinvest revenue in the local economy

Stanford Rosenthal

19 Oct 2023 — 2 min read

The New Orleans skyline from the window of a doctor's office

Did you know that when you swipe or tap your credit card at a local small business, the shop owner pays about 3%? Specifically, Square charges merchants 2.6% + 10¢ for "card present" transactions—which includes Apple Pay / Google Pay—and higher rates if the card number is manually entered.

Because of rising transaction costs, local shops are increasingly asking customers to pay with cash – or otherwise face a surcharge.

When you pay with cash, that 3% provides the merchant with much-needed revenue to cover overhead such as rent and payroll.

It can be tempting to use a credit card when they reward you with free flights and hotel stays – but keep in mind the cost to your local economy. Not only does the merchant loose that extra revenue, but those fees are leaving your local economy entirely and most likely going to a multi-national corporation. A local business, on the other hand, reinvests this revenue in the local economy, in what economists refer to a Local Recirculation of Revenue.

**Local Recirculation of Revenue** – Compiled results from nine studies by Civic Economics, 2012

While it may not always be convenient to pay with cash, it's worth thinking twice before swiping or tapping your card.