We’re working to encourage consumers to shop at locally-owned businesses, keep money in their communities, and contribute to a sustainable economy.

Shop local this Small Business Saturday, but don’t pay with American Express


This Saturday marks the fourth annual “Small Business Saturday.” It’s part of a campaign by American Express to encourage Americans to shop at locally-owned brick-and-mortar businesses the day after Black Friday, when the masses typically swarm big-box chain stores on the hunt for cheap flat-screen TVs and other once-a-year bargains.

Sounds like a great idea, right? AmEx must really care about supporting small independent businesses. Or so they’d like you to believe.

In reality, AmEx just wants consumers to shop more, and pay with their AmEx cards when doing so. That’s because every time you pay with AmEx card, or any other credit card, the credit card company (as well as the issuing bank) makes money. And where does that money come from? The merchant, in the form of transaction fees, amounting to 3% or more of the purchase total, in addition to flat fees of 10 cents or more. And don’t forget the millions credit card companies make in interest and fees from their own customers.

Of course, AmEx is looking to make a profit, just like any other company. But if AmEx truly cared about supporting small businesses, why not remove or lower its transaction fees, if only for Small Business Saturday? That way, small business merchants could encourage their credit card-happy customers to pay with AmEx that day to save them money on transaction fees. More likely than not, many customers would choose to use AmEx over another card, and AmEx would still make money off all of the customers who would end up paying interest on their purchases. And AmEx would come out looking like a small business champion, rather than a leach attempting to maximize its own profits under the guise of a feel-good campaign.

We don’t mean to sound overly cynical – we wholeheartedly believe in the message of Small Business Saturday, and we’re glad AmEx is making people more aware of the benefits of shopping local. We’ll certainly be patronizing our favorite local independent shops that day and encouraging others to do the same. But we’ll be paying in cash, or with Dwolla if the merchant accepts it.

We aren’t fans of companies who do good with one hand and do bad with the other, and we can’t help but feel like that’s what AmEx is doing with the Small Business Saturday campaign. As an aspiring B Corp, we look to Patagonia, method, and other companies that do more than just “talk the talk” when it comes to corporate responsibility as role models for how to run our business. So while we’ll continue to spread the word about choosing local independent businesses over large chain corporations as much as possible, we won’t sweep the negative impact credit card companies have on small businesses under the rug.

This Small Business Saturday, please make a point of supporting your local independent businesses. Just don’t forget that how you buy is just as important is where you buy.

How you buy matters


You may think you’re doing a great job supporting your local economy by making as many purchases as possible at local small businesses. But did you know you might actually be hurting your local small businesses by paying with a credit card?

Most credit cards companies charge small businesses 3% or more of the total order, plus flat fees of 30 cents and up. Three percent doesn’t sound like much, but when you consider all the costs small businesses must absorb – advertising, payroll, taxes, and more – if a small business has a margin at the end of the day of 10 percent (which is on the high end in today’s economy), that 3% in credit card fees is costing the business 30% of their profit. That’s a huge chunk of a small business’s profit, and credit card fees can significantly harm a small business’s viability in these tough economic times.

We’ve already stressed the importance of supporting local small businesses. Besides shifting your purchases to local independent retailers, one of the best things you can do to help small businesses thrive is to pay with cash, not credit cards. And while you might like the convenience and rewards you receive with credit cards, you may not realize they’re costing you money too. The added fees that local small businesses have to pay for credit transactions often get passed on to the consumer through higher prices. But these higher prices don’t help keep more money in your community – they are used to offset high credit card charges.

Debit cards are slightly better, but small businesses still pay approximately 30 cents for each debit transaction. And mobile payment systems like Square advertise lower fees, but they’re still charging small businesses 2.75% per swiped card, and even more if a card is entered manually. So what’s the alternative? Obviously, cash is always a good option because it costs local small businesses nothing, but it’s not always practical or safe to carry around large amounts.

Dwolla was created to help minimize the negative impact credit card purchases have on small businesses. It’s a safe way for customers to transfer cash to small businesses at minimal cost. Dwolla charges nothing for transactions under $10, and only a flat 25-cent fee for larger transactions. There are no credit cards involved – when you make a purchase, you transfer money directly from your bank account to the merchant’s account.


Customers fall in love


Consumers don’t fall in love with your brand and become Brand Advocates by being pushed into sales; they fall in love with your high quality product, excellent customer service, and a consistently enjoyable experience – all natural byproducts of strong relationships.

Shift your thinking, shift your spending


At Loyal to Local, we’ve pledged to buy local whenever possible, and we’ve outlined the reasons why shopping locally is better for the economy, for the environment, and for our communities. As consumers, most of us know we should shop local, but we’re often pressed for time, or unaware whether what we want is available locally. We’re all guilty of patronizing the big-box stores on occasion (even us here at Loyal to Local), whether due to convenience, price, or ignorance.

So is shopping at locally owned businesses really worth the effort?

In short, absolutely. And it doesn’t require a major life change.

Based in New England, the 10% Shift is a campaign designed to “build strong local economies and vibrant communities” by encouraging consumers to buy local. The organization is based on the premise that by making a slight behavior change and shifting just 10% of your annual budget for purchases from non-local businesses to Local Independents, you can have an immediate, positive impact on the health of your local economy.

The benefits of shopping locally are due to what is known as the “Local Multiplier.” When you make a purchase from a local, independent business, up to three times as much money stays locally as compared to purchasing from larger chains. And since “Local Independents” employ local people and tend to purchase from other local businesses, there is a dramatic community impact, resulting in job creation and a circulation of money in the local economy.


Cheaper doesn’t create loyalty


Cheaper is the last refuge of the person who's not a very good marketer. Cheaper is easy and cheaper is fast and cheaper is linear and cheaper is easy to do properly, at least at first. But cheaper doesn't spread the word (unless you are much cheaper, but to be much cheaper, you need to be organized from the ground up, like Walmart or JetBlue, to be cheaper). They are, you're not.

9 Businesses


A local business is the heart of a community, a place that helps create relationships between residents and lets them directly impact a city’s economy. In Detroit, small businesses are rapidly taking root in neighborhoods all over the city. From coffee shops and galleries, to bakeries and custom sneaker designers, 4exit4 highlights nine businesses that are changing the conversation of the community.