(AP Photo/Martin Meissner, File)

Ever notice how wonderful small businesses are at the mercy of a few greedy credit card companies?

With each disappearing loyalty card, communities have fewer spaces for privacy from data mining


Valerie Vande Panne
July 28, 2018 9:00AM (UTC)
This article was produced by Local Peace Economy, a project of the Independent Media Institute.

Not that long ago — in recent memory, in fact — your favorite locally owned café probably offered a loyalty program that consisted of a small paper card (the size of a business card) you would keep and get stamped or punched every time you purchased a beverage or a pastry. Often, 9 or 10 purchases equaled a freebie.

Yet the trend in local small businesses, especially local small cafés, is to use digital loyalty programs attached to your credit card and tracked with their Square, SpotOn or similar payment system. Every purchase made is tracked with the card — but the same card must be used to track. Some programs require registering an email address or phone number with the card, and then you’ll receive “offers” by email or text.

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If getting more emails or texts isn’t your jam, the system can leave you feeling frustrated, confused, and disconnected. For example, a small Boston café’s “reward” for regular patronage was to send me an offer code for 10 percent off an online Americano order. Never mind that I have only purchased herbal tea from this café, and never once made an online order, or that 10 percent off an Americano ordered online didn’t even cover the fee they charged for making the online order in the first place. Worse, they kept sending “reminder” emails that there was a 10 percent off code waiting for me. That’s a lot of wasted energy and mental and technological bandwidth for a savings of about 50 cents.

At a small, local, proudly minority-owned café in Detroit, with a trans pride flag flying in front of it, the loyalty program is similar. Cash purchases are discouraged, and there is no loyalty reward for them. Yet the café offers a “pay it forward” program, where patrons can purchase a beverage for someone unable to afford one, so that person can come in and order with dignity. A sincere and meaningful program, for sure. When I asked the barista why they didn’t offer a loyalty program for cash purchases, she said, “Everyone has a credit card — except those people,” meaning the people who took advantage of the pay it forward program. Never mind that some of “those people” might want to pay it forward when they are able to, with cash. This elitist mentality should have been surprising in such a progressive place. Cash, it seemed, is almost shameful to use there. Apparently, “these” people think it smells of poverty. Never mind average U.S. household debt is rising.

At another Detroit location — a juice bar  — patrons who wish to participate in the loyalty program are required to type in their email address every time they make a purchase. This time-consuming action doesn’t make sense when there is a long line of people waiting to order.

So what’s happening here? Why are so many small businesses switching from the simple program of stamping a card 9 times get your 10th free, to ones that are invasive, not supportive of the patrons, and, in some cases, actually elitist, time-consuming, or driving people away?

Well, the answer might not surprise you: A Visa-supported “study” of brand loyalty programs, touted by small business merchant pay systems, says that “57% of consumers prefer interacting with a customer loyalty program through a mobile device. The report is focused on major corporation loyalty, to companies like Amazon and United Airlines.

According to SquareUp, “participants enrolled in a Square Loyalty program spend, on average, 33 percent more after they join than before.”

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Yet only 20 percent feel like the brand loyalty program makes them feel “special and recognized.

And still, that’s the study pointed to, encouraging small business owners to use these digital loyalty programs. And apparently, business owners are buying into it hook, line, and sinker.

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Of course, the real benefit of these loyalty programs is data mining for the payment processor.

When I pointed that out to a barista, she rolled her eyes: Of course they’re data mining, she said. Who cares? They already have all your information, anyway.

But here’s the thing: Supporting small businesses once had the added bonus of knowing you were not being data mined. Shopping in the local café over Starbucks was once about supporting your community, keeping your money and your energy and relationships local. Digital loyalty programs erode those relationships by putting technology between the people in the small business and the community. They encourage the use of the same credit card, repeatedly, and discourage the use of cash. And, the merchant is paying for it, with every transaction.

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It’s an erosion of a relationship even a well-meaning “pay-it-forward” program doesn’t restore.

And there is nothing progressive about a small business encouraging customers to use a credit card. How many small business owners have paused to question the accuracy of a study created by Visa that encourages the use of credit cards?

Certainly, you can value and appreciate technology, but that doesn’t mean it’s the healthiest thing for society. In the café, or other small local businesses where people are looking for a reason to return, being treated as “special and recognized” is a part of that. In small businesses, that used to be an easy thing to do. It was a strength they had over the big box stores and Starbucks. It’s something humans can do much easier than an app can.

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And in such a technology-saturated society, keeping part of the transaction analog might actually increase respectful and appreciative human interaction — and the business owner might find greater loyalty in that analog space.

Because, frankly, if I want to use an app in a café and have a technological, cold and generic experience, I’ll go to Starbucks. I won’t be back to that “progressive” café, and no longer visit any of the other business examples here. There are plenty of small businesses that still value cash, and human interaction. In fact, my favorite pastry shop doesn’t have a loyalty program at all. It’s a small shop, and the employees all remember my name, even if I have been out of town for months. The food is always delicious. They have a pay-it-forward program for pie. And, my cash is welcome.

I’ll take that analog experience any day. No phone or credit card required.

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Valerie Vande Panne

Valerie Vande Panne is a writing fellow and chief correspondent at Local Peace Economy, a project of the Independent Media Institute. She is an independent journalist whose work has appeared in the Boston Globe Sunday Magazine, Columbia Journalism Review, the Guardian, Politico, and many other publications.

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Related Topics ------------------------------------------

Credit Card Data Mining Independent Media Institute Loyalty Programs Privacy Small Businesses

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