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October 2, 2012

News and Tribune letters: Oct. 2, 2012

(Continued)

> SOUTHERN INDIANA — Reader: Credit card deal hurts vendors

The Greater Clark County Schools board approved a program at its last board meeting to charge payments to their vendors on an American Express card. The superintendent and chief financial officer recommended this program as a way to generate revenue which they said “could be in the vicinity of $425,000.” Spreadsheets were presented to the board showing lists of vendors that accept American Express, those that may accept with restrictions and those that are “possibilities.”

The first group could generate approximately $23,000 in cash back to the school system; the second group $55,000 and the third group $330,000. While this seems like a great deal, it is really just smoke and mirrors. The only one who will gain anything from this arrangement is, of course, American Express.

By asking Greater Clark vendors to accept payment via American Express, the school system is asking them to pay a 3 percent or higher fee so that the school system can get a 1.1 percent kickback. Since most school vendors already offer special pricing and deep discounts to school systems, is it really fair to ask them to take an additional 3 percent off their already low profit margins in order to give Greater Clark 1.1 percent and American Express 1.9 percent?

And what would any vendor do that was asked to reduce their profit by 3 percent? The obvious answer is that they would gradually raise their prices to offset the added cost. Raising their prices over time would negate any “added revenue” that Greater Clark might receive. In the long-run, the school system's expenses would be higher not lower from this arrangement.

While I believe the school system needs to look for ways to generate revenue, this program is certainly not the panacea that it appears to be. Our long-time vendors might be more willing to reduce their prices to us by 1 percent rather than accepting a credit card payment costing them 3 percent.  

As it stands, this program will do nothing more than line the pockets of American Express.

— Alice Dorman Butler, Jeffersonville

Editor’s note: Alice Butler is a candidate in November for Greater Clark County Schools board.

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