I’ll admit it. This blogger was pretty surprised to see a “Now accepting Visa and MasterCard” sign at a Toronto-based Dollarama recently. Having already long-accepted that this particular store – known for its bargain-based prices – only accepted cash and debit, I was glad to know that I was now able to pay for my purchases with my preferred payment method: credit card.
Because Dollarama previously only accepted cash and debit, I was hesitant to visit the store on a regular basis – even when I knew my total bill would be far less than that of another shop. And that’s because I simply prefer to keep track of all of my expenditures on one account. Further to that, I like having extra time to pay for my purchases. Using either cash or debit means I have to relieve myself of my money right away.
According to Ian Vandaelle on BNN.ca, nearly half of Dollarama’s sales were plastic-based last year. It is likely that this statistic helped to push the popular retailer towards accepting credit cards in addition to debit cards. Speaking about Dollarama’s growth in sales of higher priced items (those priced over $1.25), Vandaelle points out that debit card acceptance has been cited as a big reason those sales have picked up.
“Dollarama originally eschewed accepting debit cards due to the transaction costs borne by the company, but now accepts the form of payment in all of its stores,” he writes, “Debit transactions represented 49.2 per cent of sales in the last fiscal year, and the average debit card transaction is twice the value of cash-based sales. The retailer is expanding its payment offerings this year, rolling out credit card capability across the country in the second quarter.”
That roll out, as mentioned, has already taken place, much to my delight. I admit that I’m one of those customers who will happily consider spending more in a store if my credit card is accepted. Having to pay with either cash or debit cards is limiting. As mentioned, you’re restricted to only spending the amount of money you currently have available. Credit cards, of course, enable you to pay that money at a later date, thus, giving you extra time to accumulate it.
Ahmad Faheem, an Equity Research Associate at Veritas Investment Research, believes that Dollarama’s newfound acceptance of credit cards will help to further boost basket size. “We expect credit card use (typically 2.0 to 2.5 times the spending multiple of debit and cash purchases) to help the penetration of $3.50 and $4.00 price points and push the average transaction sizes higher,” he told BNN in an email, “The combination should support a sustainable same store sales growth of 4% to 5%.”
I can attest to the fact that it has already worked on me. My last trip to Dollarama was for the purchase of greeting cards. With my family celebrating a number of birthdays at this time of year – not to mention Mother’s Day and Father’s Day – I thought it wise to take advantage of the fact that the store sells perfectly good cards for just a $1 each. Why spend any more on cards anyways?
After discovering that Dollarama would be accepting my credit card, I decided to pick up a few other necessities as well. Needless to say, I’ll be back when my necessities need replenishing. Good on you Dollarama!
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