USA POLITICS

I am proposing a Copernican revolution in the way we conceive the USA. We tend to analyze USA actions as the actions of a "power" (in fact, a "superpower"). In other words: as a traditional "empire", of the same kind that have occurred before in the history of the human race. What I am asking you to do is to look at modern history from a different angle. Actually: upside down. This is not easy to do if you have political preconceptions about the USA, but I believe the evidence is overwhelming in favor of my "perspective", the same way that evidence was overwhelming on Copernicus' side, despite the opposition of "common sense".

My (not so humble) opinion is that most opinions on the USA are due to a very naive reading of modern history, and maybe to a superficial analysis of what is unique (a lot) about the USA. Far from being just "another empire", the USA is something truly new and unique in the history of mankind. As new and unique as the Greek city-states were. History after the USA will never be the same, because something completely new has been invented. Each of these points could be a book in itself, so you have to dig a bit in history to understand them.

Briefly:

1. The USA is the only major country in the world (and in the history of the world) that is not forcing its model on anyone else. The moment one lands in any country of the world, one feels the pressure to become "one of them". It has been that way for thousands of years. On the other hand, the moment someone from Tanzania or France or Guyana enters the USA doesn't feel any pressure. That person keeps wearing the same clothes, shopping at the hours s/he prefers, eating what s/he likes, worshipping the god sh/e prefers and listening to the music s/he likes. Anywhere else in the world this is difficult, if not impossible, if not illegal. (A few exceptions, but they are very small countries). Anywhere else in the world there is a model (cultural, lifestyle, economic, etc). But an "American" model does not exist. The USA is a country of immigrants, and wildly heterogeneous immigrants. There have been countless empires built by immigrants/invaders, but never one that was built by a number of culturally/linguistically/etc different immigrants/invaders. Furthermore, this is an ongoing process, that may never end. The USA is a mixture of races, religions, ideologies, etc that evolves according to a Darwinian process. If enough people like a feature (whether pizza, reggae or Buddhism), it will survive and reproduce. Even the economy changes daily. It is not true that the USA is a capitalistic country. That is a gross simplification: each start-up is almost a communist state; many companies are run by the employees; and almost each major company works in a different manner than the other ones. Again, it is a Darwinian system. There is no official set of "American" features. Almost every decade of the USA, in fact, has had different features. The thing that we call "the American system" changes almost daily.
2. It is not the USA that wants to export its political model (liberal capitalism or whatever it may be): it is the masses of the world that want to import it. But this leads to a grotesque contradiction. Because the USA model is clearly at odds with the national traditions, and nationalism is still the driving force of most international politics, the USA ends up in the strange situation of being the model that most people want to copy but also of being hated for being the model that destroys their national identity. The issue is that the USA is not a "nation". Most of today's world is controlled by "nations", that are unified around a strong nationalistic identity. The inhabitants of a nation share a language, a religion and a history. This is not true of the USA, that accomodates people from other nations, who keep their language and their religion, and who come from wildly different (and often conflicting) national histories. The USA model is inherently anti-nationalistic. What matters is the individual freedom (of traveling anywhere in the world, of reading books of any country) and economic freedom (free trade). Both tend to blur the boundaries of the world, and therefore the national identities. Any country that adopts the USA model is bound to lose some of its national identity. That national identity became the vital force of the nation during the 19th century, which was the century of nation-forming, the century in which nationalism was born. On one hand, the masses of the world aspire to adopt the USA model. On the other hand, the masses of the world resent to lose their national identity. The very reason that the USA could adopt its current model is that it was not a nation, it was a country of immigrants, and therefore did not have to bother with a national identity. For the rest of the world, this step is not so easy, because it involves giving up something that during the 19th century became a dogma: the national identity. The masses of the world believe that the planet is divided into nations by immutable borders, and that people within those borders should keep a different lifestyle from people outside those borders. This dogma is clearly in conflict with USA's liberal capitalism, in which borders are only a geographic feature (comparable to weather patterns).
3. The USA is not a superpower. In fact, it is not a power at all. The USA is a very naive young nation, that is often manipulated by older, subtler nations. It has rarely used force to achieve its goals. In fact, the average nation in the world uses force much more frequently than the USA. The USA has been involved only in wars started by other countries and has entered war almost always reluctantly. The USA has not annexed a cm of foreign land over the last 100 years, while all the other countries of the world were busy stealing land from their neighbors. The USA has not forced a single country to adopt its language, religion, lifestyle, political system, culture, goods, and, most important, American rulers. And for a simple reason: they don't exist. There is no culture, language, religion, etc that can be defined as "American". The USA is a trading entity, more similar to a company than to a traditional nation. It is a "world power" the same way a wealthy boulangerie is a world power.
4. The USA has no foreign policy, and it almost never interferes in the affairs of other countries (unless provoked). The USA rarely gets involved in foreign policy, mainly because the average American has no interest in foreign policy, and the average American is the one who decides who becomes president. It is not the European-born intellectual or the Harvard-educated scholar: it is the average farmer of Iowa who decides. That person is totally indifferent to the rest of the world. It has no desire to conquer the world, and it has no desire to solve the problems of the world. In fact, it doesn't even want to know what a problem is. USA's interference does not exist (very few exceptions). The USA does not police the world: the USA, unless provoked, is totally indifferent to what the world does.
5. On the other hand, the rest of the world does interfere in USA politics, all the time, from China to Europe to Arabia. The USA does not have a government (that is another long story). The USA is simply a company. Investors decide what the company does. Anybody who has money can invest in the company. Anybody can influence USA politics via commerce and even direct lobbying. All the countries of the world, from tiny Nauru to the very enemies of the USA, maintain lobbies in Washington that are funded to influence the decision making of USA presidents. Nothing happens in Washington that has not been influenced by foreign powers. (For example: the Cold War was a battleground between the European powers and the emerging power of the Soviet Union. For example: Iraq is the battleground of British, French and Russian interests). The USA is not a power: several other countries are powers. The USA does not interfere: almost all other countries interfere. The USA does not police the world, the rest of the world does police the USA.
   The USA is not a nation. It was born as a colony, and it is still a colony. It is being colonized every single day by almost every single country in the world.
6. There is no such a thing as "American interests" to defend around the world. The dynamic nature of the USA system makes it impossible to talk about "American interests". The interests of Rockefeller and Morgan (who used to control 20% of the USA national product) are not the interests of Bill Gates (by far the richest person in the USA in 2000). Wealthy, influential people change rapidly. Billion-dollar corporations come and go every year. Giants fall almost yearly. New giants are created almost yearly. Today's most valuable companies did not exist 25 years ago. Each of these entities has some "interests", but none of these entities survives long enough to justify the view that there are "American interests" to defend in the world. In fact, the USA contains both an interest and its opposite. Competition is a key feature of the USA system, and is rampant. The moment an interest is created, the system favors the creation of its opposite. There is no "national" interest. There are thousands of competing interests, which represent virtually every possible action, and which change all the time.
7. The USA is the only country in the world that does not use force to create its own economic power. The USA has done very little to force foreign countries to adopt Hollywood films, McDonald's restaurants or Coca Cola. In fact, it has done a lot less than any other country does daily to support its main products. None of the big American success stories has been helped by government subsidies (a common practice around the world) and none of them has been forced on the conquered enemies by the USA army. In most cases, foreigners started consuming "American" simply to imitate Americans. In many cases, it became obvious only a decade later than something (rock and roll or Hollywood) had taken over the world. Because of the USA's Darwinian nature, the American success stories tend to reflect basic values that will succeed in most parts of the world. In fact, subsidies and force are routinely used "against" them, not in favor. All countries in the world are constantly engaged in unfair practices to fight American businesses that would otherwise destroy their much weaker products. The success and survival of American businesses is totally random. The founders of Coca Cola, McDonald's, rock'n'roll stars and Hollywood studios had no major connections with politicians. Their world-wide success was totally independent of American politics (unlike the success of European and Asian concerns, which are almost always due to political connections and strong government support). There is no policy in Washington to make this or that company a winner in Europe or Asia. On the other hand, there are very clear policies in every other country of the world for making this or that company a winner in the USA market.
8. It is not unique that the neighboring countries want to be absorbed into the empire (even the barbarians wanted to become Roman citizens), but it is unique that the very enemies of the USA want to become American or at least be Americanized. It is unique that the former Soviet citizens are becoming so Americanized. It is unique that so many Arabs are becoming so Americanized. The USA did almost nothing to "Americanize" them. In fact, their leaders have consistently opposed that process (France even banned the English language). Anti-American propaganda is widespread in all countries of the world, depicting American products and American ideas as inferior to the native ones. Despite the continuous, ferocious attacks, the fact is that people around the world still desire to be Americanized. And many would vote for full political integration with the USA. Many of them live in countries that oppose the USA on ideological grounds, and some of them even chant "death to America".
9. It is not wealthy Americans who control American politics, it is the average Americans who control American politics. First of all, the president is elected not by the businessmen, or the scholars, or the scientists, but by the average person. Second, democracy in the USA is carried out daily, not just every four years: the president reads the polls every single day. The polls tell him what average Americans think, not what wealthy Americans think. Of course, wealthy Americans can try and influence the average American because they have the money to run marketing campaigns, but opposite campaigns tend to neutralize each other, so, in the end, the average American has "free will". Almost no political decision in the USA is easy to predict, because of the great uncertainty about how the average American will react.
   It is commonplace that business interests can control USA politics. This is assuming that one group of businessmen prevails over every other group of businessmen. This almost never happens. The USA is not Europe or Japan, where a business giant remains a business giants forever. In the USA business giants are created and destroyed every decade. There is no dominant business, and no dominant pattern. The USA is a Darwinian system. In a Darwinian system there is no "perfect species". We humans can destroy the world, but we can be destroyed by bacteria. There is no dominant species. We have no clue which species will still be around 1,000 years from now. Ditto with the USA economy. There is no "most interests". There are competing centers of powers. They compete so well that they roughly neutralize each other. In the end, one can prevail in one region and another one can prevail in another region, but overall they neutralize each other. One business concern may prevail within a specific product category. People listen to the Beatles because the Beatles are more publicized than the Screaming Broccolis. But the business that controls popular music is opposed by the business that controls soft drinks (Coca Cola), which is opposed by the business that controls software (Microsoft), which is opposed... The number and interaction of these business giants keeps changing all the time (Microsoft did not even exist 25 years ago, and now is the number one company, DEC was one of the largest companies in the world and now doesn't exist anymore). In the end the average USA citizen is not controlled by anyone, because s/he is controlled by everyone.
   Last but not least, the USA system has a self-regulation mechanism (just like any other Darwinian system) that is called "free press". The media have repeatedly taken down extremely powerful men: senators, CEOs, and even a president. The media have probably more power than the entire business community combined. Their power comes precisely from the Darwinian system: the people are more interested in what the media say than in what a marketing campaign says. The media act as a further neutralizing factor in USA politics.
10. The USA system is the first system in history that provides its critics with the very ammunitions to criticize it: unlimited freedom to criticize it, unlimited information that helps criticize it, unlimited elections that materialize that criticism. No other system has ever made it so easy for dissidents to criticize it.
11. The USA is not only the wealthiest country that ever existed: it is the (major) country in which the highest standards of living have been achieved, in both economic, cultural and political terms. Ordinary people are wealthier than in any other (major) country at any time. Ordinary people have more information available than in other country at any time. Ordinary people enjoy more freedom than in any other country at any time. It is not unique that a country has the richest, most educated, freer persons in the world. It is unique that the average, ordinary person is wealthy, educated and free. In other words, the USA is a country in which the wealthiest businessman, the most brilliant scientist and the most free individual can come from virtually any social class.
12. The closest relatives to the USA are business-oriented city-states such as Venice and Athens. Unlike empires, they were not interested in annexing territories. They were "super-powers" but used their power for economic (not political) purposes. They influenced the rest of the world via their wealth, and mainly because the rest of the world wanted to imitate them.
13. The USA is more a "revolutionary" force than an "imperial" force. The USA perceives a mission to spread universal liberal-democratic values to the rest of the world. The USA does not perceive a mission to conquer and annex the rest of the world. Wars fought by the USA are invariably presented by the president as "liberation" wars to the American public, whereas empires used to present them as "expansion" wars. The USA's natural enemies are not opposing empires, but anti-liberal ideologies: nazism, fascism, communism, Islam. These ideologies hail a heroic citizen-warrior who constantly struggles against external forces. The USA hails a mediocre, cosmopolitan trader-soldier who does not distinguish between internal and external forces (in fact, who is mainly an immigrant).

These and other factors make the USA something significantly different from the traditional "countries" (and even more different from the traditional "empires").

Every time a USA president behaves like the president of a traditional country, his actions backfire, and the USA rapidly returns to its natural state of isolationism. The reason is that the USA system is inherently different from the traditional system. The reason that USA presidents are tempted to behave like presidents of traditional empires is that the traditional countries expect the USA to behave like an empire. It is not the USA that wants to behave like an empire, it is the rest of the world that "forces" the USA to behave like an empire, against its own will and "interest". The interest of the USA is to have no interests. The model of the USA is to have no models. The policy of the USA is to have no policy. The USA is a Darwinian system, not an empire. The problem is that the rest of the world knows how to deal with empires, and does not know how to deal with a Darwinian system.

Whenever a USA president tries to behave like the president of a traditional country, a conflict arises between USA's inherent neutrality and the cynical strategies of the powers that control USA's foreign policy (Britain, France, Germany, Japan and now even Russia). This conflict is resolved only when the USA resumes its neutral stance (of selling Hollywood films, not deploying soldiers).

In a sense, the USA has no "memory" of what an empire is, and that is why it does not behave like a traditional empire. The rest of the world is trying to recreate that notion that has been lost in two centuries of total American indifference for the destiny of mankind. Paradoxically, it is the rest of the world that wants to recreate the dialectic between the empire and its vassals, for the simple reason that the rest of the world does not know any other way. The USA does know another way, but it is not in its nature (it is against the very nature of that "way") to force it onto the rest of the world. The current situation is a grotesque imbalance in which the rest of the world treats the USA like an empire but the USA refuses to carry out the duties of an empire (e.g., to police the world the way the Romans and the British policed their empires).

Why did the USA come to be so inherently different from the traditional empires? One simple reason is its geographic isolation: an empire is something that expands its borders by fighting neighbors, but the USA has no neighboring enemies. In fact, its enemies have been (Germany, Japan, Soviet Union) and are (Iraq, Al Qaeda) located on a different continent. Another reason is the melting pot: empires were created by people who enslaved other peoples, but never by a confederation of peoples. A third reason is its variety: empires were multi-ethnic, but never as multi-ethnic as the USA, whose melting pot covers all continents, all religions and all languages of the world. Some American thinkers also pointed to the wilderness: the USA was founded in the wilderness and developed a unique vision of life and the world.

Several papers are presented every month around the world on these topics. Sooner or later someone more competent than me will write a book to summarize the various lines of research. But i believe that it will take centuries before someone can write a book about the USA the same way today they write books about the ancient Greek city-states, Because it will take centuries to appreciate the impact on human civilization. (Whether that impact is positive or negative is not the point).

Note: in 2001 the USA was directly attacked for the first time within its own borders, and this might force it to become a more traditional empire, at least in the short term.

See also: Chirac teaches the USA a lesson in political strategy

Appendix: USA pacifism
The USA's stubborn pacifism is a good example of the difference between previous powers/empires and the USA. The USA public has always been opposed to war, and so have been most USA presidents. USA's pacifism has bordered on the grotesque.
The USA entered World War I on the very last year (1917): its role was marginal. The USA president, Woodrow Wilson, a professor of history and perhaps the last idealist to become president of a major country, was opposed to war. He pledged to his people to remain "neutral in thought as well as in deed". In may 1915 a German submarine sank a British ship causing the death of 128 USA citizens, but Wilson maintained his pacifism. In november 1916 Wilson won reelection because he had kept the USA out of the war. In march 1917 the USA newspapers published a telegram sent by Germany to Mexico asking Mexico to attack the USA. Without that blatant aggression, the USA may have never entered the war. The USA fought only one year (november 1917 till november 1918). During that year the small Canadian army captured and killed more Germans than the large USA army. At the end of the war, Wilson became the leader of the pacifist movement that had been created in Britain and that led to the League Of Nations.
When Hitler was starting his empire, the USA passed a neutrality act (November 4, 1939) that prohibited assistance to all parties in war. The USA did not enter WW II when Germany invaded Czechoslovakia (march 1939), Poland (september 1939), Norway (april 1940), Holland (may 1940), France (june 1940), Yugoslavia (april 1941), Greece (april 1941), Egypt (april 1941), Russia (june 1941). The USA did not enter WW II when Germany began bombing Britain (august 1940). The USA did not enter WW II when Japan invaded China (1937) and Indochina (july 1941). The USA did not retaliate when the Japanese air force sank a USA gunboat in China in december 1937. USA public opinion was massively against war. (Today we know that this was one of the reasons why Japan kept expanding: they were aware that USA public opinion was pacifist, and that the president of a democratic country could not declare war against the will of his people). The USA dragged its feet for two years, while London was pummeled by German bombs day and night (ask any Briton of that generation how fondly he remembers USA selfishness). For two years the USA was trying to mediate peace. The USA even outlawed Chaplin's "Great Dictator" because it could offend Hitler. In 1941 there were USA envoys both in Germany and Japan, trying to negotiate peace between the axis and Britain. On november 26, USA secretary Hull was still trying to broker peace between Japan and China, and between Japan and Indochina, offering to remove the trade sanctions if Japan recognized the independence of both China and Indochina. On december 6, 1941 president Roosevelt still cabled a message to the emperor of Japan urging him to negotiate. The following day Japan attacked Pearl Harbour. Four days later Germany and Italy also declared war on the USA. (So much for trying to negotiate with dictators).
During World War II, Japan managed to kill 4 million Indonesians, 13 million Chinese, 1 million Vietnamese, almost all of them civilians. Germany killed 7 million Soviet civilians and 5 million Polish civilians. British and Russians killed about 1 million German civilians, On both sides, the carnage of civilians (children, women and elderly) was gigantic. By contrast, the USA killed 1.75 million Japanese soldiers but only 380,000 civilians, and almost all those civilians were killed in the last 5 months of the war (half of them by nuclear bombs). By all accounts, the USA army was the least bloody in World War II, despite having air supremacy and the most powerful weapons.
The USA was dragged into the Vietnam war by France, which had started it by refusing to grant Vietnam the independence it had earned by fighting Japan.
Every time a president of the USA wants to enter a war, he has to convince the USA public opinion, and that is almost impossible unless it can prove that the enemy is a concrete threat. The USA fabricated the Gulf of Tonkin incident to get public support for the Vietnam War. The USA fabricated accusations against Saddam Hussein that were not true in order to increase popular support for the Gulf War. It is terribly difficult to convince the farmers of Iowa to go to war.
(There are obviously exceptions to USA's pacifism, the second atomic bomb on Nagasaki being the most obvious one: but they can be explained by extraordinary circumstances or, quite simply, ignorance. Even in the case of the nuclear bombs, though, remember the only alternative that the Truman administration discussed: withdrawal. The USA actually considered ending the war without a victory once they had liberated all the countries occupied by Japan. The stubborn determination of the remaining Japanese soldiers in the occupied countries probably did more to convince Truman than anything else).

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Appendix: USA intervention.
I frequently receive emails stating that the U.S. has a history of supporting and arming dictators, hardly proof of "pacifism" or "neutrality".
Those statements are actually quite vague. Who doesn't have such a history? It's like saying that Churchill was known to have two legs. It doesn't tell me anything about Churchill, other than he was similar to all other humans. The statement that the USA supported this or that dictator says that the USA has done what every other country has always done. But these statements usually omit to mention what truly makes the USA look different from any other country: the USA is the only country in the history of the world that has removed dictators and replaced them with democracies (from Adolf Hitler to Saddam Hussein). There is no other country that has done that. France never did, Russia never did, China never did. (At best, they removed one crazy dictator and replaced him with a little less crazy dictator). Britain did it only in cooperation with the USA. In fact, for something that is fairly new to humankind, I believe the USA has been amazingly successful at it. Just think how peaceful and democratic today Germany and Japan are. In 1939 nobody would have believed that "in 70 years those two countries would become a model of democracy and peaceful coexistence". It would have sounded a very bad joke.
The USA is often accused of supporting dictators because it sold weapons or provided intelligence. Again, this is actually a very vague statement. The USA supported and armed Stalin when the USSR was about to be overrun by Hitler. Does this mean that the USA is responsible for Stalin's crimes and should not have helped the Soviet Union and let Hitler invade it? Things are a bit more complex than that.

Best credit cards for students

Card debts average $2,200 for students The average undergraduate has $2,200 in credit card debt, according to Nellie Mae, the nation's largest maker of student loans. That figure jumps to $5,800 for graduate students. Since so many student credit cards have high annual percentage rates, the longer these youngsters wait to pay the cards off, the worse it gets. Detweiler points out that by sticking to minimum payments it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate.If students fall behind in their payments, they get slammed with high late fees. And it's easy for things to get out of hand.
Paying on cards for years and yearsSophia Jackson, a personal finance counselor for Consumer Credit Counseling Service in Durham, N.C., says one of her student clients made an $82 credit card payment on an overdue bill, only to discover that a mere 79 cents of the payment applied to the card's principal. The rest was eaten up by late fees and over-the-limit fees."In that scenario, you could pay on your balance for years and years and your balance would keep going up," Jackson says. She adds that many of her clients are students from area schools like the University of North Carolina, Duke University and North Carolina State.

About Credit cards

A user is issued credit after an account has been approved by the credit provider (often a general bank, but sometimes a captive bank created to issue a particular brand of credit card, such as Wells Fargo or Bank of America), with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit.When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a PIN. Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction.Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom commonly known as Chip and PIN, but is more technically an EMV card.Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder.Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's accounts.Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid.For example, if a user had a $1,000 outstanding balance and pays it in full, there would be no interest charged. If, however, even $1.00 of the total balance remained unpaid, interest would be charged on the full $1,000 from the date of purchase until the payment is received. The precise manner in which interest is charged is usually detailed in a cardholder agreement which may be summarized on the back of the monthly statement. The general calculation formula most financial institutions use to determine the amount of interest to be charged is APR/100 x ADB/365 x number of days revolved. Take the Annual percentage rate (APR) and divide by 100 then multiply to the amount of the average daily balance divided by 365 and then take this total and multiply by the total number of days the amount revolved before payment was made on the account. Financial institutions refer to interest charged back to the original time of the transaction and up to the time a payment was made, if not in full, as RRFC or residual retail finance charge. Thus after an amount has revolved and a payment has been made that the user of the card will still receive interest charges on their statement after paying the next statement in full (in fact the statement may only have a charge for interest that collected up until the date the full balance was paid...i.e. when the balance stopped revolving).

Today's world with credit cards

In today's business environment, accepting credit cards is becoming a must for entrepreneurs and small businesses. There are numerous social, demographic and technological factors combining to make plastic the payment form of choice for increasing numbers of people.
The average American cardholder has roughly four bank credit cards. Credit card purchase volume has been expanding about 15 percent per year for the past five years, or three times faster than the increase in overall U.S. purchases. As of 2005, credit cards accounted for 19 percent of all purchases, debit cards for 33 percent, and checks for only 11 percent. According to one estimate, businesses forfeit up to 80 percent of consumer impulse buys if they don't accept credit cards.
Why people use credit cards: To understand the growth in credit card use, it's important to grasp the reasons for their popularity. Consumers typically use cards because:
-- They don't want to carry cash.
-- They want to save cash in hand.
-- They want to gain loyalty points (such as airline miles).
-- They are making a large purchase.
-- They are looking to float money in a bank account.
-- They are making a reimbursable purchase for a company.
Plastic on the Internet: Even as credit card use grows in the real world, plastic already dominates online shopping. This breakdown of how people pay for Internet purchases demonstrates that credit cards are the key to e-commerce:
-- Credit card online -- 85 percent
-- Check mailed -- 10 percent
-- Credit card via phone -- 2 percent
-- Credit card via mail -- 1 percent
-- Other method -- 2 percent
The business-to-business opportunity: It's becoming increasingly clear that credit cards are also playing a greater role in business-to-business transactions. For example, Visa is bundling credit and cash management products for small businesses under the umbrella of the Visa Business Card.
Larger companies are also streamlining their buying processes using business cards for indirect purchasing. Each business card transaction shaves a reported $50 to $100 in purchasing costs. That's something to keep in mind if your company works with large companies.
The future of plastic: Market research indicates that consumers view credit cards as lifestyle enhancers that contribute to other areas in their lives. And alternative credit card products now in development, such as online debit cards, promise to further extend the use of credit cards.
It all adds up to bad news for checks. Paying with plastic is becoming increasingly popular for even routine bills such as gas and electricity. And younger customers' preference for plastic cards is even more pronounced. Check and paper credit use has continued to fall as consumers become more comfortable with the security of online credit card submissions and the rise of operations like PayPal.
Picking a credit card processor
Look for companies with well-established track records and solid reputations.
Compare pricing from at least three processors before making a final choice.
Compare all the fees the processor charges, not just the discount rates.
Find out if a processor has a minimum monthly charge and make sure the additional credit card sales justify the expense.
Find out whether the processor allows you to use your existing bank account or whether it requires you to set up a merchant account with its own bank.
Work with a sales group
Many banks have gotten out of the credit card processing business, and those that remain are often skittish about servicing small businesses, particularly ones with limited histories. Many small businesses must therefore go through a specialized credit card processor or an independent sales organization. An ISO can help small businesses find a credit card processor and get the necessary equipment and training to begin accepting credit cards.
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