SHADOWRUN

Shadowrun 20^th Anniversary Edition: $15
Runner’s Companion: $12
Arsenal: $12
Augmentation: $12
Unwired: $12
Street Magic: $12

BATTLETECH

Total Warfare: $15
TechManual: $15
Tactical Operation: $15
Strategic Operations: $15

CTHULHUTECH

CthulhuTech Core Rulebook: $15

Trask, The Last Tyromancer

The bane comes from high costs of accepting digital transactions. Before continuing, I should mention that I work in the financial industry and have a significantly more than a layman’s understanding of the credit card and financial transaction world. I think a short introduction into the process of how credit cards work will give some insight into what the real costs of credit cards are to a small game retailer. This is a very high level overview and not a comprehensive review of the credit card transaction process, but I think it will be informative to many.

Today’s example involves Trask going to a local game store and purchasing a $100 game. The FLGS swipes the card in a POS (Point of Sale) terminal and the transaction is authorized by the bank. That is, the bank checks your credit card number to verify it is valid and not otherwise limited on how much you can spend.

My credit card is issued by the “Bank of Greyhawk,” one would assume that the “BOG” is the bank doing the authorization when the card is swiped. This is incorrect. The POS terminal connects to an “acquiring bank.” An acquiring bank literally acquires the transactions from the POS terminals at various retailers and often sells the POS terminal equipment as well. The acquirer did not issue my credit card.

The acquiring bank receives my transaction and immediately take 2-3% (these fees sometimes reach as high as %15, depending on the contract with the POS vendor, but 2-3% is more common) of the transaction right off the top. The remainder goes into the merchant’s account after a processing delay for verification. This verification process (sometimes called risk management) is also the system that turns off your card if you start buying unusual things or purchase large items when traveling. Yes it is annoying, but it does keep the costs down to everyone involved.

The acquiring bank then forwards the 3% surcharge into the “interchange” system. The interchange is the system that moves money back forth between banks. At this point, the $3.00 distributes to the many entities in the interchange system. Visa and MasterCard receive a small amount of each transaction, the acquirer takes a small piece and the issuing bank (Bank of Greyhawk  in this example) gets some too. Bank of Greyhawk also assumes the risk of the debt I now owe for the purchase and receives any interest and penalties I may pay on my credit card.

The absolute amount distributed to each party (and there are more I did not mention in the interests of brevity) depends on contracts and agreements between the banks and POS terminal vendors. Now repeat this process for every single credit card, debit card or Visa/MasterCard/Discover/American Express branded gift card in the world and you get an idea as to the size of the enterprise.

The reason I am explaining all of this is to give you some idea what the costs are to the retailer are and why they exist. Credit cards are here to stay and no retailer can avoid them because not taking credit cards is financial suicide.

Normally, I am a cold-hearted capitalist with no compunction about exploiting every discount and benefit for myself I can find.  I regularly use my credit cards for almost every transaction to maximize my cash back reward from the credit card company(I pay it off before any interest accrues). The card effectively functions as a 1% discount on all of my purchases, which is well and good for me.

However, since I have a certain fondness for my local game store and want them to succeed, I try not to use credit cards when I make a purchase. The math is quite simple . My hypothetical purchase costs me $100.00 whether I use a credit card or cash. For the retailer a CC transaction only garners them $97.00 and I earn $1.00 in cash back reward (or airline miles or whatever the reward is). Two dollars go to transaction overhead. One dollar is not worth penalizing my game store 3% (or more) on the transaction.

If these amounts seem trivial, bear in mind you need to multiply that 3% interchange fee by thousands of transactions per year. It does add up.

Credit cards have their place, especially for online purchases. The ability to contest a fraudulent transaction is priceless and not offered (for the most part) by debit cards and certainly not by cash. I suppose the point of this post is to offer enough information for each individual consumer to make an informed decision about using credit cards at your FLGS, or any small retailer for that matter.

Small businesses have a difficult enough time as it is, so this is my way of giving them a hand. Let your conscience and your wallet be your guide.

Trask, The Last Tyromancer

If you are interested at all in retail game store realities, then this blog is for you.

Word from the Outpost

Here are some of the posts I mentioned. There is a lot of great content on the blog, but I felt these worthy of special note.

Pre-orders and the game retailer

Supermarket vs. gaming space

Where does it all come from Part 1

Where does it all come from Part 2

Where does it all come from Part 3

This series is particularly interesting in regards to what is moving at this store and the market share of certain games.

That is enough to get you started, but keep for some insight into a modern retail game store.

Trask, The Last Tyromancer

I believe it is doomed.

As far as I can see, my local game store rely on three key revenue streams:

1. Collectible Games/Miniature Games
2. Board Games
3. Role-playing games

Each one of these streams is under threat from either technology or cultural shifts.

Collectible games have begun to move online. There is already an online version of Magic and WOTC is talking about an online version of the “Dungeons and Dragons” miniature combat game on Gleemax.com. I would argue that the online versions of these games are probably better, since the computer can parse rules issues and keep score for the players. Combine a better experience with an entire generation growing up with the concept of “owning” a virtual item and the card collectors of old will die out in a generation. “Magic:The Gathering” cards are just pieces of cardboard. Player demand give them value, makes them collectible. The moment that player-base accepts bytes on the internet have the same value, pieces of cardboard stop
having much meaning. No physical media means the FLGS loses a critical revenue stream.

Board games are ancient in origin. Chess and mancala trace their roots back centuries. Even modern board games like “Monopoly” and “Settlers of Catan” owe their inspiration to these venerable games. Take chess as an example. You can play chess with pieces on a real board, or you can play online. One has wooden pieces that look like a king and a player sitting across from you. The other has 3-D animated figures and a player pool as big as the internet. Add the fact that releasing a new, untested board game is an expensive proposition. For every winner, like “Settlers of Catan,” how many games disappeared in the mass of new releases? Each failure represents untold thousands in costs with no return. Produce the same game online and there is no manufacturing, only code development. Initial costs may be higher, but there is no inventory to gather dust on a shelf. Also, you cannot improve a “real” board game. Player demands can drive the shape of the game. This will certainly reduce the availability of games for the FLGS to sell.

Role-playing games. This pains me to say, but the age of printed books is ending. Sites like RPGnow and others make is abundantly clear that publishing online is a viable business option. Why risk the cost of a 500 book print run when you can publish the print-ready pdf for the price of the books development. Should someone want a paper copy, on-demand printing is a viable option and becomes cheaper every year. A small publisher, doing everything themselves and outsourcing the rest could easily provide quality game books, in a variety of formats for a reasonable price. No FLGS required.

I hope my local FLGS survives for many years to come. It probably will with “old-timers” like me to keep it going. Once we are gone, I have little hope. I just wonder in a generation or two if our collective hobby will have the same archaic charm as a knitting bee.

“In person? Granpa, you used to play games with other people in the same room?”

Trask, the Last Tyromancer