The Commerce Tavern Essay

2056 Words Oct 17th, 2015 9 Pages
The Commerce Tavern
Executive Summary
The Commerce Tavern was a popular restaurant located in Merchants Square, Colonial Williamsburg. H. Franklin Nilson established The Commerce in 1982, and he has been operating this restaurant very well. Recently, Nilson had a conversation with Anne Hamlet from The Virginia Merchants Bank about the acceptance of credit card consumption at The Commerce Tavern. VMB was willing to give The Commerce authorization of the use of MasterCard and Visa cards at the tavern. However, the general payment method of The Commerce was cash-only, Nilson was not sure if this traditional method could always working well for his business in a long term, and if he should make some changes on the cash-only policy. In
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In view of the background of The Commerce Tavern, it had excellent conditions to attract customers, so this advantage would not be influenced by the change of payment method.
Looking at the credit cards agreement
The standard bank credit-card-participation agreement from VMB stated in detail the responsibilities of The Commerce Tavern, especially checking the expiration date of the card, making sure that the card number did not be restricted or revoked, etc. It also stated that VMB would credit The Commerce immediately for the face amount of the sales slip subtract the fees calculated at the rate that time.
About the rate, Hamlet told Nilson VMB would charge The Commerce, a new participant, at the rate of 4 percent, and this rate would remain for one year. However, at the end of the year, VMB would reset the rate according to The Commerce’ s credit-card sales of the total year.
The rule of setting the rate was shown as follows: Credit-card sales ($) | Rate | Greater than 5000,000 | 2% | Between 200,000 and 5000,000 | 3% | Less than 200,000 | 4% |

Analysis of the credit-card usage
Hamlet provided a chart with credit-card usage information of other restaurants to Nilson, which could be used to estimate the rate of The Commerce after one year. Due to Nilson was familiar with all the restaurants on the list, there were eight restaurants could be used for reference.

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