Should Your Business Still Accept Cash?

Nowadays everyone carries a debit or credit card. Card reader technology has improved dramatically and there are now portable card readers available making it possible for everyone from market stall vendors to taxi drivers to accept card.

Because of this, some businesses have stopped accepting cash altogether. Cash does have its disadvantages after all. However, cash is far from dead – and while there may be benefits to doing away with cash, there could also be drawbacks to consider.

Below are some of the advantages and disadvantages that are worth weighing up before you decide to go card-only. You may decide that it benefits you to exclusively accept card. Alternatively, you could find that accepting cash is still necessary for your business.

The advantages of card over cash

Not everyone carries cash

A lot of people don’t carry cash on them nowadays. Some do this for security reasons while others find it more convenient to pay solely by card instead of having to visit an ATM machine all the time. Almost no-one is likely to carry large sums of cash – if you deal only in large transactions, you may find that there’s virtually no need to accept cash.

Handling cash means longer queues

If you deal with a quick succession of customers, you could find that accepting cash encourages queues. A long queue may put off certain customers, causing you to lose business. By going card-only, you don’t have to worry about retrieving change for customers (or waiting for customers who decide to count their money at the counter). Going card-only has become a popular strategy for festival stalls, while some nightclubs and bars also promote it.   

It’s easier to lose/miscount cash

Cash can get mishandled, which could cause it to get lost or miscounted. A lot of businesses accepting payments remotely don’t accept cash postal deliveries for the reason that they may get lost. Miscounting cash can be a problem when giving customers change and when counting up the cash register at the end of the day and it could even lead to accountancy errors. With card payments, it is practically impossible to lose or miscount money unless a product fails to be scanned/keyed in. 

It’s easier for cash to get stolen

While bank cards and card details can be stolen, cash tends to present a greater risk. Thieves often target stores that are likely to have a cash register. There’s even a risk that employees may steal cash. Going card-only is more secure. Even if a card is stolen and used, most card providers (particularly credit card providers) are able to offer protection and refund this money.

Having cash on premises can increase insurance rates

Because cash is a target for criminals, having it on site can also increase your business insurance premiums. By going card-only, you may be able to reduce your insurance rates and save some money.

Taking cash to a bank is a hassle

In order to cash in your earnings, you need to travel to a bank. Not all bank branches accept cash deposits, and some of those that do will charge you. The alternative is to keep all your cash on premises – but this is less secure and makes accounting trickier. Going cashless is the solution to this.

Cash spreads germs easier

To stop the spread of the recent Covid-19 pandemic, many businesses have started going cashless. The spread of bacteria and viruses can be greatly reduced by using contactless card payments. Cash is physically handled by many people and is a magnet for germs, making a health hazard to customers and employees during a pandemic. Covid-19 isn’t going to be around forever (hopefully) so this might not be a good reason to give up cash indefinitely, but it could be a good reason to give up cash for the meantime.

The advantages of cash over card

Some customers still prefer cash

Everyone has a card, but some customers still prefer to pay by cash. Some people find it easier to keep to a budget with cash as they can see exactly how much they are spending. By not accepting cash, you could be alienating these customers.  

Card machines can fail

Paying by card is more convenient – until the technology fails. If the internet connection cuts out or your card machine suffers a hardware fault, it could make it impossible for customers to pay by card. If you’re not accepting cash, this leaves you no means of accepting payments. Cash is always useful as a backup form of payment because it isn’t reliant on any technology. Even if the cash register breaks, you can still accept cash and manually count out change if needs be.

Card transactions can take days to go through

Card transactions sometimes take days to process. If you’ve got bills to pay the very next day and you want to run a last minute promotion to make a few extra sales, it may be no use if everyone is paying by card as the payments may not go through until a few days later. Cash can be processed and spent instantly – for businesses that live day to day it can be much more convenient.

Cash doesn’t have transaction fees

When someone pays by card reader, a fee is paid to the bank. When it comes to very small payments, you could make little if any profit due to this transaction fee. For this reason, many shops and bars that deal with lots of small purchases take measures to promote cash over card. This could include having a minimum spending limit by card. Some businesses even put ATM machines in their premises so that customers have easy access to cash – there are lots of sites where you can look into ATM machines for sale. Of course, if you deal mostly with large transactions, this transaction fee may not make much of a difference and you may not have a need to promote cash payments.

Cash makes individual tipping easier

Accepting cash makes it easier for customers to tip individuals. While modern card machines do now have tipping options, these tips tend to go into one account that is shared out among employees. It is possible to set up a system in which individual staff members are tipped electronically, but depending on the nature of the business it isn’t always easy to set this up. Tipping by credit card also has other associated issues.

Should you accept cash?

On the surface there are more cons to cash than there are pros. This is because card, for the most part, is superior. However, there are situations when cash has its benefits. 

Many small businesses that deal heavily with small transactions for instance can benefit hugely from cash. There are no transaction fees and you don’t have to wait days for it to be processed. If you card machine fails, you’re also not forced to close up – which for some small businesses could result in a serious loss of income. 

Going cashless is best suited to companies handling predominantly large transactions. Few people are going to be paying by cash in such situations and given the security risks, it makes sense to cut out cash. Companies that deal with lots of fast transactions may also benefit from going cashless – but only if the alternative is likely to be serious queues and frustrated customers.