If a customer wants to spend $200 at your business, should you tell him to use a credit card or go home? It sounds ludicrous, but that’s exactly what a growing number of U.S. businesses are doing – saying “no” to paying customers in the name of going cash-free.
These cashless businesses – which only accept payments through mobile wallets, credit cards and debit cards – say that the decision to reject physical cash payments is helping (not hurting) their bottom lines. But in some cases, the decision is made purely for safety reasons.
Are they right? Should your business stop accepting cash payments too?
This Baltimore Café Doesn’t Want Your Cash
Park Café and Coffee Bar in Baltimore embraced the cashless model after five robberies at gunpoint in a four-month period. A sign on the door announces the policy: “Due to the recent robberies and continued crime in the neighborhood we are no longer accepting cash.”
The café owner claims he received about 20 to 25 percent of his sales in cash, so the decision to make the switch wasn’t an easy one. But many of those customers have been able to pay with cards. He estimates that 5 to 10 percent of his cash-paying customers don’t have debit or credit cards to make a purchase.
A barista at the café said that customers tend to understand the need for going cash-free, especially after she explains the reason why. However, she did express concern that she wouldn’t be able to serve children from a local middle school anymore because they largely pay with cash.
The Downsides of Cash Payments
Most people would never reject a stack of cash, but maybe when it comes to running a business, accepting cash does more harm than good. Here are the main complaints about cash:
- The danger of counterfeits: Businesses that regularly accept bills are at risk of receiving counterfeit money.
- Cash register counting delays: Counting the money in a cash register till at the beginning and end of each shift – and depositing the money in the bank – takes an enormous amount of time. In a cashless business, managers and employees can spend this time in more productive ways that benefit the business.
- Vulnerability to theft and robberies: Keeping cash on hand makes a business and its employees more vulnerable to theft by employees and robbers. Depending on the area where the business is located, employees could feel threatened when managing large amounts of cash.
- Delays in passing money back and forth: It takes time for customers to remove their cash and count out their payments. Then, it takes more time for the salesperson to count out change. Using a credit card allows for faster transactions, and customers can purchase more goods in a shorter period of time.
The Upsides of Cash Payments
On the flip-side of the anti-cash spectrum, the following benefits of accepting cash payments cannot be ignored:
- You don’t have to pay fees for every transaction. Cash transactions are free.
- You receive the money instantly – cash in hand – no waiting required.
- You won’t anger customers by refusing their cash business. Some people will react strongly to the cash-free model – and they may choose to boycott your business as a result.
- You continue doing business with teens who don’t own bank accounts or credit cards, cash-only budget enthusiasts, adults without bank accounts or credit cards – which may include some undocumented immigrants, and low-income Americans who are more likely to pay with cash.
Is Your Business Cashless Compatible?
Even though it seems like we’re headed toward a cashless society, some businesses thrive without cash while others can’t seem to make ends meet. It’s vital to understand whether your business will survive or die by performing a detailed analysis of how you receive money before you take the plunge into a cash-free business model.
References:
https://www.credibly.com/incredibly/evaluating-capital-needs/pros-cons-owning-cash-business/
http://www.baltimoresun.com/business/bs-bz-cashless-20170131-story.html
