The Pros and Cons of Owning a Cash-Only Business


As technological advances make it easier and more affordable for small businesses to accept credit card and mobile payments, the cash-only business is becoming rare to the point of extinction. So why are some businesses remaining cash-only, even in the modern era?

Believe it or not, there are some good reasons for your business to only accept cash—but they have to be weighed against a few major inconveniences. Here are some pros and cons of going cash-only with your small business from Credibly.

Pros of a Cash-Only Business

Affordability: Accepting payments via credit cards impacts your bottom line in a way that cash doesn’t. Transaction costs associated with credit cards take a percentage of the purchase price that would have stayed in your pocket had the purchase been made in cash. Additionally, the extra equipment you’ll need to process credit card and mobile payments will cost you more than a simple cash drawer.

Security: With all the new technology involved in payment processing, there are an increasing number of vulnerabilities. Of course, you face the risk of counterfeit cash, but these days it is far more lucrative (and common) for thieves to target credit card information than to counterfeit money.

Simpler Accounting: When you start to accept online payments, credit card payments, and mobile payments, your accounting responsibilities multiply, because you have to track each individual payment method instead of just one. For business owners who regularly deal with disputed charges and payments that take a long time to process, the simplicity of cash can be very attractive.

Cons of a Cash-Only Business

Customer Inconvenience: According to a TSYS Consumer Payment Study, only 11% of respondents said they preferred to use cash, while 40% preferred credit cards, and 35% preferred debit cards. By failing to provide your customers with the ability to pay using their credit or debit card, many of them will feel inconvenienced, especially if your average transaction price is relatively high. After a certain price threshold, expecting your customers to pay cash is simply bad business.

Missed Opportunities: There is actually hard evidence behind the oft-heard, but usually anecdotal claim that credit cards make consumers more likely to spend money. An MIT study on credit cards’ effect on consumers’ willingness to pay showed that customers may be willing to pay up to 100% more when they’re using a credit card. If your business is cash only, you’re losing money, guaranteed—and you’ll never know how much.

No Paper Trail: Because cash payments leave no paper trail, it can be harder to reconcile your accounts with confidence at the end of the day. Cash-only businesses may also suffer from dishonest employees because it’s harder to spot employee theft.

Is a Cash-Only Business Right for You?

The issue of staying cash-only or allowing other payment types for your small business isn’t black and white. Often, it depends on the type of business you run.

For example, if you own a coffee shop, where the average purchase amount is relatively small, it may make sense to stay cash-only. Customers don’t mind paying for things in cash if the price is low enough.

However, if your average purchase price is high, you may lose customers by accepting only cash. If the cost of losing those customers is higher than the cost of offering more payment options, sticking to a cash-only policy will do your business more harm than good.

Which funding is right for your business?

Plan for the future with Credibly.

We recognize the unique financial needs of your business. Although we don’t provide mezzanine financing, we’re equipped to help you assess if this is the right path for you.

Our commitment is to understand your business’s potential beyond just the numbers. We’re here to offer insights and guidance—not just financing.
If you’re considering your next financial move and wondering if mezzanine financing fits your growth strategy, let’s discuss your options.

With experience supporting over 30,000 businesses, we’re prepared to help you make an informed decision.

Begin exploring your financing possibilities with Credibly today

Speak with a financing expert

Recent Posts: