Every now and then you might find yourself experiencing a small business that does not accept credit cards. More often than not it’s a salon or perhaps a clothing store; however I have even had to speak to some self employed out of the cash only model.
In most evenhandedness, you will find some benefits of accepting cash. It enables you to maintain your prices low because it’s not necessary to take into account credit card processing costs. Additionally you be sure that the funds are available instantly, while credit card transaction can take two working days or even more to come out in your account.
However, both of these reasons aren’t enough to prevent accepting plastic altogether. Small businesses can accept cash all they need – it’s when they’re cash-only that they’ll encounter problems.
Individuals who are operating on cash only models also make a few conjectures. First, they believe they’ll earn more cash since they’re staying away from credit card processing costs. Second, they believe when they only accept cash then the IRS will not become aware of when they don’t assert just as much earnings.
The truth is both assumptions are totally forged. Actually, small businesses might be killing themselves when they don’t accept credit cards. Here are a couple of explanations why small businesses should back off from a cash-only model.
People Are No Longer Carrying Cash
Because of digital age, people are no longer carrying cash. What this means is small businesses are losing cash because people can’t outlay cash. Some may argue that you really earn more money because you’re staying away from credit card processing costs, but it’s easier to lose 3% in costs than lose out with an entire purchase because someone could not pay cash.
2011 studies demonstrated that just 27% of customers pay cash to buy things, whereas 67% preferred credit cards. In case it was in 2011, envisage what it’s like now when individuals can pay bills from their smartphones.
Clients Using Cards Spend More Cash
Here is a fascinating fact about accepting credit cards: Exactly the same study pointed out above also discovered that individuals who purchase things with cards inclined to spend a larger amount of cash. This makes sense. You cannot really see the cash leaving your account as if you can with cash; debit cards are linked to whatever cash you’ve inside your bank account and credit cards are affixed to a credit limit.
It’s nearly as if using a card is less restricted as compared to using cash, and for that reason clients using cards spend up to 120% greater than their cash-carrying equivalents.
It’s Much Simpler To Accept Credit Cards Now
You no more require a point-of-service system in place to accept credit cards. We now have card providers that affix to our phones thanks to payment processing services such as Intuit, Square and PayPal. Additionally it also makes it to be less expensive.