Since the rise of the credit card, businesses have been faced with a tough question: How can we lower the cost of using cash?
Nearly all credit card providers come with a fee, which means employers have to pay a sliver of their sale to these companies (when the consumer used plastic, of course). This can lead to higher prices, if the business wants to offset this expense, and it can even put some smaller businesses in a bind.
“I just couldn’t hang in there anymore,” Ulika Jesus, owner of Maryland-based Omid’s Crown Auto Service, told the Washington Post. “When a little bit of business did come in, I’d end up paying a 3 percent fee on credit card transactions – and there wouldn’t be any profit left.”
“In certain conditions, cash can be more affordable than plastic.”
For Jesus, he simply hopes that more customers use cash over plastic, since it can be more affordable in certain circumstances.
Here are four of those scenarios to keep in mind:
1. If you have quality cash handling
Many of cash’s “hidden” costs are related to inadequate cash handling. Say your employees have to spend hours tracking, counting, storing and moving cash. Their time is valuable, and it can be better spent elsewhere. However, proper cash handling can free them up for other duties. Cash recyclers and dispensers can store, count and track cash, and smart processes and systems can reduce the amount of energy your employees have to dedicate to cash handling.
2. If you’re worried about fraud
Data breaches and credit card fraud have been in the news a lot lately. For employees, many resources are devoted to fraud prevention and point-of-sale security. Cash is removed from most of the risks, only in danger of in-store robberies or counterfeiting. The reduced need for fraud prevention methods is a point in favor of cash over plastic.
3. If your customers prefer cash
From a consumer perspective, cash can be king. Many consumers have a hard time getting credit cards with low interest rates or without jumping through a variety of hoops. They won’t run the risk of amassing large amounts of debt with cash instead of plastic, plus they may not be able to physically acquire a credit card. This makes cash that much more valuable to certain customers, and it can be another pro over plastic.
Some customers prefer cash over plastic.4. If you want more sales
Depending on your business, cash transactions could end up bringing in more sales. Gas stations are one good example. Since customers with cards pay at the pump, those with cash will come inside. Once there, they’ll see the wide range of other merchandise for sale, and be more tempted to buy. If cash can get more customers into your store, then it is definitely a win for your business.
Cash and plastic are both here to stay. Thankfully, both options can be beneficial and affordable for your business. Just make sure you have the technology, the policies and the systems in place to ensure that cash is just as easy and efficient as the credit card.