I was recently talking to a small business owner who does not accept credit/debit cards. She only accepts payments in cash. I was dumbfounded by her refusal to accept credit cards given society’s prolific use of plastic. I asked her why she only accepts cash. Her response was even more amazing: she doesn’t want to pay the credit card processing fees.

It use to be that you would have to pay $400+ for a credit card terminal and then a monthly fee + a transaction fee. It was pretty expensive to accept credit cards but usually they paid for themselves over time. I completely understand why she wouldn’t have wanted to accept credit cards in the past. It would have cut into her bottom line and her break even point would have either increased or she would have had to increase prices to compensation for the increase in costs. She didn’t want to do either.

That was then…this is now.

Now, you can get a card reader for free to accept just magnetic strip cards or $50 if you want one that accepts the new chip and NFC (Apple Pay and Android Pay) payments. The fees per month have also gone down a lot. Monthly payments are $0 and you pay a percentage of the amount charged, depending on the vendor about 2.75%-3.5%. Your profit of course would decrease, but your volume would increase.  People carry their credit/debit cards with them everywhere they go.  Many people like myself, very rarely have cash and do not have time to make a trip to the ATM just to buy a snack, coffee, etc. from a small business who refuses to accept credit cards.

There have been several times that I wanted to buy something from this small business, but I didn’t have cash.  Over the couple of years that I have been able to buy something from her, I didn’t. She has lost out on at least $100 in sales from me alone (probably more because I would have gone frequently if she would have accepted credit cards…perhaps this is for the best).  The amount of business she has lost over time myself and others cannot compensate for the 2.75% she has gained by not taking cards. If her profit margin is that tight (which I’m doubting it is), then she needs to re-evaluate her prices or other businesses practices.

If it were 10-15 years ago when it was more expensive to accept credit cards, then I could understand her not accepting them, but given today’s processing fees I find it absurd that she does not.

I can think of only one other reason why she does not want to accept credit cards and that is because then she would have to pay taxes on the income received. As a cash only business, she can choose how much she reports to the IRS. This is not a very good business practice but I will leave that for another blog post.

The point of this post is that she is losing out on 97.25% of something because she is holding on to trying to get 100%.  As a small business, she needs every penny she can get and should work as diligently as possible to give her customers as many possible ways to pay.  Her philosophy of “If it ain’t broke, don’t fix it,” will not last forever and will most likely put her out of business if she doesn’t adapt to the new way of doing business.

*Please note: I use Square for my credit card processing. If you’d like to use them as well you can get free credit card processing for up to $1000 in your first transactions. Click here

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