For several businesses (small and medium-sized), cash seems a convenient method to accept payments. It is safe from hackers, doesn’t need any specialized hardware, and also there are no extra charges linked with cash acceptance. Many business owners encourage cash payments over card payments, as it appears to be the most straightforward and cheaper option.
However, most merchants are not aware of the hidden charges that come with accepting cash, which easily overrides the benefits of cash payments.
The Hidden Costs of Cash for Merchants
Every business is structured differently, but the following cash costs apply to all companies. Let’s take a look at them:
- Costs of Theft Protection
As per reports, retail businesses in the US lose around $40 billion each year due to cash theft alone. Though cash may not include processing charges, it can be stolen easily. Employee theft has been estimated to be liable for losses of 4% of sales in restaurants, leading to a significant cash loss for the industry. On the other hand, credit or debit card data is relatively harder to steal; and the right payment processor can deliver security solutions that make client data nearly impossible to hack.
- Costs of Fraud
When your customers pay their bills by check, you cannot determine whether it is going to bounce or not. It is quite challenging to track and pinpoint this kind of fraud. In such cases, you cannot do anything. If your money is gone, it’s gone.
- Costs of Manual Counting
Cash payments require merchants or store managers to collect and calculate the cash at the end of the day. This takes up the valuable time of upper-level management. With digital transactions, money is automatically counted and deposited into your business bank account. There’s no manual counting, no trips to the bank to deposit the money, and little or no room for mistakes.
- Costs of Abandoned Carts
When it comes to cash payments, the person at the counter takes a while to calculate, accept money, and give change. All these together can lead you to lose your customers. As per Box reports, 41% of consumers would give up their purchase because of long checkout lines. Businesses run the risk of losing around 50% of their sales just to avoid a little percentage of credit or debit card processing charges.
- Costs of Repeat Purchases
In today’s market, clients value their time more than ever. Long wait time deters customers from visiting your shop for repeat purchases. As per the research, around 81% of people actively ignore shopping from stores where they find too long waiting lines. Also, 74% of the clients surveyed stated that they would prefer to purchase from a competitor instead.
- The Accounting Costs
Accounting becomes way simpler when there are precise details of each purchase with the customer name, date, and total amount. But with cash payments, there are no records of transactions. Only online payments offer detailed reports of each payment, making accounting low-cost and more straightforward since it needs less manual time. Also, digital payments eradicate the guesswork from accounting and enable seamless business transaction records.
- Cost of Check & Cash Deposits
On top of the extra time spent on accounting and reporting, most business owners forget about the cost of depositing regular cash and cheques at banks or financial institutes. Visiting the bank to deposit your funds needs time and money (petrol, parking charges, etc.). Considering these costs, you may save around $25 or more from each visit by allowing online payments. Also, sometimes financial institutes can charge some amount for your deposits, and it can take several business days for your money to be available in your account.
Choose the Right Payment Method for Your Business
A quick and intuitive checkout experience that enables clients to pay through their preferred payment method is essential to establish long-standing loyalty and ensure 100% customer satisfaction. Being a business owner, if you’re planning to boost your business operations, providing a convenient payment acceptance option is critical. Flexible and versatile payment solutions can bring improved sales, increased market share, and greater business loyalty.
Overall, grow your business by accessing more and more clients and enabling them to pay the way they want. You can speed up your checkout lines with mobile and swipe payments, eliminating the process of accepting hard money. This way, you can save your money and time by eliminating the need to go to the bank to deposit your funds in your account. On the whole, choose the right payment method and let your customers pay your bills quickly and conveniently.