Cash is king! Not anymore

But some businesses have moved to, or are still clinging to a “cash only” model, simply not accepting credit cards at all, dealing only in cash. On a Martha’s Vineyard vacation this summer, I came across at least a half-dozen businesses that didn’t accept credit.  At one point I had ordered something, but had to run across the street to an ATM when the employee informed me the business was cash only.  Some businesses, like gas stations, are open about the difference in credit card payments versus cash payments.  Stations are posting the “credit card price” against the standard price on top of the pumps. They are, without any hesitation, passing the credit card fees along to the consumer.  If you pay in cash, you’ll pay less, it’s that simple.

So if you’re a small business owner, should you pay the fees and offer the credit option?   

First, ask yourself why you’re not accepting credit cards as a cash only business. How much business are you potentially losing (or could potentially gain) with the credit card option?  You might want to take the time to survey your own customers to see whether or not their spending habits might change if paying with a card was an option.  Think about whether or not your competition offers it.  Also consider that statistics have shown consumers spend more with a credit card than with cash, because they aren’t limited by what’s in their wallet and don’t feel the “pain” of the purchase immediately.  Additionally, in 2010, 609.8 million credit cards were held by U.S. consumers. The numbers keep going up –consumers are paying consistently with credit and debit cards. 

As President Obama continues to focus on small businesses, the options for entrepreneurs will hopefully continue to expand.  More companies are catering to the small business market and offering products and services to manage their business. Intuit, as an example, now offers a pocket-sized credit card reader to small business owners, designed to attach to a mobile phone, so they can take credit card payments anywhere, anytime.

As U.S. consumers move toward electronic options, businesses of all sizes need to adapt.  The numbers don’t lie; more people are paying electronically and want options with the vendors they do business with.  If you’re not going to give your customers the ability to pay in a variety of ways, you could see them walking away to a competitor.   

Cash might be king, but credit is rapidly bridging the gap.  And if you haven’t noticed, when you pay in cash you’re considered strange, or so this Visa credit card ad would have you believe. 

Have you struggled with the decision to offer the credit card payment option as a small business? What reasoning did you use to stay cash only or expand your payment options?