Counting the benefits of accepting cash

A popular strategy is to look for ways to process transactions more cost-effectively and here the  cost of credit card transaction fees bears scrutiny.

Many small business owners don’t consider just how much the processing fees affect their bottom line.

There are a few strategies to help retailers minimise credit card processing fees, but encouraging cash transactions wherever possible can also make a big difference to profitability. 

Cash offers several benefits that make the payment option an important element of managing costs:

No fees: 

To accept cash, there are no fees paid to external parties. That’s in contrast to the 1.5 to 3.5 percent transaction fees levied by major credit card companies1. And the fees themselves can vary quite a bit depending on the type of card, the amount of the transaction, and the type of product/service being purchased. With a combination of interchange fees, payment process fees, and assessment fees, it can get complicated and costly.

Cash is decidedly simple by comparison.

Lower risk: 

Compared to credit card fraud, cash is much lower risk. 

Counterfeits are typically removed from circulation quickly, often after a single use. In 2023, less than 0.0025% of banknotes were counterfeit, that is less than 1 in 40,000 banknotes. Some 116,000 counterfeit Bank of England banknotes with a nominal face value of £2.5 million were taken out of circulation.

In comparison credit card fraud continues to rise. 

Recent data shows that the UK is the ‘card fraud capital’ of Europe with the most victims per 1000 people and the highest losses - that’s 134 frauds per 1000 people and a cost of £8833.20 per ‘000 people.

By using cash, consumers and merchants both avoid the complication (and losses) of fraud chargebacks.

Convenience: 

In terms of which payment option is easier, cards and mobile devices or cash, there’s not much in it. 

For the consumer, people can operate just as easily with one or the other. 

Cash allows for immediate use. For the consumer, it’s on hand at the point of purchase and for the merchant the funds are available as soon as a deposit is made at the bank.

Reliability: 

For consumers who may fall victim to credit card fraud or online theft, cash avoids that scenario altogether. 

Simply put, a note can’t be hacked. 

In addition, without a digital component, any risk of theft is limited to the cash in hand, not the contents of a bank or savings account. 

And cash works when a phone won’t; if the the system is down, you’re out of charge or have access problems you’re out of luck.

Not so with cash.

Of recent times, the pandemic trend of going cashless has reversed and there is a global shift toward using cash more frequently. 

In the UK, cash usage has risen to 19% of all transactions (from 15% in 2021). This reflects a choice by many households to use cash to budget more carefully during the cost of living crisis, as well as a natural return to cash usage following the move to contactless during Covid.

As the share of in-person purchases rebounds, retailers should be ready to offer consumers the option to pay based on their preference, to make doing business easy and convenient for the consumer.

Whatever multi-payment-method operation you have in place, it makes sense to consider integrating a cash-handling solution into the mix. As an industry-leading provider of cash management solutions and an active supporter of all payment forms, Loomis can help you determine the most effective cash management process for your business - from cash recyclers, smart safes, cash in transit, to coin and note delivery and collection….

Why not contact us to discuss the options?