Are You a “Cash Only” Business? 3 Reasons to Reconsider
The goal of every small business is growth and increased profitability. There are many ways to reach those goals, but the most common way is by reaching and retaining new clients. So why do some small business owners ignore their customers’ needs? As more people use debit cards, credit cards with points or cash-back rewards, and mobile payment options like Paypal and Apple Pay, paying with cash has become passé.
At the same time, it’s easier than ever for businesses of all sizes to become equipped to accept credit and debit cards. Whether you still think “cash only” is the best policy, or you’re wondering how to accept credit cards or how to accept debit cards, we have 3 compelling reasons to take down your business’s “cash only” sign. There are more payment processing options than ever, many of which are incredibly simple to implement.
Avoiding cards is costing your business more than you think.
Those “Cash Only” signs next to some companies’ registers can become deterrents to business growth. All too often when greeted with signs that require them to find an ATM to complete their purchase, shoppers simply leave and do not return. Instead, they take their hard-earned money and go to a store where they can conveniently make a purchase on their credit or debit card.
The reality is that Americans no longer carry cash as they once did. Hard currency will always have its place, but a Nilson Report reveals that by 2018, cash and check payments will decrease by 24 percent and 46 percent, respectively. At the same time, credit card payments are set to grow by 50 percent.
Cash-only businesses will lose increasingly more market share due to customer payment trends and realities. A 2016 Gallup poll found that only 24 percent of Americans claim to make “all/most of purchases with cash.” Why miss out on the remaining 76 percent of consumers and purchases? Offering additional payment options attracts a broader clientele and shows concern for customers’ preferences and convenience, which inspires increased loyalty from customers. Many business owners believe that not accepting credit cards saves them valuable dollars and cents, but it is more likely costing them in lost sales.
For example, when paying by credit card, shoppers spend more and are likelier to make impulse purchases, according to a 2008 study on the relationship between payment methods and spending behavior. This makes sense: to pay with cash, customers must have the exact amount of their purchase or more with them. Paying with a debit card offers greater freedom, and shoppers face even fewer limits on their spending when they use a credit card.
Not offering flexible payment options is costing your business more than you think. 60% of consumers use plastic over cash for their purchases, according to Intuit. Yet about half of small businesses in the U.S. do not accept credit cards. That mismatch means businesses that think they are saving money are actually paying the price of not meeting their potential customer base where they are and offering them the payment options they desire.
Many small businesses focus on the disadvantages of credit cards, especially the processing fees that accompany each transaction. However, the additional sales your business can gain by accepting card payments will easily make up for transaction fees. Additionally, some businesses try to strike a compromise between increased sales and transaction fees by setting a minimum purchase amount for credit and debit card transactions.
Card payments are safer than you think.
If you are worried about fraud or data theft that could accompany credit card processing, you may be missing the biggest threat to your small business. Having large sums of cash on hand puts you at risk for external and internal theft. Potential robbers will be likelier to target a “cash only” business that they think will have plenty of bills to take from the register. And your own employees could be tempted to steal cash from the register. On the other hand, physical theft is unlikely with card and mobile payments.
One genuine concern merchants have about credit card payments is the potential for fraudulent chargebacks, in which customers stop payment on a purchase without returning the merchandise. Partnering with a merchant services providers like Union Bank is the best way to ensure the safety and security of your business’s card payments. For example, we offer breach insurance to protect your small business against fraud. We also provide in-person expertise to help you process chargebacks and fight any fraudulent ones that may arise.
Payment processing is faster than you think.
When you own a small business, every penny of your bottom line counts and day-to-day cash flow can make or break you, especially in the beginning. Only accepting cash may seem like the best solution because you don’t have to wait for checks to clear or card payments to be processed. However, Union Bank’s merchant services can help you expand your payment methods without hurting your cash flow. With check verification and guarantee, you don’t have to worry about accepting a bad check. And Union Bank guarantees next-business day settlement of funds from card payments made to a Union Bank deposit account.
Work with a local merchant services provider you can trust to help grow your business.
Partnering with Union Bank for merchant services gives you local service, competitive rates, and access to 24-hour technical support to ensure smooth operation for your business. We are here to assist you as you transition from cash-only to accepting credit and debit cards. Union Bank can also answer common questions such as, how safe is credit card processing? We offer equipment that enables you to use EMV chip technology, a major recent security enhancement. These features are all presented by a local community bank that understands the concerns of small business owners in northern Vermont and New Hampshire.
Convert your cash-only business to one that is geared towards growth. Contact our merchant services team today to learn more and get started with a provider you trust to help grow your business by adding flexible payment features for your customers.