How Accepting “Cash Only” Could be Hurting Your Business
For business owners, having a cash-only policy may seem easier than dealing with multiple payment methods. However, only accepting cash can add headaches and hassles that can threaten your business’ security and bottom line.
Because cash-only businesses frequently have large sums of physical cash on site, they are a notoriously common target for burglars. There are several reasons why cash is so attractive to burglars.
- Cash is easy to transport, making it possible for thieves to steal a large amount of cash in a short amount of time.
- Cash is anonymous, allowing an individual to pay for goods and services without divulging any of their personal information. When making transactions in underground economies or for illegal purposes, cash may be the only acceptable form of payment.
- It’s versatile and untraceable, allowing a thief to use stolen cash for virtually anything without having to worry it will be traced back to them.
Overall, businesses are more at risk of break-ins and theft if they handle large amounts of cash, which is why it’s crucial for cash-only businesses to be ultra-vigilant about security. Accepting only cash will likely require you to spend additional time, money, and energy to ensure everything is kept safe.
Because cash-only businesses deal with hefty sums of currency, they’re more vulnerable to counterfeiters. Counterfeit money remains a large problem in America. In 2020, the U.S. Secret Service seized more than $500 million in counterfeit currency, a near 40% increase from 2019.
Advancements in technology—like computers, printers, and scanners—along with widespread access to these devices and the increased use of the U.S. dollar across the globe have allowed counterfeiting to evolve and remain a threat.
While all businesses are at risk of currency fraud, cash-only businesses may have to spend extra time and resources understanding the issue and taking measures to prevent it simply because they work with such high volumes of cash every day. Spending time examining every bill you receive, investing in anti-counterfeiting technology and training workers are just a few of the extra steps that cash-only businesses should take to reduce the risk of currency fraud.
Nowadays, fewer consumers are making purchases with cash. Today’s tech-forward world makes it easier than ever to pay with credit and debit cards and with apps like Apple Pay and PayPal. Cardholder reward programs, speedy transactions, and better protection from fraud also have consumers reaching for their cards.
An annual payments study from the Federal Reserve found that consumers used credit and debit cards for a majority (62%) of their in-person payments in 2021. Whereas consumers used cash for just 29% of in-person payments, down from 40% in 2016.
The study also found that fewer consumers prefer using cash for in-person payments, with 76% citing credit and debit cards as their preferred payment method and only 19% citing cash as their payment of choice.
Preventing your customers from paying with their debit or credit cards can leave many of them feeling inconvenienced. Accepting only cash can create additional hassles for your customers, and they may be less inclined to return to your business or opt to shop elsewhere to avoid dealing with the cash-only policy.
While we would all like to believe our employees are trustworthy and law-abiding, the unfortunate reality is that internal theft is common. Having large amounts of cash on-site can entice some employees to steal.
Taking cash from the register, reversing cash transactions, and altering cash counts are just a few examples of how employees may steal cash from their employer. Theft can devastate a business. While it’s time-consuming, it’s worthwhile for cash-only businesses to establish strict internal controls to spot and prevent employee theft. Setting a checks and balances system, investing in video surveillance, conducting regular internal audits, and creating an internal tips hotline are just some of the practices a cash-only business can employ to help protect itself from employee theft.
Having a cash-only model may work for some, but it’s important to understand the risks and consider how it may be hurting your business. If you have questions about merchant services for your small business, PlainsCapital Bank can help. Our experienced banking professionals are equipped with the knowledge, tools, and expertise to help small business owners stay organized. Call us today at 866-762-8392 to learn more.