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8 Reasons Why the Cash-Only Model Doesn’t Work for Small Businesses

Chad Brooks
Chad Brooks
Editor Staff
Updated Jun 27, 2022

Customers want options when it comes to paying. If you don't already accept credit cards, here are eight reasons you should.

  • 55% of small businesses don’t accept credit cards.
  • Some examples of cash-only businesses are laundromats, lawn services, babysitters, street vendors and small restaurants
  • Many small businesses that only accept cash should reconsider this policy. Some compelling reasons include the fact that it can limit a company’s sales potential, it makes your business seem old-fashioned, and people typically buy less.

A surprising number of small businesses operate on a cash-only basis; in fact, a full 55% don’t accept credit cards.

Cash-only businesses

Although having a cash-only payment model is not always recommended, there are many types of businesses that still use this method of handling their finances. According to Patriot Software, the following is a list of some of the types of businesses that typically operate on the cash-only basis:

  • Small, nonfranchised restaurants: Although larger franchised restaurants tend to accept payments of all kinds, many smaller restaurants that only have one location do not. Setting up the ability to accept credit, checks and other forms of payments can be a costly expense that may not be in the budget for smaller restaurants. This causes many of them to operate on a cash-only basis.
  • Street vendors: Businesses in street vending face similar circumstances. Not only can it be costly, but due to the lack of electricity, it can be difficult for them to accept other forms of payment.
  • Babysitters: Given that many babysitters are either younger or only watch a few kids at a time, there is often no need to set up entire payment systems to stay in operation.
  • Laundromats: Laundromats are supposed to be a convenient method for washing and drying clothes for those who do not have immediate access to washing machines. A cash-only model is often the most convenient way to operate these businesses.
  • Lawn services: Since many lawn service companies only operate during certain months of the year or are only needed on a monthly basis, the cash-only model is often the most convenient method of receiving prompt payment.

Many small businesses pride themselves on their cash-only model, thinking it ties them to the past (“We’ve always accepted cash only and done just fine.”). What worked in the past, however, doesn’t necessarily still work in an era where technology has all but obliterated cash from the transaction equation.

Here are eight reasons why cash-only isn’t the best formula for future growth.

1. You limit your sales potential

Beth owns a boutique – every day, shoppers fill her store. But time and again, when they get to the cash register and see her “cash only” sign, they sigh, put their items back, and walk out of the store. She’s missing out on serious sales opportunities.

According to Bankrate, 9% of people don’t carry cash on them at all. And of those that do, 40% carry $20 or less. That’s a lot of people who can’t buy from you if you refuse to accept credit cards.

2. You seem old-fashioned

We live in an era where technology talks. If you’re still using a cash register and only accepting cash, your customers will leave you in the dust.

Joe Coffee prided itself on being cash only for years. It was part of its charm. But then the coffee shop started seeing negative reviews on Yelp, with comments about the fact that they didn’t accept credit cards. The brand changed its tune, accepted cards, and their Yelp review “skyrocketed.”

3. Your average transaction is lower

Research shows that the average spend per transaction is 120% higher when customers pay with a credit card compared to cash. If your customers are limited to a purchase that is equal to what they have in their wallets, they won’t buy as much from you. If you want larger transactions, you have to open up your payment options.

4. Each transaction takes longer

If you’ve ever had to wait for a little old lady to count out pennies at your checkout, you can understand the frustration of the other customers waiting in line. Credit cards are fast! With just a swipe, they’re done.

5. Cash is so last year

Trying to stay en vogue? Cash won’t do it for you. In fact, cash transactions are expected to decline, while credit card transactions are expected to rise to 33% of all transactions.

Remember that cautionary tale of Joe Coffee: not accepting credit cards goes beyond curbing your sales. Your brand’s reputation is on the line as well.

6. Checks take too long

If you’re in a service industry and wait for your clients to mail you a check for payment, you’ll be waiting a lot longer than you would if you accepted credit cards online. Customers like payments they can make with a few easy clicks of their mouse.

7. Cash doesn’t protect your customers

There’s some assurance when customers use cards: After all, there is consumer protection built into most debit or credit cards. Having trust in the transaction means people are more willing to spend with you. Cash doesn’t give that comfort.

8. Cash doesn’t offer loyalty points

For many consumers, those reward points credit cards offer are reason enough to make major purchases using a credit card. But no matter what kind of promotion you’re offering, you can’t compete with the cash back that credit cards provide, and so those customers go elsewhere to be rewarded.

If you’re truly looking to grow your business, you’ll have trouble doing so if you operate as cash-only. Credit card processing boosts your bottom line, and the additional revenue more than pays for the cost to upgrade.

Image Credit:

cyano66 / Getty Images

Chad Brooks
Chad Brooks Staff
Chad Brooks is a writer and editor with more than 20 years of media of experience. He has been with Business News Daily and for the past decade, having written and edited content focused specifically on small businesses and entrepreneurship. Chad spearheads coverage of small business communication services, including business phone systems, video conferencing services and conference call solutions. His work has appeared on The Huffington Post,,, Live Science, IT Tech News Daily, Tech News Daily, Security News Daily and Laptop Mag. Chad's first book, How to Start a Home-Based App Development Business, was published in 2014.