Is Cash or Credit Card Best for My Small Business?

Most businesses start off by accepting only cash as payment, in part because they are intimidated by the credit card application process. However, this can be a significant bottleneck for a business’s revenue. Credit cards are easier than ever to apply for, and they are quickly overtaking cash as the payment method of choice for many consumers. If we also take online payments into consideration, credit card processing capabilities have become that much more valuable. The fact is that online businesses and e-commerce websites may need to accept credit cards in order simply to survive.

Cash payments

Cash is the traditional way of accepting a payment. It can come in the form of currency or checks or money orders. While accessible, cash does have some considerable drawbacks. First off, cash needs to be counted, managed and stored securely. This is can be both time consuming and dangerous, since large amounts of cash can be attractive to criminals. On the other hand, cash does not have any transaction fees (unless you count the cost of theft and embezzlement), which is one of the major reasons why some small businesses prefer to stick with cash over credit cards.

Credit card payments

Since we’re on the topic of transaction fees, it’s worth mentioning that these fees are usually only a very small percentage of each transaction.  While that may seem like a net loss at first, the fees are typically covered by an increase in revenue due to increased sales. There is a considerable part of the customer base that purchases products and services using credit cards almost exclusively. On top of that, credit card users are more prone to buy on impulse, because credit cards offer incentives to spend more in order to earn things like airline miles, cash back, or other incentives.

Cash or credit card?

At the end of the day, the choice is not simply binary. A company can accept both kinds of payment methods, and give its customers more options to choose from.  Indeed, that is precisely what a huge portion of the companies out there normally do.  However, foregoing credit cards is often a strategic misstep, because it simply cuts off a chunk of your potential customers. Processing credit cards is more accessible than ever, and it is a service that studies have shown can typically increase revenues by 500% or more. It is also a service which makes it a lot easier to run an online business, especially for companies that engage in eCommerce.

For more information on which payment method works best for a small business, or to open a merchant account, please call (888) 924-2743 or go to

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