Credit Card Processing Blog
Cash vs. Credit

Nov 13, 2015 09:09 AM / by Reliance Star

Consumers love using credit cards for their convenience and reliability. This makes credit cards one of the most popular payment options in the shopping world. But which one is better, cash or credit? The answer to that question depends on what side of the transaction the card is being applied to. 

Credit cards are usually the go-to during a shopping spree for simple reasons:
  • Every transaction is recorded. 
          If you and the merchant lost a receipt, the card issuer still has a record of your purchase. Cash holds no record other than what you remember of it.
  • Credit cards offer protection.
          Unlike cash, credit cards offer many levels of fraud protection. If an unauthorized transaction occurs, the cardholder has options they may take. With cash, once it’s gone, it’s nearly impossible to get back. 
  • Rewards
          Many cards offer rewards that can be used for things such as, travel, cashback, and more. Once you spend cash, that’s it, it’s gone. 
 
These consumer benefits explain why Americans mainly rely on credit cards. However, for merchant’s, credit card use is looked at a little differently.
 
Promoting card logos in the window attracts more business. However, some merchants are more worried about credit card fraud and view cash as more reliable. Matter of fact, some small businesses only operate as “cash only” merchants. With advancement in technology, a “cash only” operation may actually be hurting the merchant. There are pros and cons of cash only operations that every merchant should be aware of.
 
Pros:
  • Cash payments mean instant payments. There are no waiting periods, processing periods, or risks of anything going wrong. The merchant receives the payments quickly and without any possible setbacks normal card accepting businesses may face. 
  • Cash is the simplest form of payment. There would be less bookkeeping associated with operating a cash only business. This may actually save the business money for the usual time and labor it takes for bookkeepers to record other payment methods.
  • The risk of fraud is greatly reduced considering cash is less likely associated with fraud compared to credit. 
  • There are no possible third parties or fees associated with cash payments.
Cons:
  • Customers who don’t carry cash or do not have enough will walk away from a purchase.
  • Considering the increasing popularity of credit cards, business may lose customers if they only accept cash. Majority of consumers expect the option of using their card. If they cannot, they may consider that business inconvenient and will find somewhere else. 
  • Depending on how much cash and how much the owner is organized, keeping track of large amounts of cash can potentially become a mess.
So yes, there are benefits from becoming a cash only business. However, those benefits aren’t nearly as much as those who accept both cash and credit. Instead of limiting your business to cash only, a better solution would be to keep your payment infrastructure updated to secure maximum protection. Majority of shoppers are trustworthy, therefore it doesn’t make much sense to limit your business’s prosperity for the few shoppers who aren’t.