Is This Why More Businesses Will Be Going Cash Only?

Some companies may switch to cash-only payments to save on credit processing fees.

Many businesses accept credit card payments for added convenience. However, companies must pay fees to process credit card transactions. This added expense keeps some businesses from accepting credit card payments; some even choose to operate on a cash-only basis. Could higher fees entice more companies to go cash only? Keep reading to find out more.

Merchants pay fees when they run credit card transactions

Since consumers use credit cards regularly, many businesses accept credit card payments in addition to debit card and cash payments. But doing this comes at a cost to business owners. That's because merchants must pay fees every time customers swipe their credit cards.

In spring 2022, Visa and Mastercard raised their credit card swipe fees. Due to increased costs, some companies may decide to change what form of payment they accept. Some companies may set minimum spending limits to use credit card payments or may only accept cash payments to deter customers from using credit cards altogether.

Could this mean that more businesses will switch to cash-only payments? It's possible. But it's unlikely that all companies will decide only to accept cash payments because that's not convenient for consumers who may only have debit and credit cards in their wallets. This move could deter some customers from doing business with brands.

Don't ditch your credit cards

If you're wondering if cash-only payments will eventually become the norm, you likely don't need to worry too much. Most businesses want to provide various payment options to customers, so it's convenient for them to spend money. Accepting multiple payments encourages more consumers to do business with a company and could help boost sales.

Consumers should keep in mind that some businesses may choose to charge customers a fee to pay with a credit card, which would make their purchases more costly. But if you use credit cards frequently, you don't have to plan to stop using them anytime soon.

Credit cards make it easy to pay for your purchases when you shop in a store and online. Plus, rewards credit cards allow consumers to earn valuable rewards when they use their cards. You can feel confident knowing that many businesses will continue accepting credit cards, even if some companies change their payment processes due to rising business costs.

Be prepared with cash

It's never a bad idea to prepare for multiple scenarios. You may encounter some businesses that don't accept credit cards. One thing you can do is always keep some cash in your wallet. This is a good move because you never know when you may end up at a business that only accepts cash payments or one that passes payment processing fees on to the customer.

Some businesses that only accept cash payments have on-site ATMs for customers to use. However, be aware of potential checking account fees to use them. If the ATM isn't associated with your bank, you may need to pay out-of-network ATM fees, which impacts your bank account balance. That's why it's good practice to keep extra cash on hand in case you need it.

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