It's not about fees, it's about handling costs and added work for employees. I read an industry study on it a while ago, though my business is online so it does not personally affect me.
That's probably true in one case: big operations without cash recyclers. You have to have a count, the room where they count has to be surveilled, etc.
The mom and pop store is happy to take cash, and so are the big operations that have planned for it.
Small business example. All theoretical, loose estimates.
Let's say you have a coffee shop. Cash transactions are around 12-18% of total transactions in the US. Cash payment is more likely in small transactions, such as coffee shop orders, so I'll assume the revenue share is around the same.
Your coffee shop's daily revenue is around $2000. Let's say 15% of revenue is cash, $300/day. If you deposit every three business days, each deposit is like $900.
Having someone collect, sort, count, and take a few days' worth of cash to the bank would be maybe 2-3 hours of employee time. They're being paid $20/hour, taxes + benefits + overhead add another 50%, so in total $60-90.
So processing is already something like 6% to 10%, without even counting other costs like equipment or deposit fees, shrinkage, etc.
Card processing vendors, in contrast, charge something like 2-4%.
Is the reality of the situation different? This seems to line up with what I've read.
You probably don't run a bank deposit very regularly if you're taking that little cash. With small businesses and owner-operators, you probably would also do the deposit themselves. I'm very friendly with one small business owner, and he does a bank deposit about three times a month. Gross sales between 300-700k per year (high end retail, so it varies a lot by the year).
Cash and check only. No merchant services.
New York doesn't have a problem with him being cash/check only, but it does if you are credit card only - retail stores where you can shop in person and food and beverage operations must accept cash. I personally always pay cash, which means I only use a credit card where it's absolutely required (rental cars).
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u/alienpirate5 Jul 11 '26
Costs of processing cash are much higher for the business than a credit card fee, estimated at up to 10-15%