Exploring America’s Cash-only Businesses

Nov 24, 2022


Reporting on research from Business News Daily, CBS News says many American businesses continue to rely solely on cash payments. Rising fees associated with card payments were identified as a key reason for many merchants shunning cashless.

Money Watch on CBS reported that over 40 percent of payments in 2021 were made in cash, and asked the question: why are so many businesses choosing cash-only operation? Ted Rossman, Senior Industry Analyst at Bankrate, pointed to interchange fees charged by card companies to use their payment systems as being a key reason.

These fees are also identified by Business News Daily in their round-up of cashless pros and cons, noting that businesses are left with a choice between taking on the fees themselves—thus losing profit margin—or passing the added costs on to customers, who may then choose to go elsewhere.

Privacy is another issue highlighted, with the easy tracking of purchases being a potentially desirable quality for consumers, but also a privacy risk when that same data is used and sold by cashless payment providers. Additionally, cashless expenditure can prove harder to keep track of due to its intangible nature. Psychologists have noted handing over physical money creates a sort of ‘payment pain’ that is felt more keenly than when someone taps or swipes with a card or app, which can lead to more overspending with cashless methods.

One tried-and-true spend management method, putting cash in envelopes segmented by expense, is still as common today as it was decades ago. Without being able to see money spent, some may easily lose track of how much they’re spending.
"Business News Today

Hacking of accounts—which can see entire bank accounts emptied, versus losing potentially far less should a wallet containing cash be stolen—is the final ‘cashless con’ noted, with Business News Today concluding that while cashless transactions ‘offer perks like easy tracking and minimising touchpoints’, for some people, ‘security and privacy concerns outweigh these conveniences.’

Ultimately, choice should lie with the consumer. While some businesses may lack the infrastructure or cash flow to introduce cashless transactions, for the majority, the ideal situation is to offer both cash and cashless options and let the customer decide how they want to pay that day.

Last Updated: Nov 24, 2022