Accept cash, cards, Venmo; don’t lose customers

Many businesses limit accepted payment methods, which is short-sighted and unwise

The way we pay for things has changed significantly, with options like Venmo, Starbucks app payments, and tap-and-go with phones becoming the norm. Despite these changes, some small business owners are either sticking to traditional methods or hastily embracing new technologies.

Take, for example, the restaurant owner in South Philadelphia who refuses to accept credit cards, instead directing customers to use an ATM that charges a $4.50 fee for cash withdrawals. This inconvenience is unavoidable since most people no longer carry cash.

Another example is the convenience store near Rittenhouse Square, which refuses to accept credit cards for purchases under $5. This policy either forces customers to buy additional, unwanted products or, as in my recent experience, to leave empty-handed.

Similarly, a deli in Margate, New Jersey, warns customers of an extra fee for using credit cards instead of cash.

And then there are the businesses that operate on the opposite end of the spectrum, insisting on being “cashless.” This practice has sparked backlash from governments in various states, including California, Wisconsin, Washington DC, Florida, and even Philadelphia. These governments aim to end a practice that discriminates against those who do not have access to credit or debit cards.

None of these practices are particularly wise, and for good reasons.

The first reason is simple math, which seems to elude those business owners who avoid accepting credit cards. They often cite wanting to avoid fees, which is a valid concern as transaction costs can range from 2-4%. For a retailer or restaurateur, these fees can significantly reduce already slim profit margins.

I understand their perspective, but as an accountant, I can suggest a simple solution to this challenge. By calculating the total annual cost of these fees and distributing it across all their products through slight price increases, they can easily cover these expenses. Would I mind if my burger cost $11.60 instead of $11.15? That’s a mere 4% increase, and I wouldn’t even notice. However, like many other customers, I find it irritating when these costs are separately itemized and added like an IRS penalty, or when handwritten signs with exclamation points are displayed at the register, or when they are added to the check without my knowledge. Not a smart move.

And if you believe you’re deceiving the tax authorities by dealing exclusively in cash, you might want to reconsider. Any competent IRS auditor can easily observe your business for a few days and reasonably estimate your revenues compared to what you’re reporting. If you’re audited, you won’t be able to deceive anyone.

It’s also not wise to insist that customers use a particular form of payment that is convenient for the business, regardless of the customer’s preference. This is not 1984. Today’s customers have numerous payment options, from credit cards to mobile apps to bitcoin. While these methods may entail fees (as discussed above), denying a customer’s preferred payment method is not only disrespectful but also detrimental to the business. It can lead to customers leaving the transaction feeling irritated or without making a purchase.

Small business owners often grapple with rising costs, inflation, and the challenge of attracting new customers in a sluggish economy, all of which are legitimate concerns. So, it’s puzzling how these same business owners can casually turn away potential customers with actual money simply because they don’t approve of their chosen form of payment. This approach does not bode well for future growth.