After the reports of Target and Michaels having major security breaches on consumer credit cards, you have to wonder how both stores would fare if they became a “cash only” business. It’s an interesting debate when the fear of using credit and debit cards in stores is likely going to increase and precipitate the use of more cash sales. You have to assume if more of these breaches occur, more people will be using ATM machines before heading to the retail stores to shop. And there’s every indication more security breaches will be on the horizon as major names scrimp on utilizing the proper IT services.
Is it still limiting to have “cash only” business today? Consider some of the benefits by going this way in the first place. Some of the prior disadvantages may end up being moot as consumers create their own cash on hand policies.
Saving Money By Accepting Cash
It seems to cost businesses more money in the long run accepting credit cards. Certain fees are always applied to setting up credit card commerce, and the chances of fraud are always there. This could cause huge disruptions in your store getting the funds you need while you sort out all the issues.
Also, you can virtually eliminate the use of a bookkeeper that keeps track of all the card purchases and receivables. Having simple cash transactions is about as simple as it gets in keeping books. A manager could do this themselves rather than worrying about more complex purchases where consumers pay by credit card, or layaway programs.
Consider that most credit card purchases are going to mean not getting the money for up to a couple of months, if possibly at all. Some consumers can’t pay their credit card bills or file for bankruptcy, and that means you don’t get paid. In fact, it’s almost unbelievable how much stores have become dependent on cards when they’re usually so unreliable.
By using cash, you’re getting the money immediately without having to wait for it. You also create more cash flow, something that many businesses have trouble balancing due to the overreliance on cards.
What Disadvantages Might Become Advantages?
The biggest hurdle has always been that people feel inconvenienced having to pay strictly by cash. Any exception might be allowing payment by bank debit card since cash is taken immediately out of the consumer’s checking account and into yours. However, some people might be afraid to use even a bank debit card when there’s never any guarantee the card will be safe.
That feeling of being inconvenienced may go away eventually as people prepare themselves long in advance with cash to shop safely. For businesses that want to go with a “cash only” policy, they may find no better time to do it than now. While there’s always the risk that some customers will find it to be an inconvenience and decide to shop elsewhere, credit card scanners may get people wincing when their card gets run through. You have to wonder how many people bring up a discussion with a cashier at Target or other retail store asking if their credit card will come out of the scanner the same way it was before going in.
The only inconvenience “cash only” policies may have left is in filling out a specialized IRS form. If you make more than $10,000 in cash sales, you have to fill out Form 8300 listing these transactions. Keep in mind this also means sales from bank debit cards considering it’s a form of instant cash through a card. It also applies to traveler’s checks, cashier checks, and money orders.
As small of an inconvenience as the above is, major retailers may never shift to “cash only” with the continual thought they have the hacker problem licked. Even if they do, their credit card scanners may be gaining cobwebs while their cash register tills overflow with fifty-dollar bills.