One Stop Mortgage Corp Blog

4 Reasons Business are Switching to Cash Only Payment

Oct 2, 2015

Follow us on Twitter @OneStopMtgCorp.

recession

In this day and age it’s almost unheard of that people, companies or institutions would be flocking away from an electronic system. Automated electronic processes used by companies in Alberta and BC could include scheduling, invoicing or simple payment processing from clients and customers.

But moving away from electronic payment systems is exactly what’s happening for many small businesses all over North America.

According to Mark Leger at the Globe and Mail, businesses adopting this gutsy procedure are placing their faith in customer loyalty.

Once considered a manoeuvre for companies who wanted to collect income under-the-table to avoid taxes is now being employed by entrepreneurs, small businesses and family operations looking to save expenses in any way they can.

Switching to cash only is just another way to do that.

 

1. Credit and Debit costs

Credit card fees and the costs to maintain a debit system just aren’t worth it for many small businesses. Companies that need to pay a fee so they can be paid are switching to cash only despite the risk of alienating potential customers.

In order to process credit and debit payments, merchants have to pay a fee to the company that processes that payment for the card holder in the first place. The merchant is paying a percentage of the cost to make the transaction, and for many small retailers, it’s enough to deter them from allowing credit or debit payments at all.

 

2. Loyalty of Existing Customer Base

How do small companies justify the limited payment methods of their customers?

By creating and delivering a product that out-weighs the hassle of running down the street to a bank.

“Many of them don’t have the desire or potential to expand,” says Dr. Bakr Ibrahim, a management professor at the John Molson School of Business. Dr. Ibrahim says that these businesses are content with their existing customer base and aren’t dissuaded by the frustration of potential new customers.

For these operations, the clients they currently serve are good enough, and they’ll do all they can to keep them satisfied.

 

3. Old School Values

Many companies switching or choosing to remain with a cash only approach are doing so because the traditional method of receiving payment suits their mission statement.

While keeping prices a bit lower, these businesses deal with their customers face to face and haven’t had an issue accepting cash, and thus see no reason to change.

They don’t see credit and debit costs as a necessary means of doing business.

These companies normally don’t require large purchases that would necessitate customers carrying around large amounts of cash. According to Mr. Leger, these values allow for a relaxed, stress-free atmosphere between merchant and customer, an atmosphere that’s beneficial for both sides of the table.

Switching to or remaining a cash only business is a method of operation not without its disadvantages, but if it suits a particular business model and it’s organized, it’s an advantage that can be enjoyed by both consumer and producer alike.

Need help growing your business? We can help! Contact us to ask about a small business loan ->

 

Read More Articles

Add your comment

comments powered by Disqus