Which Payment Method Costs You More? Cash Payments vs. Card Payments (Updated 2020)

    Jul 23 2020

    Topics: Cash Handling Solutions

    Today, cash still accounts for a large number of transactions. Many customers still put their trust in cash, and others prefer it for making smaller purchases. 

    Download our free guide for CFOs to find out how cash handling is affecting  your bottom line.

    Business owners need to pay close attention to the costs of any payment method. One reason cash has been popular with business owners is because it’s often more economical than other options.

    Just how much does it cost to accept card payments versus cash? This guide examines each payment method and makes it clear that cash is best. 

    The Costs of Accepting Debit and Credit

    Before you can start accepting card payments in your business, you need the right technology. You’ll likely have to set up payment processing services from a provider or a financial institution like your bank. You’ll need to invest in point-of-sale terminals.

    The terminals can be bought outright, or you may decide to rent them for a monthly fee. You’ll also have to pay for upgrades, maintenance, and repairs. Then there’s a monthly fee for your merchant account, which allows you to accept payments.

    Merchant accounts also include variable costs. There’s usually a set fee for every debit transaction. Credit card transactions often carry a percentage fee. There could be a flat transaction fee. Some merchant account providers also levy a minimum monthly charge, meaning you’ll pay so much, no matter how many card transactions you complete.

    All this adds up. The average cost of a credit payment could shake out to around $2.08 per transaction. The more people who use credit cards in your business, the higher the cost you must pay each month. 

    The Low Cost of Accepting Cash

    Cash is attractive to business owners because its costs can be much lower than card payments. In fact, the average cost of a cash transaction is approximately 30 cents

    For cash transactions, there are no transaction fees, no merchant account fees, and no minimum monthly charge. Plus, it’s easy to start accepting cash. There’s no need to sign up for a merchant account. Rather than paying fees the smaller cost of cash tends to come from the time and labour of counting, sorting, and reconciling cash. And this cost can be further reduced with an investment in cash management solutions, like cash recyclers or smart safes.

    Accepting cash, and encouraging cash payments, is an excellent way to reduce your monthly expenses, which can improve your bottom line. 

    No wonder some retailers stick to a cash-only model or encourage their customers to pay with cash.

    Cash: The Preferred Payment Method

    At the end of the day, it’s clear that cash remains king. There’s no contest between card payments and cash when it comes to costs. 

    Plus, consumers often prefer cash, even in modern times. It’s more likely to be accepted, it doesn’t run up debt, it’s great for budgeting, purchases stay private, and studies show that paying with cash makes people enjoy their purchases more.

    Cost of Cash Calculator  


    Andrea Lombardi

    Andrea Lombardi

    Andrea joined the CashTech team upon its inception in 2003. Learning the business from the ground up, she now utilizes her expertise in account management, planning, and negotiation while managing the daily operations of CashTech’s sales, marketing, and logistics departments. Andrea holds a bachelor’s degree from the University of Western Ontario. She enjoys travelling and has a passion for personal fitness, including obtaining her kettlebell certification. Andrea lives in Toronto with her husband and two young sons.

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