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  • Writer's pictureDorothy Royal

Cash Is King

If cash is king, is the king dead? Let’s hope not.

In the business world, one expense that is taken directly from the bottom line, is credit card processing fees. With businesses now doing between 60-85% of their business in credit card sales this can add up and take away.

On an average month, small business owner, Jamie Lewis, pays out over $1200 a month in credit card processing fees. In the beginning he never calculated that into his profit/loss as he considered it just a cost of doing business. Recently, after accounting for the increase in his wholesale supplies and his inability to increase customer cost due to big box competition, he realized those card charges were his profit.

It is common for a gas station to advertise a cash and credit price (sometimes differing by 5-15 cents a gallon) and the consumer is given a choice. The convenience of using plastic over cash has become the norm in the last decade. Credit card processing companies charge the seller a percentage (usually 2-3% plus a per transaction fee) which can really add up. To simplify things, gas stations decided the consumer could pay for the convenience, instead of the money coming from the bottom line.

A new program known as the “cash discount program” is now allowing for all businesses to offer the same option. The prices listed on most retail items are considered the cash price. If a consumer decides to pay by credit card there is a minimal amount added at check out. This is common in retail, restaurants, services and bill paying venues.

Does this make the small business owner the bad guy? Absolutely not. For a small business owner to be able to offer competitive pricing against big box stores or online giants (like Amazon), passing along this small fee may be the difference between staying in business or not.

The government is offering rebates, but read the fine print and in some cases, expect a higher price tag from the manufacturer. The convenience of being able to walk into a store and walk out with a product may not exist in the “future world” of drone deliveries, so take advantage of option now, while you still can.


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