How does being a cash-only business affect sales?

A cash-only business means that they only accept paper bills or coins. As such, there are no cash transfers, credit or debit cards, gift cards, or personal checks (Arvidsson, 2019). Most businesses that prefer taking cash-only are the small ones as they want to minimize the startup costs. Others are those that are avoiding the additional costs, such as purchasing or leasing equipment to process credit cards, hiring a person to maintain that equipment, and a processing fee every time a customer pays you. These costs tend to reduce the profit margin of the business.

However, times are changing, and we are moving towards a cashless society whereby most customers carry little cash and are used to making purchases through debit, credit, and cash cards. Therefore, going cashless implies that these customers will not be in a position to make purchases in cash-only business unless they have enough cash on them, or they can access a nearby ATM (Arvidsson, 2019). In addition, even though a customer may manage to pay for items using the cash-only store for the first time, they may not come back as they want to avoid inconveniences of paying cash again, thus reducing the number of sales in the business.

With the advancements of technology, we have an increasing number of social media platforms that have made it easier for people to shop online. Most businesses even have their websites where they post their products along with the price tag, and the customer can make inquiries and order a product of choice online. However, a cash-only business operating in this era is likely to have fewer sales because most customers prefer shopping online (Arvidsson, 2019). In such a business, they are expected to be physically present at the store so that they can pay with cash. Unlike online business, where you can reach many customers for the cash-only store, you have to wait for customers to visit your store, and many will not be willing, thus reducing the number of sales you make.

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Reference

Arvidsson, N. (2019). Cash Payments: An International Comparison. SpringerBriefs in Economics, 23-25. https://doi.org/10.1007/978-3-030-10689-8_3