You may not have thought about it much but, for businesses, accepting payments in cash is not free.
That’s right. There’s a lot of talk about the cost to businesses of taking debit and credit card payments, but not so much about accepting bits of metal and paper instead.
Accepting cash involves a lot of costs, some more obvious than others.
First, businesses typically have to pay to deposit cash with their bank. Here’s a quick look at the fees that banks charge small businesses for doing this:
- NatWest’s standard tariff: 70p per £100
- Lloyds: £1 per £100 or 80p per £100 over £1500 per month
- Royal Bank of Scotland: 70p per £100
- Barclays Business Current Account – Mixed Payments Plan: 90p per £100
Then there are other costs of handling cash. These include:
- Theft by staff
- Time spent counting cash
- Keeping enough change
- Physical security
- Transporting cash to the bank
When all these costs are taken into account, accepting a cash payment can easily cost a small business, on average, 1% or more of the value of that payment. It can conceivably be more expensive for a businesses than accepting a debit or credit card payment.
What do you think? Is cash secretly a rather expensive way to accept payments?