Merchants have never before had so many options for accepting cards, but a stubborn core that deals only in cash may never change its ways.
It would seem like there's no excuse anymore — some readers are free, others add features like a GPS-based tax calculator, and a rumored device from Groupon would even come with a free iPod (see story). And yet none of these perks has won over cash devotees.
As it turns out, the most compelling voice — that of the customer — isn't always on the side of plastic cards.
"A couple of years ago people were complaining about why we don't take credit or debit cards, but I'm not hearing that so much anymore," Vinny Cuccia, an owner of Strawberry Place, a Nyack, N.Y.-based eatery specializing in breakfast and brunch, tells PaymentsSource.
The business has accepted only cash for about 40 years, and "it doesn't cause any problems," Cuccia says.
The restaurant uses an antique register, which is more than capable of handling the average individual meal check of up to $20, he says. Customers caught short of cash usually visit the ATM at a nearby delicatessen.
Cuccia is not alone. Many restaurants, bars and small businesses across the U.S. manage to do fine with a cash-only policy.
But many may miss opportunities or risk getting cut out of the growing movement toward mobile payments, which lean heavily on credit and debit cards and other electronic payment forms.
Intuit Inc. found in a recent survey that more than half of the nation's small businesses do not accept credit cards, collectively losing out on millions of dollars in potential sales (see story).
Fifty-five percent of an estimated 27 million small U.S. businesses shun credit cards, which equates to about $7,000 annually per business, or $100 billion altogether, Intuit says. Intuit hired Decipher Research to conduct the survey online in November 2011 among 1,000 U.S. small-business owners.
Despite a mushrooming array of options for merchants to accept payments wirelessly and through mobile devices, many small merchants continue to refuse to change their habits because "only recently has it begun to be cost-effective" for them to do so, Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC, tells PaymentsSource.
For example, at an outdoor festival held May 18-19 in Campbell, Calif., near the birthplace of many emerging mobile payment technology companies in Silicon Valley, 200 merchants participated and more than half insisted on accepting only cash.
"The merchant has to find the right price point where it make sense to accept cards and that isn't easy to do for a lot of small mobile merchants," he says.
For Lisa Aiken, a Marana, Ariz.-based merchant selling soap products at fairs and festivals across the Southwest U.S., $20 was the "break point" where last year it began to make sense to accept cards using a device from Square Inc.
"I found that when I accept cards people tend to buy more than what they can afford just with the cash they have in their pocket, and for anything above $20 it's worth it to pay the transaction fee," she says.
Aiken pays a flat fee of 2.75% on transactions she accepts through her mobile phone. This beats the pricing from the banks that offered her card-acceptance deals, she says.
"Every bank deal I've received for accepting cards, including one through a local soap guild, costs a lot more because of monthly fees and per-transaction fees, which would make me cringe," Aiken says.
Since she began using Square last year, Aiken continues to research other options but has ruled out several "because of the fine print."
A rare group of small merchants, even those who deal face-to-face with customers, refuse to take cash and accept only credit cards.
One example is Trevor Clark, an independent photographer based in Stateline, Nev. He specializes in photographing outdoor adventures such as white-water rafting and snowboarding.
Clark, who operates from a van that serves as a mobile office, handles payments in batches between gigs where he dangles from bridges to photograph people shooting river rapids.
"Credit cards are the only way I can accept payment and keep my workflow going," Clark says, noting that cash is a hassle and checks are "too much work."
While some merchants may cling to a cash-only policy indefinitely, the pressure to expand customer payment options is on the rise, analysts say.
Operators like Square may steadily break down certain small merchants' resistance to accepting cards, Rick Oglesby, a senior analyst with Aite Group, suggests.
"By leveraging the mobile device to eliminate upfront costs associated with accepting cards and providing an equipment-free way to accept cards at card-present rates, (Square and its competitors) are reducing the cost of card acceptance for very small merchants," Oglesby says.
The growing popularity of a cloud-based approach to handling mobile payments is also helping to expand such offerings, he says.
PayPal Inc.'s growing range of payment-processing options also "can bring down the cost of electronic payments for a merchant," Oglesby suggests. This may cause more merchants to eventually ditch a cash-only approach.