Why Small Businesses Should Accept Cash: Retaining the Value of Currency Within the Small Business Economy
So, let’s talk about cash. Yes, good old-fashioned paper money. In an age where digital payments are the norm, the importance of cash transactions is often overlooked. But as a small business owner or even just a savvy consumer, understanding the value of cash is crucial.
Let me start with a story I came across on Facebook, posted by a former banker. It’s a simple yet eye-opening scenario that really drives home the impact of cash versus digital transactions.
Imagine you have a $50 bill in your pocket. You decide to go out for dinner and pay the restaurant with that $50. The restaurant owner then uses the bill to pay someone to clean the place. The cleaning service, in turn, uses the bill to pay the barber for a haircut. The barber then spends that $50 on groceries. And so on.
In this scenario, that $50 bill continues to circulate, retaining its full value with each transaction. The bank doesn’t take a cut, and the value of that money stays within the local economy, benefiting everyone who touches it.
Now, let’s compare that to a digital payment. You go to the same restaurant and pay with your card. The bank charges the restaurant a 3% fee for the transaction—$1.50 on that $50 bill. Every time the money changes hands digitally, another 3% is skimmed off by the banks. After just 30 transactions, the original $50 has dwindled to $5, with the other $45 now sitting in the bank’s coffers.
This isn’t just a hypothetical. It’s happening every day in small businesses across the country. According to financial magazines and industry data, transaction fees are costing small businesses thousands of dollars each month. For a business with $50,000 in monthly sales, that 3% fee translates to $1,500 in lost revenue. That’s $18,000 a year—money that could have been reinvested in the business or used to support the owner’s family.
And let’s be honest—many small businesses are operating on razor-thin margins. Those fees can make a significant difference in whether a business thrives or just survives.
This brings me to my main point: Small businesses should be actively encouraging cash transactions. I know it might seem inconvenient in a world dominated by digital payments, but the benefits are undeniable. Cash keeps the full value of every transaction in the hands of the business owner. It avoids the hidden tax that digital payments impose on every sale.
As someone who has run multiple businesses, hosted podcasts, and written books, I can tell you that this isn’t just about saving a few bucks. It’s about preserving the financial health of small businesses and keeping the value within our communities.
I personally almost always carry cash—not in large amounts, but enough to cover my needs. Why? Because I see the big picture. Every cash transaction is a small act of resistance against a system that slowly drains value from our local economies.
So, the next time you’re at a small business, consider paying with cash. It’s a simple way to make a big impact. And if you’re a business owner, start thinking about how you can encourage your customers to do the same. It’s time to take control of our financial futures, one cash transaction at a time.
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