Think of the last time you filled up your vehicle’s gas tank. As you were pulling into the service station, you likely noticed that the price if you paid by cash was a few cents less per gallon than the price were you to pay by credit. Though many service stations have enacted this policy to maintain profit margins (it’s estimated that credit card transactions cost about 3 percent more than cash-only transactions), this is an example of why cash is still relevant in today’s world. In fact, it’s estimated that 40 percent of all transactions in the U.S. are made using cash. Conversely, less than 20 percent of transactions are made with credit cards.
Service stations are hardly the only venue that offers discounts on cash transactions (or only accepts cash at all). And while many people eat the additional cost of using their credit card at service stations for the sake of convenience, paying for items in cash has its benefits. For starters, it helps people manage their finances more in that they’re only buying what they know they can afford. Paying in cash helps minimize — or eliminate — credit card debt, not to mention avoid paying interest on carryover balances from month to month. In fact, studies show that people who regularly pay for purchases with credit cards have more of a tendency to overspend. Additionally, paying in cash eliminates the risk of identity theft, as there’s no paper trail to your purchase that a wrongdoer could track and manipulate.
Businesses That Still Accept Cash Only
Though many businesses have moved away from cash-only models to accept credit cards as a means of staying competitive, you’d be surprised at how many there are out there that are still cash only. Here’s a closer look at some of them:
• Laundromats: As there are no large laundromat chains out there, many still operate on a cash-only (or coin-only) business model.
• Hair salons: Many stylists are independent reps, so they have the option of picking and choosing which forms of payment they accept. Many still just accept cash or check to avoid paying credit card fees.
• Small businesses: In order for small businesses to stay competitive, they have to closely watch overhead expenses. Credit card fees have the potential to greatly cut into their bottom line, so many opt to only accept cash or check as forms of payment. Prior to closing, even the world-famous Carnegie Deli in New York City only accepted cash as payment.
• Others: The likes of parking meters, food trucks and more are also largely still operating on a cash-only model. Also, many customers get faster — and better — service at bars and clubs when they pay in cash over credit.
Bottom Line: Why Cash is Still King
In addition to the benefits of paying in cash over credit, there’s one other key reason why this form of currency is still king: ATMs are still being widely used. This is true even among the Millennial generation, as the majority report using an ATM at least once a week. As you can see, cash is still relevant in today’s (largely) digital world. It pays (pun intended) to do business with cold, hard cash.