The cost of accepting payment at local businesses. (Part 1: Cash)

Chris Turney is founder and CEO of Pass. Chris has been working with local businesses for several years, leveraging mobile tech to improve revenues, cash flow and customer retention and satisfaction. Pass makes it simple for any local business to sell bulk packages and subscriptions for what customers get day-to-day.

They say cash is king...but what does it really cost to accept cash?

My first“ ”real world” job was working at a Dunkin’ Donuts in Connecticut when I was 16. Each cashier was responsible for balancing, or counting down as some may know it, their register at the end of their shift. The point-of-sale system (POS) would tell us how much should be in the drawer, we just had to count the money to double check, and file the excess of cash above $200 into the safe for deposit.

How long do you think it should take to count the money in a register at a typical local business?

Balancing a register should take 10 minutes.

As an analogy, think of an ordinary coin jar. Imagine dumping all of the change out of that jar. Now start counting it. How long does that take? If you were patient enough to count all of those quarters, pennies, nickels and dimes, do what a diligent business would do; count it all again. Did you get the same amount the second time? No? Start again…

While counting out all of the money in the register is a 10-minute task, making sure the count is correct and “clocking out” can easily be extended past 30 minutes.

Most businesses do not invest in bill-counters, so cashiers have to balance their own drawer (if you do invest in a bill counter remember that you get what you pay for — don’t go cheap when it comes to your money.) This means an hourly worker is being paid to balance their register by hand. How much are your cashiers paid? $8/hr, $10, $15? If it takes an individual an average of 30 minutes to balance their drawer and clock out, that usually costs a business at least $5 — for a task that generates $0 in revenue.

This cost must be factored into the cost of accepting cash. How much cash do you make per cashier in a day? It’s probably between $100–200 in cash per shift if yours is like most businesses. This means the 15–30m it takes to balance the register costs anywhere from 1.25–5% of the cash collected.

And that’s not all…

Even after this onerous process you’re is not yet free from the cash burden. That money can’t just be left in an envelope. Cash is pretty useless when just left sitting in a safe. So now you have to take it to the bank and make a deposit.

Think of all that goes into just depositing the cash you collect. You package up all of the money you are taking to deposit (and perhaps count it all again). Grab you jacket and head out the door. How long does it take you to drive or walk to the bank? Now that you’re there, how long are you waiting in line? If it’s around the holidays quadruple your wait time. Now drive or walk back to the shop so you can get back to revenue-generating work.

Time yourself the next time you drop everything you’re doing to deposit your money. How long does it take you?
Remember, every minute spent on non-revenue generating activity is money out the door.

This process usually accounts for about another 30 minutes to the process of collecting cash. Thankfully this doesn’t have to be done every day, but having over $1k in bills and coins sitting around doesn’t give anyone great peace of mind.

If you have one of your trusted workers making this bank run, it likely costs you another 0.5–1% of the money you made, bringing us to just under 4% for the cost to accept cash in many businesses. That’s not to mention the time it takes to accept cash throughout the day.

Do you have lines during rush hour? Do some customers turn away, not wanting to wait?

What do you think is faster, swiping a card or making change for a 20 on a $5.15 transaction? This time adds up. I’m at client locations during rush hour almost every day and I see up to half a dozen people turn away because they don’t want to wait in line. This is a huse loss

If taking the time to make change durring rush hour results in the loss of even one customer at a coffee shop, that’s $2–4 dollars in revenue lost due to accepting cash — adding another 1–2% to the cost of accepting cash…per customer lost. Cut out the time it takes to make change and some of those customers wouldn’t be lost (they may even be upsold and provided an experience that turns them into evangelists — growing revenues further).

For an owner who does all the accounting and deposits themselves, maybe you don’t have to worry about the hourly cost of employees accounting cash and running to the bank. As a business grows, so does the reality of such costs. Time is money, especially when you’re paying someone else for his or her time. Every minute spent on non-revenue generating activity is money out the door. Often this time is worth it, but you should know just how much it costs you.

Quantify. Quantify. Quantify.

Take a day to analyze the time these processes take for your business versus how much revenue is brought in. You will likely find that accepting cash costs you at least 2% of the amount collected. For many it will cost up to 5% of cash revenue; that’s without even factoring for the lost revenue from customer abandonment due to long lines.

“Wow! At those costs, the 2.75% charged by Square seems like a solid deal!”

Perhaps it is. We shall find out in Part 2 of this series.

Do you want to collect a month’s worth of customer purchases up-front, and lower your transaction time at the POS to 5 seconds or less?
Learn more at
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