Credit card customers spend more than cash customers ... a lot more. Research shows card users spend 12 to 18 percent more per transaction than those paying with cash. The Federal Reserve found non-cash purchases average more than four times higher than cash.
I learned this lesson firsthand early in my career. When I became store manager at Santa Monica Place Mall (back when it was still the dynamic Frank Gehry design, not the updated version that ruined the concept). I lobbied for us to accept American Express. Customers of means wanted to pay that way, and I had seen us lose sales when we didn’t. Eventually, ownership gave in.
Not long after, an AmEx rep came by with decals and signage. He asked my young assistant manager if he could put them up. She said no. Why? "Because the owners told us to first ask customers if they had another card, since American Express fees were higher," she said. She even handed over the memo to prove it.
Needless to say, I got a phone call...
But more importantly, it drove home the problem: we were treating the card fees as something to fear instead of something to leverage. The focus was on pennies in cost, not dollars in lost sales.
The Hidden Costs of Cash
Handling cash looks straightforward, but it isn’t free. Registers have to be counted, deposits prepared, errors reconciled, and going to the bank. Banks charge fees. Staff waste payroll hours on the process, and theft remains a constant risk.
Nancy Rawlinson, a small business owner, calculated it cost her more than 24 cents in payroll time just to prepare deposit tickets for cash transactions.
Store manager Chris Chewning has seen the benefits of going digital: “Ninety-five percent of our transactions are cashless, and we strongly encourage credit card use.” He points to faster deposits, better tracking, and less hassle with cash handling.
Multiply those inefficiencies across a chain and the supposed savings vanish quickly.
Why Credit Card Fees Are Marketing Spend
Many retailers see processing fees as a tax. They’re not. They’re part of your marketing budget.
Those fees fund the rewards programs customers love: cash back, airline miles, loyalty points. That’s why shoppers instinctively pull out cards instead of cash. They aren’t just paying, they’re earning.
Accepting cards means buying into that ecosystem — the one that nudges customers to spend more with you. Julie Berstler advises treating fees the same way you treat rent or utilities. Kriss McGraw told me, “We don’t pass credit card fees to customers; it’s a business expense we absorb to keep shopping seamless.”
Savvy retailers understand: fees aren’t dead weight. They’re fueling the very programs that drive repeat business and higher average tickets.
Why Passing Fees to Customers Backfires
Some retailers try to dodge fees with credit card surcharges or cash discount programs. On paper, these approaches look like savings. In reality, they damage the very relationships you need to grow.
Wind River Payments points out that credit card surcharging is capped at three percent, only applies to credit (not debit), and is still banned in some states. It also requires disclosures and signage that make it feel like you’re penalizing the customer. And customers notice. In competitive markets, they’ll just walk to the store down the street that doesn’t tack on a fee.
Cash discounting can sound friendlier because it’s framed as a reward. But it lowers average ticket size because cash transactions are smaller, it forces retailers to raise listed prices across the board, and it can create confusion or mistrust. Most importantly, cash can’t be used for e-commerce, so it has no place in an omnichannel strategy.
The bigger problem? Both surcharges and discounts push customers away from credit cards, when the data is clear that card users spend dramatically more. Capital One research shows shoppers spend up to four times as much when they pay with credit instead of cash. Why fight that?
Payment Flexibility Wins Loyalty
Modern shoppers expect to pay however they want: debit, credit, Apple Pay, Google Wallet, Buy Now Pay Later. Limit them, and you limit your sales.
Dave Crowell summed it up: “We provide a service; our clients engage from their comfort. Cash, checks, credit, debit, Apple Pay, Samsung Wallet, Bitcoin — whatever works for them.”
Customers notice. Bill Atkins admitted, “I’ll go to competitors who make the process easier without guilt-tripping me for how I pay.”
Convenience always wins over ideology.
Smart Retailers Don’t Fight the Trend
Fees are real, but the smart approach isn’t avoidance. It’s strategy. Some negotiate lower rates. Sueann Blackwell cut hers by renegotiating with her provider. Others build them into pricing rather than trying to make customers feel guilty at the register.
The point isn’t to eliminate credit cards. It’s to rethink how you see the cost.
The Real King in Retail
Processing fees, usually 1.5 to 4 percent, are a manageable cost when card transactions are significantly larger. Retailers that try to dodge fees with surcharges or cash discounting end up shrinking their sales and frustrating customers.
The retailers that thrive are the ones who stop fighting payment trends. They absorb fees as a cost of doing business and reframe them as marketing spend — because those fees fund the very rewards programs that make customers loyal. They know the real win is increasing basket size, repeat visits, and long-term relationships.
Cash is not king anymore. Customer payment choice is the new king, because it defines the customer experience.
