Last year there was a lot of noise about businesses going cashless. Some big nobs in banking championed the idea of a “cashless society.”
Around that time, I noticed several trendy businesses—particularly coffee shops in Kalk Bay—suddenly announcing they were no longer accepting cash. It looked like the way of the future. People discussed the need for physical money when paying small amounts. After all, how do you tip a car guard who doesn’t have a card machine?
But lately, I’ve noticed something else.
Some retail restaurants and shops have gone the other way—cash only. For example, there’s a restaurant at Kalk Bay Harbour that only accepts cash payments. A mobile phone franchise outlet on Fish Hoek Main Road has also gone cash-only.
Why the shift?
What’s happening?
Many would say it’s because of “you-know-what” (we all know what that means by now). But let’s dig deeper and look at some of the main reasons small businesses in South Africa may be moving toward cash-only operations.
This includes a wide range of small contractors—plumbers, electricians, construction workers, handymen, garden services, and carpenters—many of whom operate strictly in cash.
Here are some of the key reasons behind this trend:
Why Some Businesses Are Going Cash-Only
- Card Processing Fees
This is a major factor. Every time a customer pays with a card, the business pays fees. These include:
- Interchange fees – Paid to the customer’s bank, varying by card type.
- Network fees – Paid to card companies like Visa or Mastercard.
- Processing fees – Paid to the payment processor (sometimes negotiable).
While these fees might seem small (e.g., 1.5% to 3.5%), they seriously eat into profit margins. For a business with a 10% profit margin, a 3% processing fee effectively takes away 30% of that profit. On top of that, there are monthly service charges, device rental fees, and chargeback penalties.
- Immediate Access to Funds
With cash, businesses have money in hand. Card payments involve a waiting period before settlement, which can slow down cash flow—especially for small operations.
- No Chargeback Risks
Card payments carry the risk of chargebacks when customers dispute transactions. With cash, the sale is final—no disputes, no fees.
- Simplified Bookkeeping
Cash-based operations often mean simpler accounting, especially for microbusinesses. No need to reconcile digital payments or deal with technical issues.
- Financial Inclusion
In South Africa, many consumers—particularly in lower-income brackets or informal sectors—don’t have bank accounts or card facilities. By accepting cash only, businesses remain accessible to these customers.
- Lower Risk of Digital Fraud
While cash has its own security risks, going digital exposes a business to cybercrime, hacking, and online fraud.
- Avoidance of Hidden Bank Fees
Local banks often apply a range of small, cumulative charges—debit orders, SMS notifications, withdrawal fees. For small businesses, cash provides a way to sidestep unpredictable bank costs.
- Legal Right to Choose Payment Methods
Under South African law, businesses can choose which payment methods to accept—as long as they clearly communicate this and avoid discriminatory practices.
The Trade-Off
Of course, going cash-only can reduce a business’s potential customer base, particularly those who prefer digital payments. But for many small businesses, the financial and operational benefits outweigh that drawback.
With tight margins, rising costs, and unpredictable banking fees, accepting only cash may not just be practical—it may be essential for survival.
