6 Times You May Be Charged Extra for Paying in Cash

6 Times You May Be Charged Extra for Paying in Cash

Nowadays, paying with cash can actually come with its own set of costs. Some businesses refuse to accept cash or even charge a fee if you choose to pay this way. It might seem unfair, but there are several reasons behind this trend. For instance, handling cash involves labor costs for counting money and making trips to the bank.

Additionally, digital payments can be faster and more secure for businesses. Understanding these reasons can help you navigate the modern payment landscape and make informed decisions about how you choose to pay. Let’s explore what are those 6 times you may be charged extra for paying in cash, how it affects you as a consumer, and what you can do to avoid extra charges.

6 Times You May Be Charged Extra for Paying in Cash

Why Are Some Businesses Going Cashless?

Not all businesses are going cashless, and in some places, it’s illegal to refuse cash payments. For example, states like Arizona, Delaware, Idaho, Maine, Massachusetts, Michigan, Mississippi, New York, and North Dakota have laws requiring businesses to accept cash. Cities like Washington, D.C., Philadelphia, and San Francisco also have similar laws.

However, there are many reasons why some businesses prefer to go cashless:

Cost of Handling Cash

Handling cash isn’t free for businesses. They need to pay for the time employees spend counting money, managing cash registers, and transporting money to the bank. If the cash register runs out of change, someone has to spend time getting more. These costs add up. In fact, studies show that managing cash can cost a business between 4.7% to 15% of the cash received.

Reduced Demand for Cash Payments

A survey by the Pew Research Center found that 41% of Americans don’t use cash for any of their weekly purchases. As digital payments become more common, businesses might follow their customers’ preferences and stop accepting cash to streamline their operations.

Safety and Efficiency

There are other benefits to going cashless as well. Without cash on hand, businesses are less likely to be targeted for robbery. Also, employees won’t make mistakes counting cash or be tempted to steal it. Digital payments are often faster, allowing businesses to serve more customers in less time and improve overall customer satisfaction.

Also read: Do Checks Expire? Here’s How Long a Check is Good for

Downsides of Going Cashless

Despite the benefits, there are some significant drawbacks to refusing cash payments:

Alienating Customers

While many people use digital payments, not everyone does. Some customers still prefer or need to use cash. Businesses that refuse cash might lose these customers, potentially hurting their sales and reputation.

Impact on Low-Income Individuals

The Federal Deposit Insurance Corporation (FDIC) estimates that about 4.5% of U.S. households don’t have a bank account. These “unbanked” households often rely on cash for their transactions. By refusing cash, businesses may unintentionally exclude these individuals, many of whom have lower incomes.

No Processing Fees

While handling cash has its costs, they might be lower than the fees businesses pay to process debit and credit card transactions, which typically range from 1.5% to 3.5% per transaction.

Venues and Services That May Charge for Cash Payments

Some places and services have started charging fees if you choose to pay with cash:

Sporting and Entertainment Venues

Major sports stadiums and entertainment venues like amusement parks and zoos prefer digital payments to keep lines moving quickly. If you want to use cash, they may direct you to a reverse ATM. You put your cash into the ATM, pay a fee, and receive a prepaid card that you can use at the venue or elsewhere.

Utility Companies

If you prefer to pay your utility bills with cash, you might need to visit a convenience store or drugstore, where you’ll likely be charged a fee to make the payment.

Parking Tickets and Toll Charges

When paying parking tickets or toll charges, paying with cash often means going to a third-party retailer, where you’ll pay an additional fee.


The IRS allows cash payments through retail partners like Dollar General, Family Dollar, CVS Pharmacy, Walgreens, and 7-Eleven. You can pay $500 at a time with fees ranging from $1.50 to $2.50 per transaction.

Also read: What Option Will Not Be Available If You Are Behind On Loan Payments?


Paying with cash isn’t always free and sometimes it’s not even an option. Some businesses prefer digital payments for efficiency, safety, and cost reasons. However, refusing cash can exclude some customers and comes with its own set of challenges. Being aware of these trends can help you prepare and avoid extra fees or inconveniences when making payments.

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