# Do small businesses generally prefer to be paid in cash or credit/debit? **URL:** \ **Category:** Factual Questions\ **Created:** [November 18, 2016, 5:25am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311 "2016-11-18T05:25:01Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [November 18, 2016, 7:47pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/21 "2016-11-18T19:47:14Z")
Huh? You can use a debit card online? That doesn’t sound right… Unless it’s a credit card with a prepaid amount? ---
**Author:** ![Rama](https://avatars.discourse-cdn.com/v4/letter/r/ccd318/32.png) [@Rama](https://boards.straightdope.com/u/Rama)\ **Post date:** [November 18, 2016, 7:51pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/22 "2016-11-18T19:51:01Z")
Yup I got a nice big ticket in a rental and they just charged it to my card (photo radar). Another cop had given me a warning weeks earlier so I guess I deserved it. ---
**Author:** ![slash2k](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@slash2k](https://boards.straightdope.com/u/slash2k)\ **Post date:** [November 18, 2016, 8:36pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/23 "2016-11-18T20:36:54Z")
> [@Musicat](#): > > Since rental car companies can charge debit cards as well as credit cards, and they typically put a large hold on funds (credit or debit) prior to your driving off the lot, I’m still at a loss as to why debit cards are so disliked. Crash the car, you get charged.So why, as a merchant, would you care what their credit score was as long as the transaction was legitimate and approved? If they’ve got good credit and crash the car, you can probably get it out of them one way or another. If they’ve got lousy credit and crash the car, the $250 in their bank account that they paid upfront may be all you ever see. > [@Musicat](#): > > But let’s talk online transactions. Since the physical card is not present (where it says “debit” on the face), can an online merchant tell if the card offered is credit or debit? I’ve used both online, and was never refused because it was a debit card. Would a different fee apply? [Binlist](https://binlist.net/) (and similar services) can tell from the first six digits in the card number who issued it and whether it is credit or debit. Yes, the card brands (Visa, Mastercard, etc.) have different interchange fees, depending on the type of card, the type of business, whether or not the card is physically present, etc. Here’s the current Visa schedule of interchange fees, e.g.: [PDF file](https://usa.visa.com/content/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees-2016-april.pdf) ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [November 18, 2016, 9:40pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/24 "2016-11-18T21:40:20Z")
> [@slash2k](#): > > If they’ve got good credit and crash the car, you can probably get it out of them one way or another. If they’ve got lousy credit and crash the car, the $250 in their bank account that they paid upfront may be all you ever see. > … This. A friend used to own one of those off-brand neighborhood car rental franchises. You don’t want to ever let someone who doesn’t have at least a couple grand of available credit line borrow your prized Yugo. It won’t end well. ---
**Author:** ![DrCube](https://avatars.discourse-cdn.com/v4/letter/d/a3d4f5/32.png) [@DrCube](https://boards.straightdope.com/u/DrCube)\ **Post date:** [November 18, 2016, 9:46pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/25 "2016-11-18T21:46:16Z")
> [@Musicat](#): > > But let’s talk online transactions. Since the physical card is not present (where it says “debit” on the face), can an online merchant tell if the card offered is credit or debit? I’ve used both online, and was never refused because it was a debit card. Would a different fee apply? It’s rare, but I’ve been refused sales online before for using a debit card. I have both. I think they can tell by the number whether it’s debit or credit. The only time I can think of off the top of my head though is the local circuit clerk’s website, when you’re trying to pay a traffic ticket, won’t let you use a debit card. It has happened to me more than once, though. ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [November 18, 2016, 9:55pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/26 "2016-11-18T21:55:45Z")
> [@Happy\_Lendervedder](#): > > My wife and I run a small business, and cash and credit both have their benefits in my opinion. We use a Square reader for credit and debit transactions, so the convenience of having the money just plopped into our bank account is nice, but obviously we lose a bit on fees. Cash has to be dealt with and we have to remember to record it (in our Square account), however we get to keep more of it. I guess if push came to shove, I prefer the credit card because you don’t have to keep track of the cash and the transaction automatically is recorded. > > But I hate checks. \*Hate \*'em. But don’t you mark up your product/service to account for those fees? ---
**Author:** ![purplehearingaid](https://avatars.discourse-cdn.com/v4/letter/p/7bcc69/32.png) [@purplehearingaid](https://boards.straightdope.com/u/purplehearingaid)\ **Post date:** [November 18, 2016, 10:06pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/27 "2016-11-18T22:06:18Z")
The small businesses I use never complained about me paying in cash , they like it . ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [November 18, 2016, 10:11pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/28 "2016-11-18T22:11:58Z")
> [@md2000](#): > > Huh? You can use a debit card online? That doesn’t sound right… Works for me. To an online merchants I have used with a debit card, if they get paid, they’re fine with it. And a debit card transaction can’t be challenged by the customer, making it better for the merchant (and why it’s not as good for the customer). > [@slash2k](#): > > If they’ve got good credit and crash the car, you can probably get it out of them one way or another. If they’ve got lousy credit and crash the car, the $250 in their bank account that they paid upfront may be all you ever see. I’ve never rented a car with a debit card, but are you telling me that a merchant can’t put a temporary funds hold on one? I see no technical reason why not unless there are laws against it. If you have money in a deposit account to back the debit card, why not put a hold on funds sufficient to cover an accident? That’s exactly what is done with a credit card, and from a merchant’s point of view, I’d rather have guaranteed cash waiting for me on hold than a mere promise of future payment. ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [November 18, 2016, 10:21pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/29 "2016-11-18T22:21:29Z")
> [@Personal](#): > > I’m a solo lawyer. Of your options, I prefer cash. I’m also a solo lawyer, and I also prefer cash. I don’t accept either credit or debit cards. It’s just too much hassle, and I’m not really interested in generating fees for the bank leaching off my business. So far, I lost exactly one client because I couldn’t take his card for payment. I tell potential clients my terms up front, and they will bring cash, check, or money order when they hire me. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [November 18, 2016, 10:24pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/30 "2016-11-18T22:24:22Z")
> [@Musicat](#): > > Works for me. To an online merchants I have used with a debit card, if they get paid, they’re fine with it. And a debit card transaction can’t be challenged by the customer, making it better for the merchant (and why it’s not as good for the customer). > > I’ve never rented a car with a debit card, but are you telling me that a merchant can’t put a temporary funds hold on one? I see no technical reason why not unless there are laws against it. If you have money in a deposit account to back the debit card, why not put a hold on funds sufficient to cover an accident? That’s exactly what is done with a credit card, and from a merchant’s point of view, I’d rather have guaranteed cash waiting for me on hold than a mere promise of future payment. I’m not up on my credit/debit tech, but my understanding is that a debit transaction is just that - I specifically approve one time that the bank transfer $X from my account to yours - proven by the PIN number I enter. (In Canada, backed up by the CHIP and PIN verification). I was not aware that merchants could randomly take additional funds out of the account in future without you and the card present. (But then, I just have a consumer’s view of this tech) For credit cards, they have the option of HOLD - plus, they can also charge additional fees to your card provided they don’t exceed your limit and provided you have agreed to those fees (which you do by signing the car rental agreement). I can’t imagine an effective hold technology for debit - I mean, the last time (the one time) I had an accident they dinged me about $1500 immediately on the credit card, which the insurance (on my credit card) reimbursed once the paperwork was done. Good luck finding a guy who can’t get a credit card but has $1500 or more in cash in his account - that’s he’s willing to let you lock up until he returns the car. ---
**Author:** ![Banquet\_Bear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/banquet_bear/32/373_2.png) [@Banquet\_Bear](https://boards.straightdope.com/u/Banquet_Bear)\ **Post date:** [November 18, 2016, 10:27pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/31 "2016-11-18T22:27:30Z")
> [@Musicat](#): > > I’ve never rented a car with a debit card, but are you telling me that a merchant can’t put a temporary funds hold on one? I see no technical reason why not unless there are laws against it. If you have money in a deposit account to back the debit card, why not put a hold on funds sufficient to cover an accident? That’s exactly what is done with a credit card, and from a merchant’s point of view, I’d rather have guaranteed cash waiting for me on hold than a mere promise of future payment. …you don’t seem to understand what a debit card is. A credit card offers you a line of credit. A debit card gives you many of the benefits of a credit card (being able to buy online, etc) without the actual line of credit. You can’t put a temporary hold on funds that don’t exist. If you don’t have any cash in the bank: how can you put a hold on that? You don’t need to “back a debit card.” If you have money on a debit card you can use it: if you don’t, then you can’t. I have maybe $30.00 in my debit account at the moment. What good would it be to put a hold on those funds? And there is no way that I would agree to any company to put a hold (an effective freeze) on the funds in my bank account. Can you not see the implications of doing that? ---
**Author:** ![slash2k](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@slash2k](https://boards.straightdope.com/u/slash2k)\ **Post date:** [November 18, 2016, 10:36pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/32 "2016-11-18T22:36:50Z")
> [@Musicat](#): > > I’ve never rented a car with a debit card, but are you telling me that a merchant can’t put a temporary funds hold on one? I see no technical reason why not unless there are laws against it. If you have money in a deposit account to back the debit card, why not put a hold on funds sufficient to cover an accident? That’s exactly what is done with a credit card, and from a merchant’s point of view, I’d rather have guaranteed cash waiting for me on hold than a mere promise of future payment. No, that’s not what is done with a credit card. The “funds sufficient to cover an accident” might easily be many thousands of dollars, certainly more than most people would have in a checking account, or even available credit. When you rent a car, the rental agency puts a hold in the amount of your rental plus security deposit, usually a hundred bucks or so. By contrast, the most common rental car in America today is the Chevy Cruze (retail price starting at $17K), and the Toyota Corolla ($18K), and Chrysler 200, Nissan Altima and Toyota Camry (all in the $22K range) round out the top five. If every renter had to have $20K in spare cash available, most personal rentals would not happen. ---
**Author:** ![Oakminster](https://avatars.discourse-cdn.com/v4/letter/o/77aa72/32.png) [@Oakminster](https://boards.straightdope.com/u/Oakminster)\ **Post date:** [November 18, 2016, 11:15pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/33 "2016-11-18T23:15:28Z")
> [@Banquet\_Bear](#): > > And there is no way that I would agree to any company to put a hold (an effective freeze) on the funds in my bank account. Can you not see the implications of doing that? Ever bought gas on a debit card? The station may have put a hold on funds in your account at the point of sale. The hold is usually invisible to the purchaser because it is removed whenever the seller reconciles its transactions for the day. This can sometimes cause a debit card to be rejected on long trips with multiple fuel stops because the automatic holds add up to more than the actual transactions. There is a notice on the pump at my regular fuel stop that explains this. ---
**Author:** ![Banquet\_Bear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/banquet_bear/32/373_2.png) [@Banquet\_Bear](https://boards.straightdope.com/u/Banquet_Bear)\ **Post date:** [November 18, 2016, 11:50pm UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/34 "2016-11-18T23:50:26Z")
> [@Oakminster](#): > > Ever bought gas on a debit card? The station may have put a hold on funds in your account at the point of sale. The hold is usually invisible to the purchaser because it is removed whenever the seller reconciles its transactions for the day. This can sometimes cause a debit card to be rejected on long trips with multiple fuel stops because the automatic holds add up to more than the actual transactions. There is a notice on the pump at my regular fuel stop that explains this. …different countries. Most of the major banks here release pre-authorisations immediately. This cite hasn’t been updated for a while, but it will give you the general gist. > **[FAQs](https://gull.nz/about-us/faqs/)** > >   > > Can I receive a receipt for a past fuel purchase?You sure can. Simply send the below information ... A hold on a debit account that lasts until transactions are reconciled at the end of the day would cause a riot here. Debit accounts are the “standard” account here now. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [November 19, 2016, 12:19am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/35 "2016-11-19T00:19:45Z")
> [@Banquet\_Bear](#): > > …you don’t seem to understand what a debit card is. > > A credit card offers you a line of credit. A debit card gives you many of the benefits of a credit card (being able to buy online, etc) without the actual line of credit. > > You can’t put a temporary hold on funds that don’t exist. Just why do you think that a debit card’s backing doesn’t exist? I have a debit card, and I assure you that there are funds that exist to back it up. And if you have overdraft protection, there are funds to back it up even if the account has a zero balance. (Which is one reason I avoid using a debit card, for fear fraudulent transactions could drain my bank account and more.) > [@](#): > > And there is no way that I would agree to any company to put a hold (an effective freeze) on the funds in my bank account. Can you not see the implications of doing that? Most banks put an automatic hold on your account when you make a deposit greater than some amount, typically your average balance, especially if you are a relatively new customer. They rarely inform the customer, but they do it. You agreed to it when you opened your account. Holds are a fact of life for most bank customers. ---
**Author:** ![Personal](https://avatars.discourse-cdn.com/v4/letter/p/b9bd4f/32.png) [@Personal](https://boards.straightdope.com/u/Personal)\ **Post date:** [November 19, 2016, 12:22am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/36 "2016-11-19T00:22:22Z")
> [@Musicat](#): > > Looks like **Personal** breaks that down even further, but I don’t know why yet: LSLGuy hit it in the first paragraph of a post where he mentioned his wife was credit/not debit for awhile. I’m not set up for debit. I don’t recall if it was even offered when I started up. I don’t think I’ve ever had a client ask for that option. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [November 19, 2016, 12:48am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/37 "2016-11-19T00:48:08Z")
I just renewed my Quebec driver’s licence a couple weeks ago. I had to go to the MVB for a photo. When it came time to pay, I offered my credit card, but they refused, taking only cash or debit card payments. I assume the fee is significantly lower. OTOH, I still use cheques (and at least one check) to pay my gardener, my chiropracter, my doctor when he has to charge for lab fees (and my US cell phone company which doesn’t accept any method of payment if you can’t furnish a US address and zip code). Some of these I can also pay by cash. But some of these things just aren’t going to go away. And, oh yes, we use cheques for charitable donations. When we send birthday and other cash gifts to my grandchildren in the US, they can use their phones to scan the checks to the bank and then they never actually have to visit them. ---
**Author:** ![slash2k](https://avatars.discourse-cdn.com/v4/letter/s/439d5e/32.png) [@slash2k](https://boards.straightdope.com/u/slash2k)\ **Post date:** [November 19, 2016, 1:00am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/38 "2016-11-19T01:00:31Z")
> [@Musicat](#): > > Just why do you think that a debit card’s backing doesn’t exist? I have a debit card, and I assure you that there are funds that exist to back it up. And if you have overdraft protection, there are funds to back it up even if the account has a zero balance. (Which is one reason I avoid using a debit card, for fear fraudulent transactions could drain my bank account and more.) He’s saying that a debit card is backed only by the cash in the account (plus overdraft protection if you have it, but that is rarely more than a few hundred dollars). If the car rental has to place a hold on funds sufficient to cover an accident, that is minimally the entire cash value of the car ($20,000 or so), and it could be as much as the total damages the car could cause (which might be in the hundreds of thousands of dollars). How many people have that kind of money in their readily-accessible account? For most people who have a credit card, their credit line is likely to be several to many multiples of their cash balance. However, a renter still would not want their entire available credit line or any significant portion thereof frozen while they had the car rented. If somebody has a decent credit line, however, they probably have a decent job and other assets that would be reachable if they crashed the car and failed to pay up. Somebody with lousy credit has a history of not paying bills and may well be judgment-proof or likely to file bankruptcy if our car rental establishment ever got a judgement. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [November 19, 2016, 1:22am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/39 "2016-11-19T01:22:25Z")
> [@kayaker](#): > > ETA: I’m willing to accept barter, also. I once had a client who wrote a Outdoors articles for a magazine. He had ~$1,000 worth of fishing equipment, new in box, that he’d received from manufacturers. He traded all of it for $380 he needed to pay me. We both walked away happy. In recent years, I heard about a dentist who took payment in aquariums. :eek: Here’s the story: A man who owned a pet supply store needed some very expensive dental work but didn’t have the money to pay for it, and he had some obsolete high-end aquarium equipment in his back room that was still usable but aficionados of this kind of thing wouldn’t have wanted it, and he couldn’t send it back. The dentist agreed to the transaction, after looking at the equipment and talking to his accountant, and the man got his teeth fixed and the dentist later had a nice aquarium in his waiting room and the kids’ basement playroom as well. 🆒 My own small business is such that I don’t have to deal with credit cards personally; I will take cash or check payment, and of course my online sales are paid electronically. ---
**Author:** ![Banquet\_Bear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/banquet_bear/32/373_2.png) [@Banquet\_Bear](https://boards.straightdope.com/u/Banquet_Bear)\ **Post date:** [November 19, 2016, 2:42am UTC](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311/40 "2016-11-19T02:42:42Z")
> [@Musicat](#): > > Just why do you think that a debit card’s backing doesn’t exist? …because it doesn’t? I’ve got $30.00 in my debit card at the moment. If I try and buy something worth $40.00 I’m going to get declined. > [@](#): > > I have a debit card, and I assure you that there are funds that exist to back it up. I have a debit card: and I can assure you that there are no funds in it beyond the $30.00 that is in there at the moment. And if I try and spend more than that: VISA aren’t going to guarantee payment of that overspend to the vendor. > [@](#): > > And if you have overdraft protection, there are funds to back it up even if the account has a zero balance. But I don’t have overdraft protection. And thousands, if not millions of people don’t have overdraft protections either. > [@](#): > > (Which is one reason I avoid using a debit card, for fear fraudulent transactions could drain my bank account and more.)Most banks put an automatic hold on your account when you make a deposit greater than some amount, typically your average balance, especially if you are a relatively new customer. They rarely inform the customer, but they do it. You agreed to it when you opened your account. Holds are a fact of life for most bank customers. That might happen with the banks you bank with, but that doesn’t happen here. [Previous page](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311.md?page=1) [Next page](https://boards.straightdope.com/t/do-small-businesses-generally-prefer-to-be-paid-in-cash-or-credit-debit/772311.md?page=3)