Pros and Cons of Cash Payment for Your Business

. 6 min read
Pros and Cons of Cash Payment for Your Business

Digital payments are gaining popularity all around the world due to their ease of use and instant payment modes. There is no doubt that such cashless payments are the need of the hour. Besides being contactless and safe during the pandemic, it can easily resolve all issues physical distance causes with purchases.

However, in India, several individuals still prefer cash payment to any cashless mode of transaction. Blame it on orthodoxy and a lack of understanding of how the online world functions.

So, digital payments still haven’t completely overshadowed or replaced the preference for cash. But a business person must adapt to the changing times and be more flexible with payment modes. This article will cover why it becomes necessary for any business person to understand the pros and cons of cash payment when conducting business.

What are the advantages of paying with cash?

  • Avoids transaction charges

Each payment made through any debit or credit card or any other digital payment mode demands a fee. These charges are like service charges. Such charges can affect your affordability in the long run.

  • Protects your identity

A survey has shown that thefts have increased due to the use of cards or digital payment apps, thanks to privacy breaches. Your stolen identity can be used to send spam messages, make unapproved payments, etc. Anonymity is one major advantage of making payments by cash.

  • Simple accounting

If you start accepting payments from all online payment modes, you have to keep track of all such methods while accounting and managing cash flow statements. This will undeniably be tedious. Moreover, this could lead to disputes. If you choose to opt for only cash payment, you will only need to maintain one register. Thus, tracking money becomes easier.

  • Can be a backup

When we do not use cash and become completely dependent on cashless modes of payment, we are left at the mercy of technology and its disruptions. So, you can always use cash as a backup.

Business woman using calculator and laptop for do math finance on wooden desk in office

What are the disadvantages of paying with cash?

  • Cash needs to be kept securely

If you only make transactions in cash, it is obvious that you will always have some amount of cash in hand, which is not safe. When you use cards, your money will be kept in the bank. It becomes the bank's responsibility to keep it safe and secured from theft. You can easily make payments via cards or online payment apps and do not need to carry money around.

  • No records of transactions

When you make payments with cash, you cannot keep track of when and where you spend it, as you would not always receive a cash payment receipt. Whereas, if you pay by a card or virtually any online payment method, you can record the date and time of transactions. This will help you analyse your expenditure too. When the need arises, you have a record of previous payments as well.

  • Helpless when out of cash

In case of any emergency, you might end up being helpless if you do not have immediate access to your cash. In the online mode, you will always have access to your money. Thus, one disadvantage of cash payments is that you must always have cash on hand to remain viable.

  • Hard to make large payments

It is not convenient and safe to make large payments with cash. They may be prone to theft, misplacement, etc.

Cash payments: comparing the pros and cons



  • No transaction charges are involved.

  • They protect your identity and prevent privacy breaches.

  • One cash register simplifies the accounting process.

  • They can act as a last resort and emergency backup.

  • Cash payments need security. You cannot always carry large amounts of cash.

  • You have no detailed record of transactions. So, you cannot track expenses thoroughly.

  • They are not always liquid enough during emergencies. You always need to have immediate access to cash, which is not feasible.

  • Large cash payments are inconvenient and unsafe.

Young happy cheerful woman with credit card and dollar

Cash payments vs digital payments

Using what we know about the unique advantages and certain disadvantages of cash payments and digital payments, let us compare the two modes.

Cash payments 

Digital payments

  • No transaction charges

  • Have service charges

  • Anonymous

  • Not anonymous, higher chances of privacy breaches

  • One cash register simplifies the accounting process but offers no proper record of transactions

  • Having detailed records simplifies analyzing expenditure and creating cash flow statements

  • Carrying large amounts of cash needs security, for which you are solely responsible

  • Banks are responsible for securing your money. No matter how large the amount is, it remains safely in your account

  • Cash can be an emergency backup. But when you depend only on cash, you need immediate access to it all the time to remain viable in emergencies

  • Flexible and liquid – a variety of online payment methods are available and feasible for emergencies

  • Large cash payments are inconvenient and prone to risk

  • Make large payments easily with a few clicks, secured by online payment app protocols


All modern business owners must keep up with the times. Digital payment options are diverse but also have a few pitfalls. You cannot completely discard cash payments either, as some customers may find them easier and more comfortable. By understanding all the pros and cons of cash payment, we can conclude that in this day and age, any business owner should accept and deal in both types of payments.

Also read:

1) Impact Of COVID-19 On Digital Payments!
2) Reasons your Small Business Should Accept Digital Payments
3) emSigner: Digital signature for GST online payments
4) E-Commerce Customer Service – 10 Best Practices [guide]

5) OkCredit: Simple, Paperless & Secure solution for businesses

Stay updated with new business ideas & business tips with OkCredit blogs in English, Hindi, Malayalam, Marathi & more!
Download OkCredit now & get rid of your bookkeeping hassles.
OkCredit is 100% Made in India.


Q. Can I run a completely cash-only business?

Ans. Yes, as a business owner, you reserve the right to accept only cash payments. However, it will limit your customers to only those individuals who would prefer to make payments in cash as well.

Q. Should I accept payment in cash only or allow all payment modes?

Ans. This decision depends upon your business and your customers, and which way you and your customers would like to make payments. Considering today’s high-tech era, accepting cash as well as digital payments is more viable.

Q. Why is digital payment gaining popularity?

Ans. Digital payment methods are gaining popularity due to their ease of use and instant payment. Both customers and business owners will have records of transactions as well.

Q. Is liquidity important for business?

Ans. Yes, liquidity of money and assets is essential for any business to meet emergency requirements. Cash payments can also help you maintain some liquidity. Make sure that you keep your cash safe and secure and have both options at hand.