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Leveling Up: Why Customers Spend More at Small Businesses That Accept Credit Cards

If you want to understand the cost of processing cashless payments in your business, mathematics is your friend. There are monthly fees, transaction percentages, and per transaction fees to consider (although some companies offer a simpler solution). If you want to understand the opportunity cost of insisting on cash payments at your point of sale, you might get better insights from a psychologist.

There can be no question that small businesses that accept credit cards win more customers than those that don’t. Such is the lure of convenience. However, what you may not know is that enabling cashless payments doesn’t just bring in more customers. Numerous studies suggest that paying with credit cards is likely to make your customers spend more each time they visit your business. The reason? It’s just human nature.

An oft-quoted Dun & Bradstreet study concludes that people who use credit cards spend an astounding 12–18% more on transactions than those who use cash. In certain scenarios, the difference between cash and noncash users can be far higher. The average McDonald’s transaction, for example, increases from $4.50 to $7.00 when customers use a credit card instead of cash.


The SumUp Air Lite is a 3-in-1 card reader.

The SumUp Air Lite is a 3-in-1 card reader that enables business to take credit, debit and contactless payments.

Turn transactions into interactions with the SumUp Card Reader!

The SumUp Card Reader is a simple and affordable 3-in-1 card reader that enables businesses to take debit, credit and contactless payments. No monthly contracts. No hidden fees. Ever.

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Although you may think that a customer who pays more ultimately be less happy than a customer who spends fewer dollars, studies suggest that customers who have less transaction stress have greater levels of satisfaction overall and a greater appreciation for the products they buy and the services they receive. Using credit cards transforms mere transactions into positive interactions with the business owners they patronize.

Delaying the “Pain” of Payment

We, humans, are masters of putting off experiences that cause us anxiety, and as it turns out, a credit card’s ability to put some distance—temporally and emotionally—between the act of buying and the act of paying is something that consumers appreciate. The fact that we won’t pay for our purchases until the monthly bill arrives loosens our inhibitions.

According to a 2008 study aptly entitled Monopoly Money by researchers Priya Raghubir and Joydeep Srivastava, the “pain” of paying is greater when we pay with cash. Doling out those physical dollars makes the monetary loss real, whereas using plastic makes the loss more theoretical. Credit cards give our brains a chance to focus only on the positive, namely our newly purchased goods or services, and tends to make us more liberal overall when we decide what or how much to buy.

Essentially, by using credit cards, we automatically upsell ourselves... and business owners don’t have to lift a finger.

What’s remarkable is that the spending “pain” researchers speak of is not theoretical. It’s literal. The impact of spending on the brain has been captured by MRI technology, and not surprisingly, it registers smack dab in the brain’s pain centers.

Still need convincing that accepting credit cards makes good business sense? A 2015 study suggests that consumers who pay with credit have a greater connection to the benefits of the products they buy—rather than to the cost of them. This insight reveals that by using a credit card, a customer retains a longer-lasting appreciation for your product, and by extension, of your business.

The Allure of Reward Points

Let’s not forget another dominant factor when it comes to spending with credit cards: the siren song of credit card reward schemes. According to a 2017 study, 68% of Americans are motivated to use a personal credit card because they want to rack up air miles, cash rebates, or merchandise with their providers.

Common sense may tell us that receiving 1, 2, 3, or 5% cash back on our credit card transactions doesn’t justify spending 12–18% more on those transactions. Yet that is precisely what we do. The sense of “earning” while spending, counterintuitive as it is, eggs us on. The word “earning” even features conspicuously in most credit card commercials, even though the subject at hand is clearly spending.

Imagine how this might go down for a small business owner with a cleaning company. While a cash-paying customer might economize by just sticking to their weekly house cleaning routine, statistically speaking, a credit-card-paying customer is likely to be more open to adding on extra services. For example, the customer might accept an offer to have their windows cleaned that day for a hundred dollars more. The customer, who is distanced from the “pain” of paying now, enjoys not only the relief of ticking an important item off their to-do-list but also rationalizes this into a “win” by earning extra points on the purchase. Thus the customer is then left with a greater sense of satisfaction on two fronts. Meanwhile, the entrepreneur can focus less on transacting with the customer and more on interacting with the customer, finding ways to provide more benefit to them on an interpersonal level.

The Added Convenience of Mobile Wallets

Much of the research surrounding spending with noncash forms of payment has been centered on physical credit card use—actual plastic. Because mobile wallets are a much more recent addition to the marketplace, we have yet to see the statistical impact they will have on consumers’ purchasing habits.

It stands to reason that the Monopoly-money effect can only be multiplied as mobile wallets gain in popularity. If credit cards create the emotional distance of Monopoly money with consumers, tap-to-pay apps like Apple Pay and Google Pay have the potential to make spending seem even less real. Now you aren’t even pulling out a credit card. You’re pulling up a picture of a credit card. Since mobile wallets can be used from many smartwatches, you don’t even need to reach into your pocket to use one. This ease of spending doesn’t necessarily have to be a bad thing; many Americans (arguably not enough) use credit mainly for convenience, paying off their balances every month, rather than racking up debt. So don’t feel guilty if you are rubbing your hands together and cackling with entrepreneurial glee.

Convenience Is the New Upsell

Overall, credit card use is on the rise, having grown by an average of 7.4% every year of the last decade (including a whopping 10.2% between 2015 and 2016). That should be reason enough to convince you to make noncash payments as effortless as possible for your customers. With recent technological trends, the process can be just as effortless for business owners too.


Taking card payment is easy with the simple and affordable 3-in-1 card reader from SumUp. It enables you to take credit, debit and contactless payments without the need for any longterm contracts or monthly minimums.

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Catherine Traffis is blogging for SumUp | USA.

Catherine Traffis