If you’re a business owner, you know how expensive cash can be. That’s why it’s so important to get a clear picture of your cash handling costs, including fees related to payment processing, currency conversion and more.
In this article, we’ll take a look at how to measure your cash handling costs and what you can do about them.
1. Payment processing fees
Payment processing fees are a big part of running a business. They’re unavoidable, but there are ways to offset them and save money.
The amount of these fees depends on the type of credit card, payment network (Visa, Mastercard, Discover, American Express) and the merchant category code. They typically range from 1.3% to 3.5% of the transaction value.
The interchange fee is paid directly to the card issuer for every swiped card transaction. This can be a bit confusing, especially for small businesses that aren’t familiar with this process.

2. Currency conversion fees
When you pay with a credit or debit card outside of your country, your transaction needs to be converted from the currency of the vendor or ATM operator to your home currency. This process is often done using a currency conversion fee, which may be charged by your credit or debit card payment processor (in the case of a purchase), or your ATM network (in the case of a withdrawal).
These fees can add up quickly, especially when you take multiple purchases abroad. They can be rolled into your foreign transaction fee or included in the purchase price, so it’s important to know how they work and how to avoid them.
3. Deposit fees
One of the most under appreciated aspects of banking is the fees that financial institutions charge for services you don’t need. In some cases, these fees can be significant enough to cause a customer to switch banks. The good news is that there are a number of ways to minimize these costs and improve your bottom line. Among the most effective are open account promotions, fee rebates and cash back rewards, online banking features and mobile banking apps.
For example, you should be aware of the fact that your local bank or credit union might offer you a free deposit if you have at least one direct deposit. This can be a boon for a low-income customer who may not have the option of opening a savings or checking account at another institution. Similarly, you might want to consider the merits of using a debit card at an ATM as opposed to using a credit card to avoid paying transaction fees.
4. Withdrawal fees
When you make withdrawals from your savings account or money market account, you may be charged a fee. The fee usually is a flat rate per transaction.
Withdrawal fees are a common problem that affects many consumers. These fees can add up to several hundred dollars in a single year.
A common way to avoid these fees is to limit your withdrawals. Federal Deposit Insurance Corporation (FDIC) Regulation D limits how many withdrawals you can make in a month from your savings or money market accounts, up to six.
Some banks also offer a refund of out-of-network ATM fees. But the fees can still add up, so shop around and assess your habits before signing up for an account.
5. Other fees
A fee is a payment for a service, generally associated with transactional relationships. They can be a small price tag for something basic, like mowing the lawn or filing taxes, or they can be a big deal, such as getting a mortgage or wiring money to another person.
The cost to open cash drawers, close them, make change requests, pick up bills that are too large, and reconcile cash records at the end of the day can be significant for retailers. New research from IHL Group found that cash handling costs can range from 4.7-15.3 percent of the value of each cash transaction, depending on the industry and type of business. These costs can be significantly reduced when cash management processes are automated. Retailers can recapture between 100 and over 500 labor hours a month by automating some of their cash handling processes.