Why Do Some Businesses Not Accept Credit Cards?

Mostly the processing fees. Card networks charge merchants a percentage of every sale, which cuts into already-thin margins, especially on small purchases.

A few other factors push businesses toward cash or debit instead: slower access to the money, the risk of a customer reversing the payment later, and the cost of the equipment needed to accept cards in the first place.

KOHO Cash Advance

KOHO Cover is not a traditional personal loan. It is a cash advance designed for Canadians who need a smaller amount of money to cover short-term expenses.

With KOHO Cash Advance, you can:

• Get up to $500 as an instant cash advance, depending on eligibility
• Pay no interest on the advance
• Avoid a credit check
• Repay automatically once you add money or get paid

You need a Cover bundle subscription, which comes with a monthly fee. The bundle also includes benefits such as a credit report, financial coaching and priority support.

The Fees Cut Into Already-Thin Margins

Every credit card sale costs the merchant a percentage of that sale, paid to the card network and their payment processor.

For a business with healthy margins, that cost is easy to absorb. For one running on thin margins already, such as a small restaurant or convenience store, that percentage can meaningfully eat into what they actually keep from each sale.

Why Small Purchases Are Often the Problem

Card processing includes a small fixed cost per transaction, on top of the percentage fee.

On a large purchase, that fixed cost barely matters. On a $3 coffee, it can represent a significant chunk of the sale. This is why many merchants that do accept cards still set a minimum purchase amount for credit transactions.

Some smaller businesses skip the complexity of managing a minimum altogether and simply decline credit cards instead.

Cash Flow and Chargeback Risk

Cash is money in hand immediately. A credit card sale typically settles into the merchant's bank account a few days later, which matters for a business that needs same-day cash to pay suppliers or staff.

Credit cards also come with chargeback rights: a customer can dispute a charge with their card issuer and have it reversed after the fact. Cash and debit payments don't carry that same risk, which is part of why some merchants, especially those selling custom goods or services, avoid credit cards specifically.

The Cost of Accepting Cards at All

Accepting cards means paying for a card terminal, a payment gateway, and ongoing monthly processing fees, regardless of how many sales come through.

For an established business, that cost disappears into the bigger picture. For a seasonal stall, a pop-up, or a very small operation, the fixed cost of card acceptance may not be worth it relative to how much they actually sell.

What to Do When a Business Doesn't Take Cards

A few habits make this less of a problem when you run into it:

• Ask about debit before assuming it's cash-only. Many businesses that skip credit cards still accept Interac debit, since debit processing costs merchants far less than credit.
• Carry a small amount of cash as backup, especially at markets, food trucks, or small independent shops.
• Check for a card minimum before you try to pay with a card for a small purchase.