When finalizing a purchase, an important question often arises: should you pay in full or in installments? These two options can impact not only your monthly balance, but also your future finances.
Now, if you intend to start a business or already run one, merchants generally prefer payment in full due to the speed of receipt and lower administrative fees, which is essential to ensure healthy cash flow.
For the customer, the most obvious benefit is the possibility of saving money, since many merchants offer discounts for this type of payment.
That’s why we’ve prepared this article to explain everything about cash payments, how they work, and which payment methods fall into this category. Check it out!
What is a cash payment?
Cash payments are those in which the total purchase amount is paid in one go, whether using credit, debit, boleto, Pix, or bank transfer. In this case, the amount is not divided into several installments, as is the case with installment purchases.
But you may be wondering: isn’t using a credit card synonymous with installment purchases? It depends. If the single installment payment option is chosen, the amount will be debited in full on the next bill, also constituting a cash purchase.
This payment method can be seen as safer for your finances, as it avoids the accumulation of small installments that, when added together, can turn into a debt that is difficult to manage.
On the other hand, despite its convenience, paying in cash can significantly impact your monthly budget. Therefore, it is important to carefully evaluate whether to pay in full or divide the amount into installments, balancing convenience and financial planning.
What are cash payments?
As mentioned, cash payment is any payment where the total amount is paid in a single installment. However, this does not mean that the merchant will receive the money immediately.
The most commonly used payment methods for this type of transaction include cash, Pix, credit and debit cards, bank slips, and digital wallets. Here’s how each one works:
Cash
Payment in cash, using bills and coins, is one of the most traditional forms of cash payment. This method is accepted almost everywhere and can be an excellent alternative for those who want to negotiate discounts or avoid fees.
Pix
Pix is currently the most widely used payment method in Brazil. According to data from Febraban, in 2023, almost 42 billion transactions were made, representing a 75% increase over the previous year, making it one of the main payment choices in Brazil.
To make a payment via Pix, you just need to have a registered key, which can be your CPF (Individual Taxpayer ID), email, cell phone number, or a random key. For individuals, this operation is completely free. It offers convenience and speed for both buyers and retailers, who receive the amount immediately.
However, entrepreneurs need to be aware of the fees applied to corporate accounts, which can vary according to the financial institution, ranging from R$ 1 to R$ 10 per transaction.
Debit card
When a customer pays by debit card, the amount is withdrawn directly from their bank account, which is another form of cash payment.
However, the merchant does not receive the money immediately, as card operators set clearing periods that can vary from two to thirty days.
Advance payment of these amounts usually includes additional fees, although debit fees are generally lower than credit fees, at around 2%.
Credit card
Although they are mainly associated with installment purchases, credit cards can also be used for cash payments. In this case, the amount is charged in a single payment on the customer’s bill.
For merchants, transaction fees range from 3% to 5%, reflecting the risk assumed by the operator if the consumer delays or fails to pay their bill. As with debit cards, the amount is not received immediately, unless the merchant opts for advance payment.
Bank slip
The boleto is widely used in online transactions and allows both lump sum and installment payments. In the case of lump sum payments, the merchant must wait for bank clearance before shipping the product or releasing the service.
In addition, there is a cost for issuing the boleto, which depends on the financial institution or system used.
Digital wallets
Tools such as PicPay, PayPal, and other digital wallets have gained popularity by integrating users’ financial data into a single application.
These platforms allow for cash or installment payments without the customer having to share their information directly with merchants. In addition to security, many wallets offer benefits such as cashback, making them an attractive alternative for both consumers and merchants.
What is the difference between paying in cash or in installments?
Choosing between paying in full or in installments is a decision that depends on your financial situation and the impact each option will have on your budget. Here are the characteristics of each option:
Cash payment
Making a cash payment means paying the total amount of a purchase at once, using methods such as cash, Pix, or debit card. This choice usually offers advantages such as discounts, as many sellers encourage this type of transaction to receive payment more quickly.
On the other hand, paying a large amount at once can deplete your financial reserves, reducing your ability to deal with unexpected expenses or other priorities. Therefore, it is essential to plan ahead before choosing this option.
Payment in installments
Installment plans allow you to divide the cost of a purchase into several installments over a period of time, which makes it easier to purchase higher-value products or services, such as appliances or electronics. This option spreads out the financial impact, making it more manageable in the short term.
However, it is essential to pay attention to the terms of the installment plan, such as interest or additional fees, which can increase the final cost of the purchase. In addition, accumulating installments can compromise your monthly budget, increasing the risk of financial difficulties.
How much of a discount can you offer for cash payments?
Generally, the discount percentage for cash payments varies between 5% and 15%, depending on the type of product or service offered.
It is important to note that offering discounts for cash payments is not a legal requirement, but has become common practice. This is because retailers often include installment costs in the final price.
Thus, when receiving full payment at once, they can pass on these savings to the customer through a discount.
If the company chooses to offer this advantage, it is essential that it be valid for all forms of payment considered cash, such as cash, Pix, debit card, and boleto. This transparency avoids misunderstandings and legal problems.
One point of attention is to ensure that the conditions are clear in the communication. For example, if the discount is exclusive to cash payments, this must be clearly and prominently stated in the offer.
Otherwise, the company may be accused of misleading advertising, which can lead to complaints or penalties imposed by agencies such as Procon.
What are the advantages of paying in cash?
Prioritize paying in cash whenever possible. This choice helps keep your finances organized and reduces the risk of accumulating debt with multiple installments on future bills.
Paying in installments is a valid alternative only in emergency situations or when there is no other option available, but it is essential to plan the number of installments well to avoid compromising your budget.
If you do not have the necessary amount at the time of purchase, consider waiting and saving until you reach the desired amount.
Opting for cash payments offers a number of financial benefits that make this practice advantageous in many situations. Here are some of the main reasons to adopt it:
- Discount savings: Many retailers offer attractive discounts for cash payments, allowing for a significant reduction in the total cost.
- Easier planning: By paying for a purchase in one go, you eliminate the worry of future payments, freeing up space to better organize your spending in the coming months.
- Better financial control: Without accumulated installment debts, managing your finances becomes simpler, allowing you to focus only on the current month’s commitments.
Tips for shopping with cash
Paying cash is an excellent way to save money and control your finances. We have put together some tips for you to make cash purchases safely:
Look for advantages
Before finalizing a purchase, check if the store offers benefits for cash payments.
It is common for sellers to offer good discounts to those who pay immediately, as this reduces the risk of default and ensures full payment.
Organize your budget
Make sure that paying cash won’t destabilize your finances.
After making the purchase, it’s important to ensure that you have enough resources to cover other commitments and unexpected situations.
A valuable tip is to maintain a separate emergency fund, which should not be used for purchases. This way, your financial planning remains intact, and you avoid unpleasant surprises.
In addition, it is important to have a reliable online accounting firm to adjust your expenses, profits, and even your business taxes.
Why encourage cash payments in your business?
Now, if you have a business, you should know that cash payments offer several benefits. We have listed some reasons to encourage your customers to choose this payment method:
Reduction in operating costs
Cash payments generally involve lower operating costs. In transactions made using card machines, for example, fees tend to be lower for cash sales, whether debit or credit.
These savings help retailers maintain their profit margins and allow consumers to enjoy more attractive prices. This can encourage customers to purchase more products, increasing the total value of the purchase.
Elimination of default risk
One of the main advantages of cash payment is the guarantee that the purchase amount will be received at the time of the transaction. Unlike options such as installment bills, this method eliminates the possibility of delays or non-payment.
This way, the merchant guarantees receipt for the product or service offered, reducing potential financial losses.
Immediate availability of resources
Another significant advantage is the rapid cash flow provided by cash payments. Whether through cash, Pix, or prepaid cards, retailers receive payment quickly.
This allows for more efficient management, such as reinvesting in inventory replenishment or taking advantage of immediate purchasing opportunities, contributing to sustainable business growth.
How to sell in installments and receive payment in cash?
To receive the advance amount of installment sales, the merchant must pay an additional advance fee. This fee can range from 2% to 15%, depending on the conditions established by the payment operator, the amount to be advanced, and the term agreed upon with the buyer.
Have you discovered what cash payment is?
We hope this article has helped you understand everything about cash payments, how they work, and the advantages of this payment method for both merchants and customers.
If you sell internationally and receive payments in dollars on your e-commerce site, Payoneer can be an excellent alternative.
With Payoneer, you can receive payments from abroad and transfer them to your local bank account without any opening or maintenance fees.
The platform allows you to receive payments in multiple currencies, making it easier to expand your business to global marketplaces.