NEW YORK – Small businesses constantly face big challenges to their survival. With higher relative overhead than larger competitors, local retailers must struggle to control costs. Now, with changing spending habits — particularly Millennials’ inclination to use plastic instead of cash — small businesses could be facing yet another challenge.

A recent survey from CreditCards.com showed how habits have changed across generations in making purchases of less than $5. According to the survey, more than 80% of baby boomers age 65 and older prefer to use cash for small purchases, but for Millennials (age 18 to 29), the popularity of cash for small purchases falls below 50%, with the majority using plastic and with younger shoppers preferring debit cards to credit cards by a 2-to-1 margin.

For shoppers, the convenience of credit and debit cards largely explains the trend. Carrying and spending cash requires additional trips to the bank and poses a theft risk, while cards carry at least some level of fraud and theft protection in the event of their loss or misuse. Moreover, with point-of-sale transaction technology having improved substantially, paying with plastic no longer takes markedly longer than a cash transaction, according to an article in the Financial Times.

Unfortunately, for the merchants that accept these transactions, the rise in popularity of card use for small purchases isn't necessarily good. The main problem is that many providers of merchant services charge per-transaction fees on top of percentage fees. The per-transaction fees tend to be relatively small and therefore fade in importance for large purchases. But on small transactions, those fees have a much larger impact on profitability.

As the popularity of electronic payments increases, small businesses will have to find new ways to address the problem of high card fees. Given how many people now rely almost entirely on cards, businesses can't afford to refuse card transactions — even if they can't afford to accept them, either. In the long run, small businesses will need to find service providers willing to recognize the crippling impact of small card purchases on their bottom lines.