Just cash money: why a diehard band of L.A. merchants refuses to join the credit card crowd.

When patrons at Philippe The Original Restaurant in downtown Los Angeles try to pay for their meals with a credit card. General Manager Richard Binder sends them down the street to an automated teller machine.

"Our regular customers know they have to have cash," said Binder.

Philippe, one of L.A.'s oldest eateries, does not plan to change its no-credit policy anytime soon - despite the fact that Binder has noticed more customer requests to charge meals than ever before.

He isn't alone. As cash dollars go the way of gold doubloons, there is intense pressure on merchants to accept credit cards. Most already have succumbed, but there remains a handful of renegades who think Visa is a kind of passport and Discover is a cable network.

Dismayed by the high fees charged by credit-card companies and banks that issue plastic, they are willing to accept the risk of alienating their customers. And they hope that by offering lower prices or better service than their card-accepting competitors, they can make up for the inconvenience.

"It's a hassle sometimes and I apologize to people," said Sam Martorana, owner of Casa Bianca Pizza Pie in Eagle Rock, who does not accept credit cards. "But as far as business goes, I don't think I've lost a dime. When you're treating customers right, people will seek you out."

For well-established businesses, the refusal to take credit doesn't seem to have much impact; restaurants like Philippe already have such a large following in Los Angeles that customers are willing to put up with the inconvenience, some even seeing it as a charming quirk.

But there are much smaller and less well-known businesses whose hard-nosed owners have no intention of bowing to the almighty Visa and American Express - even though they acknowledge that their intransigence is costing them business.

At Jolanta Widuch Skin Care in Beverly Hills, the refusal to use credit cards at the 18-year-old business "was simple," said salon owner Jolanta Widuch. "It's too much trouble for me."

She concedes that the no-charge policy has probably caused some customers to go elsewhere. "I know people like to use their credit cards," she said. "But I'm absolutely not interested."

Peter Park, owner of Seventh Avenue Cleaners in Inglewood, says he doesn't accept credit cards because increased competition has slowed down business and he has to watch every penny. Having to worry about additional credit-card transactions would only make it harder for him to keep track of his revenues. Besides, added Park, "nobody has complained yet."

Park and Widuch both rely heavily on repeat customers who understand the no-credit policies and don't seem to care. Of course, exclusive reliance on repeat customers means a business might not grow.

"I'm not in the growth mode," said David Farber, owner of David Farber's Service Center, an electronics repair shop in Los Angeles. "I'm just trying to survive."

Farber, who always tells his customers ahead of time to bring a check or cash, said accepting a credit card would be "another hassle."

"They have a much longer period to dispute the charges," said Father. "With a check, you just put it in the bank."

Martorana of Casa Bianca is similarly unconcerned. "There is an Italian saying, 'How much do you want to eat?' I have enough with one restaurant," said Martorana.

The reasons cited for not taking credit cards vary. For Binder, it is the time element. Credit transactions typically take significantly longer to complete than a cash sale. For a popular eatery like Philippe, long waits could mean less business.

"Basically, we serve 2,500 people a day. It would slow down our operation considerably," said Binder.

But the major concern shared by credit-card detractors is the fees associated with accepting plastic.

"I don't want to lose (profits) to fees," said Widuch. "I can't charge my clients more, so I would have to pay. My business is the loser."

But credit-card companies say the merchants are the losers when they don't accept credit. Widuch and others like her could be short-changing their profits, they say.

"When people use their credit cards over cash, the ticket value could be higher," said Carolyn Brett-Schneider, a spokeswoman at Visa U.S.A. "With cash, people have that limitation of how much they're going to spend. With a credit card, you could up that spending rate."

Because of growing competition among banks and a surge in the number of businesses accepting credit cards, some credit providers have lowered their fees, which range from about 2 percent to 4 percent of each transaction.

American Express adjusts its fees based on the number of annual transactions performed by the merchant, according to John Whelan, senior manager of merchant acquisitions with American Express Travel-Related Services Co. Inc.

American Express' fees range from 2.5 percent to 3.5 percent - the higher the number of charges, the lower the fee.

But the cost of accepting cards does not stop there. Business owners also have to lease equipment from financial institutions in order to process credit-card transactions.

Such costs have not stopped most retailers from signing up. Since 1990, the number of U.S. merchants accepting credit cards jumped to about 5 million, up from 2.8 million in 1990, according to Dan Cunningham, senior vice president at Phoenix Planning & Evaluation Ltd., a Rockville, Md., consulting firm specializing in card-payment systems.

The holdouts tend to be smaller merchants with established customers. And those are the businesses that the credit-card companies are going after.

For the past four years, "our whole thrust has been to acquire small merchants," said Whelan. "We try to talk to them about what they will get in return ... if they don't have American Express, they could be losing customers."

That isn't always the case. In a 1985 ad campaign. Atlantic Richfield Co. blew up a billboard-sized credit card to let customers know it was dropping credit cards at its stations. The policy allowed Arco to charge lower prices for gas, which resulted in increased sales.

"We blew it up," said Scott Loll, a spokesman at Arco. "The cost of credit at that time was 2.8 percent ... we passed those savings on to all our dealers and encouraged them to pass it on to consumers."

Within six months of dumping credit cards, "volumes almost doubled," Loll said "Since then. we've stuck with that policy. At this point we don't see a reason to change."

Some predict that a new payment system on the block may decrease the importance of credit cards: debit cards, which, like plastic checks, deduct charges directly from a customer's bank account.

"They have to be responsive to what consumers want ... people don't want to carry cash around," said William B. Gartner, a professor at the Marshall School of Business at the University of Southern California. "More likely, what we're going to see is more debit cards."

Some cash-only businesses already offer those services. Customers of most Arco gas stations, for example, are given the option to use their ATM cards.

Even Binder is considering a debit-card terminal for his 82-year-old eatery.

"You could swipe your card, punch in your PIN code and (customers) could get twenty to forty bucks," Binder said. "It wouldn't cost us much, we would probably break even ... it would be a great convenience."

Widuch, though, has no plans to step into the electronic age.

"You think if my customers wanted to pay by credit card and I said I couldn't do it, they wouldn't come back? Of course they would," she said.