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Confidently Cashless: Small businesses left behind by the payments revolution

From coffee shops to plumbers, hairdressers to accountants, the chances are you’ve bought something from a small business in the last week or two. The UK is a nation of small business owners, with around 5.4 million of them across the country.   

It’ll probably come as no surprise to you that around three million of Britain’s small businesses still do not accept cards. That’s frustrating, since six in ten of us would shop more with small businesses if we could pay by card, meaning those business owners are missing out on sales by relying on cash.   

As shoppers we’re carrying less cash than ever before. The average Brit has just £32.54 in cash in their purse or wallet right now – and the average transaction in the UK is £18.42, meaning we’re not even carrying enough to cover two typical purchases.   

One in six Brits is now a “card-only” shopper 

Over the last decade, behavior has changed dramatically when it comes to making card payments. A clear driver for the cashless consumer has been the growth of contactless payments, which first launched in 2006. Contactless has made a huge difference in terms of the number of people who are starting to use cards for smaller transactions – the spending limit that contactless provides actually encourages people to make those smaller purchases with card, which means they are much less likely to need cash day to day, or indeed carry it on them at all. 

We recently carried out a study that showed one in six Brits is now a card-only shopper, and a further two in five people (38%) describing themselves as “card-first”, and would typically try to pay with a card, or mobile technologies like Apple and Android Pay, before having to pay with cash. One in four shoppers (27%) also told us that haven’t bought something because they couldn’t pay with a card, so missing out on sales is a very real issue that’s impacting small business owners.   

The growing tribe of cashless consumers shows a trend of UK shoppers who are purposely making their purchases in shops where they know they can pay by card. Is it a generational thing? Actually, no. Interestingly it is 45-54 year olds who are the most likely to want to pay with cards – disproving the association that it is millennials driving the demand for card payments.   

With this seismic shift in consumer habits, some small business owners are having to play catch up.   

What’s holding small businesses back? 

There are a number of reasons why small businesses don’t take card payments – more traditional businesses are used to people carrying a lot of cash on them. 44% of small business owners simply think they don’t miss out on sales by not accepting cards.   

One example, Glenn Hunter, a Square customer, runs Hunter Home Ventilation in Lisburn, Northern Ireland. His business has been running since 2007 and his transactions are usually over £100 - in the past he found that most people had that amount of cash in the house. More recently he’s seen a shift in behaviour, with customers wanting to pay with card, rather than cash or cheque. He realised relying on cash was negatively impacting his business and his cash flow, and that he was always chasing unpaid invoices. That prompted him to sign up for Square to start taking card payments with a Square Reader this year.   

Many business owners do not always consider that being a cash business comes with its own hidden costs – for instance taking time out to go and deposit cash. With high street banks closing branches, this often isn’t just a lunchtime visit to the bank, but several hours travel a week. Some business bank accounts also charge for depositing cash, not to mention the security concerns associated with carrying large sums of money around.   

Another reason is that, historically, it has been difficult and expensive to install card machines, requiring expensive hardware hire, long-term contracts and confusing fees. Business owners have come up against obstacles to accepting cards when they first set up their business, but technology solutions like Square make it easier than ever for all sorts of small businesses to accept every way their customers want to pay. The shift in consumer habits makes now a good time for small business owners to review technologies that could help them improve their bottom line.   

Portable payments 

Card machines have long been associated with retail shops. Service industries like plumbers, designers, mobile hairdressers or even market stalls have not considered card payments as a solution for their mobile businesses. 

We’re working in a flexi-world. Businesses are going to where the customer is and a flexible workforce with the right tech to do the job is key.   

Card payment technologies are adapting to catch up with the changing ways of working, with solutions like the Square allowing businesses to take card payments quickly, easily and affordably, wherever their customers are.   

Mobile readers on the market, like Square, are offering seamless integration with existing technology – businesses only need to allow a couple of minutes to get set up and are able to start taking card payments straight away. Additionally, these readers often do not charge monthly fees, do not tie businesses down to long term contracts and offer much lower transaction fees. There is often the option of receiving your money faster as well, for example Square sellers get the money into their bank the next working day.   

Square is used by more than 2 million businesses around the world. Successful Square merchants include anything from food-trucks and market stalls to one-man-band handymen and hairdressers, and with our solution they now have the flexibility to do business in a way that helps them flourish.   

It’s an exciting time to sit at the intersection of technology and finance – we are entering a new portable, instant and technology-enabled phase of payments, one that not only accommodates consumers but provides a new realm of possibilities for small businesses across the UK.   

Sarah Harvey, UK Lead at Square (opens in new tab) 

Image Credit: 3112014 / Pixabay

Sarah Harvey is the UK Lead at Square – the global mobile payment company that enables millions of small and medium sized businesses around the world to take credit and debit card payments without monthly fees or long term commitments. Sarah joined Square in 2016 to lead their expansion into the UK, Square's fifth global market. She is responsible for a range of business functions including sales & marketing, business development and strategy, as well industry relations.