New research by B2B marketplace Expert Market reveals that SMEs could be losing out on over £23,000 of profit a year because they cannot accept card payments. The report crunched business transaction figures in 2015-2016 and consumer attitudes to purchasing to find out how much additional revenue businesses risk losing out on by operating as cash-only.
The findings reveal that nearly half of all payments in 2015 were made using a debit or credit card, which equates to an average profit of £93,660 per SME. The data shows that one in four British consumers actively avoid businesses who operate a cash-only policy in favour of companies who accept card payments, suggesting that some SMEs are missing out on nearly £23,145 of profit per year due to having limited payment options.
With card payments predicted to constitute 65 per cent of all consumer transactions by 2025, businesses who operate without offering their customers cashless alternatives could risk losing over £35,000 per year from missed sales opportunities.
SMEs comprise 99 per cent of total businesses in the UK (5,490,000 companies), and are predicted to be the hardest hit by the switch to card as figures show that nearly one in 10 small and independent retailers continue to decline customers who wish to pay by card.
With a surge in digital money solutions and challenger banks such as neobank Monzo and contactless payments, cash use continues to diminish, particularly among millennials and those in Generation Z.
The data reveals that nearly two-thirds of 24-34 year olds prefer to not carry cash and would opt for credit or debit card transactions. Contactless payments are also on the rise with a threefold increase in usage from 2014 to 2015, accounting for over 8 per cent of all consumer card payments. By 2025 contactless payments are projected to account for 47 per cent of payments each year.
Adelle Kehoe, head of Expert Market comments, ‘With such rapid innovation and competition in the financial technology space, the importance of cash payments is only set to dwindle further. Our findings highlight the need for cash-only businesses to adapt in order to remain competitive or miss out on huge profits by choosing not to keep up with consumer buying behaviour trends.
‘As the millennial generation comes of age and their purchasing power becomes stronger, businesses will have no choice but to pay attention to their preferences.’
Further reading on cash and small businesses
Nominations are now open for the British Small Business Awards 2017, the leading event celebrating the brightest stars in the SME sector. Click here to enter, and make sure you get involved today using the hashtag #BSBAwards. Good luck!