With cash in decline, small businesses risk falling behind if they don’t adapt.
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A report from UK Finance says that while 28 per cent of all payments in 2018 were made in cash, that will fall to just nine per cent by 2028.
This comes as research from payments provider Square reveals that as many as four in 10 of the UK’s micro businesses don’t accept card payments.
So, how can small businesses adapt to this shift in habits? Here are four changes you can start thinking about.
1. Consider a card machine
There are 5.4 million micro businesses in the UK, according to figures from parliament. Square’s research indicates that potentially 2.2 million don’t accept card payments.
There might be varying reasons for not accepting this payment method – including cost – but businesses risk losing out on customers if they don’t keep up.
Larger competitors are more likely to offer this flexibility – Square says that almost nine out of 10 businesses with between 10 and 249 employees accept card payments.
If you don’t give customers the option to pay by card already, it might be time to future-proof your business. Card machines give customers more convenience, speeding up transactions, and might not be as expensive as you think.
Read more: the best card machines for small businesses
2. But don’t ditch cash just yet
On the other hand, some businesses have gone completely cashless. Last August, MarketingWeek reported on London coffee shop chain The Attendant, which gave up on paper money earlier in 2018.
The Attendant’s CEO, Bosh McKeown, told MarketingWeek that the decision means he can attract and retain modern consumers. But Alison Sagar, Marketing Director at PayPal UK, offered a counterpoint: “it’s not about committing to cash-only or cashless, but about offering as many methods of payment as possible to make life easier for customers.”
The message is clear – although cash payments are declining, they’ll still make up nine per cent of all payments in 2028, which is significant. Businesses that offer customers efficiency, choice and convenience in a fast-paced world are the ones that will thrive.
3. Giving customers more reasons to shop with you
While people across the UK are using ATMs less, access to cash will still be important in regions seeing slower falls in ATM use. According to new data from cash machine network LINK, the smallest year-on-year declines are in the North East (3.7 per cent), Northern Ireland (4.6 per cent) and Yorkshire (4.9 per cent).
But bank and ATM closures are affecting areas across the country. In September 2018, the Sun reported that 1,300 free-to-use cash machines had closed in the first half of that year.
Lloyds Banking Group have put forward a solution. Working with Visa, they unveiled a pilot scheme earlier this year. Under the plan, businesses in areas with little access to ATMs would be paid to offer customers cashback.
Customers don’t have to bank with Lloyds and the aim is to give businesses more support – and more reasons for the public to visit local shops.
Beccy Soper of Beccy’s Greengrocers also called out a practical benefit: “there are also other benefits that aren’t as obvious, like paying out more cash from my till which means I don’t need to make as many trips to the bank to deposit my takings.”
Eventually Lloyds want to roll this out to an estimated 50,000 merchants. Depending on the results of this trial, this could be another way to offer your customers more flexibility and convenience. Be on the lookout for more news on the scheme as it evolves.
4. Embrace retina scanners and microchips
Back in 2008, the most popular phone in the US was the Motorola RAZR, according to Nielsen.
Fast forward to 2019 and it’s common to make payments using your smartphone, plus the next big thing is a device you can fold. Technology moves quickly, and not only do your customers recognise that, they embrace it too.
A recent survey from Paymentsense asked people whether they would consider alternative forms of payment. Many of them said they would pay using methods seen straight out of sci-fi:
- 26 per cent would use their fingerprint
- 16 per cent would use their retina
- nine per cent would use an embedded microchip
It’s important to keep up with current trends, especially when they reflect how customers want to pay for your products. While they might not be implanting microchips anytime soon, it’s a good idea to check in with your customers to find out if there’s any way you can make their lives more convenient.
Read more: 6 expert customer experience strategies
What are your thoughts about the shift to a cashless society? Let us know in the comments below.