Small businesses which fail to invest in card payment technology could be losing out on as much as £23,000 a year in profits, according to new research.
A recent study, commissioned by online business service market place Expert Market, revealed that almost half of all payments made to small UK businesses in 2015 were made using a debit or credit card, equating to average profits worth £93,660 per business.
With the research showing that one in four British consumers actively avoided cash-only ventures, it suggests small firms miss out on £23,145 of profit per year by limiting the ways customers can pay.
Card payments are predicted to make up 65 per cent of all consumer payment transactions in the UK by 2025. The study concluded therefore that the amount small businesses owners stand to lose in missed sales by failing to offer cashless alternatives could be as much as £35,000 a year in future.
The head at Expert Market, Adelle Kehoe, said that innovation would be of increasing importance should small business owners want to remain competitive. “As the millennial generation comes of age and their purchasing power becomes stronger, business owners will have no choice but to pay attention to their preferences.
“Our findings highlight the need for cash-only ventures to adapt to remain competitive or miss out on huge profits by choosing not to keep up with consumer buying behaviour trends,” she added.
The main reason cited by the study for diminishing cash use is a generational shift, with the millennial generation preferring not to carry cash around with them day-to-day. Nearly two-thirds of 24 to 34 year olds would chose a debit or credit card transaction instead of having to carry cash, the research found.
The rising popularity of contactless payments amongst consumers was also confirmed. Between 2014 and 2015, the rate of contactless transactions tripled in Britain’s shops, accounting for 8 per cent of all card payments by the end of that year. By 2025, contactless is predicted to account for 47 per cent of card payments.
“With such rapid innovation and in the financial technology space, the importance of cash payments is only set to dwindle further,” Kehoe went on to say.
Read on for three cashless payment methods to help grow your business
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