If you’re a retailer or other business which doesn’t already accept card payments, there are a few reasons which suggest that you should consider it.
The latest figures from the UK Card Association show that 518 card payments were made every second across the UK in 2016. This equates to 16.4bn purchases, with spending equivalent to a third of national GDP at £709bn.
The rise of contactless technology has been credited, at least in part, with the boom in card transactions. Contactless payment has made sales quicker and more convenient, becoming popular with retailers and consumers alike for its ease.
Retailers who accept contactless payments have seen their number of sales increase by 30% on average
As a result, customers are turning away from cash payments, instead favouring their cards and smartphones for speed and simplicity. Combined with the robust security measures which underpin the technology, contactless is fast becoming the preferred method of payment.
A recent report by Barclaycard has found that just over half of card transactions within the contactless limit (£30) are made using contactless. It also found that retailers who accept contactless payments have seen their number of sales increase by 30% on average.
Additional figures from the Office for National Statistics show that card transactions in April 2017 accounted for 26% of total spending in the UK – amounting to £58bn. In April 2016, card spending was around £52bn; clearly, consumers are willing to spend on card.
24% of customers abandon a purchase if they’re unable to pay by card, especially for those aged 16-34
Research conducted by Visa in 2015 found that 24% of customers abandon a purchase if they’re unable to pay by card; this was particularly the case for customers aged 16-34 and the problem is particularly pronounced for SMEs.
Another study has found that for 62% of SMEs, cash is ironically featuring less and less in their cash flow, with card payments becoming the accepted norm for consumers.
Ultimately, this means that your business could be losing sales by not catering to customers who prefer to pay by card. There is no sign of this trend abating; the Barclaycard report estimates that, by 2021, there will have been a 317% increase in the number of contactless payments.
Additionally, there is also the pending introduction of a new EU directive which will abolish excessive card surcharges from January 2018.
While surcharges are legitimate – businesses must pay a merchant fee to process card payments – many companies were found to be profiteering.
Many consumers are also put off by retailers applying surcharges to transactions below a minimum spend. The new directive will ensure that surcharges reflect the true cost of processing the payment (the cost of payment processing has also been capped by the EU, meaning that retailers pay less to processors).
These factors mean that consumers will be increasingly likely to pay by card over the coming years. However, waiting until 2020 when contactless point-of-sale becomes mandatory for many means that you could miss out on huge amounts of revenue.
There are other practical reasons why you should consider accepting card payments, too.
One of the prime concerns is security and cash handling; by accepting card payments, you’ll reduce the amount of cash you handle. This makes your business less of a target for theft and crime. (We’ve also got a guest post about how you can improve your cash handling policy).
Alongside this, contactless payments are fast and convenient. This means that at busy times, you can reduce customer waiting times and process more customers in windows of peak time.
These benefits all add up – the aggregation of marginal gains – and make a convincing case for accepting card payments, particularly contactless.
You’ll open your business up to impulse buyers, as well as appealing non-cash carrying customers and consumers in the 16-34 age bracket who are increasingly turning away from retailers that do not accept card.
Importantly, you’ll also be adapting your business to capitalise on the most recent consumer trends, which show that the popularity of card payments is only going one direction – upwards.
There are several steps to getting started with card payments; from setting up a merchant bank account for receive payments and choosing a card terminal and the rental agreement.
There is plenty of information available online. The UK Card Association is the national body for the card payments industry. For more information, statistics, and resources on card payments, visit their website.
There are also the practicalities to consider; the initial investment, as well as the intricacies involved, such as choosing a card terminal and agreeing a terminal rental contract. Your bank will be able to offer you tailored advice.