At Sweeny Ted’s barber shop in Holywell, north Wales, a young customer recently paid for a haircut with his watch.
“It was a first,” admits the owner, Ted Palmer, whose business only dealt in cash until 18 months ago. “I had thought about it, but our most expensive transaction is £6.50 and the cost of people paying by card would have been prohibitive for us, but I knew that I would lose customers by not offering cashless facilities.”
In January 2017, the local council in Holywell (where small firms had been hit by the closure of three high street banks) introduced a scheme with card payments provider, Square UK. Now more than 90 of the 100 companies in the town centre are kitted out with a card machine.
It puts them ahead of the game; research by Square claims that almost half of the UK’s small and medium-sized enterprises (SMEs) still aren’t setup to accept cards, yet 81pc of people would shop locally if they knew that a business was.
“Increasingly, my clients are paying this way,” says Mr Palmer. “We will never be a totally cashless business, but you have to offer customers a choice of payment options.”
From card machines to marketing
Small firms were put off in the past from going cashless because of the expense, explains Clare Bailey, an independent retail expert. “It used to cost thousands of pounds to setup a card system and keep it running each year, but now there’s a choice of methods.
“Last year and for the first time, more than half of all purchases in the UK were made by card, so any small company that wants to succeed must offer its customers as many options to pay as possible.”
The benefits of cashless transactions are self-evident, thinks Ms Bailey. “You save time in not having to ring up a till and take money to the bank, which means greater security and reduces staff theft.” Then there are added bonuses – for example, some systems give anonymised data back to retailers about shopper behaviour and how to relate better to them.
She adds: “Digital payment systems have other useful add-ons, including electronic receipts so that customer details are online and can be used for further promotion and marketing.”
At least 50pc of visitors to Banham Zoo and Africa Alive in Norfolk still use cash, according to Martin Dupee, director of operations. “Card payments have increased considerably since the introduction of contactless, mainly for the entry fee, but once inside the zoo, many of the transactions are in coins and notes – particularly in our gift shops, where children spend their pocket money,” he says.
However, poor network coverage can be a major challenge to a business introducing card machines, he adds. “Both zoos are in remote locations, where we can’t always get connections through networks or 4G – and in some places, we can’t take card payments at all.”
Eventually, Mr Dupee hopes that the company will be in a comfortable position between card and cash payments, possibly increasing the cashless side of things even further.
“It doesn’t suit everyone,” he warns. “As a charity, we’re very dependent on cash donations in our collection boxes, but we must adapt to however our guests want to pay for their day out.”
The UK e-commerce sector is worth hundreds of billions of pounds and is growing rapidly, so it’s no surprise that SMEs are tapping into it.
The main methods of paying are credit or debit cards and PayPal, a hugely trusted brand, according to Nielsen Online Buyer Insights, which claimed in a 2013 study that offering the service as an option boosts customer numbers by 27pc in the first year of use.
So how do you set about installing a card machine and digital payment system? Banks don’t have their own merchant services packages, instead using specialists such as Worldpay, Global Payments, iZettle and First Data, among others. By going direct, you will pay less for the same service, or you can use one of the many independent provider comparison tools out there. It certainly pays to shop around, especially if your turnover is low or your transactions are small.
You also need to make going cashless part of your business strategy, instead of being forced into adopting a card machine to survive. Ms Bailey points out that Uber’s cashless payment method has transformed the taxi scene in many countries, with London black cabs having to accept cards in order to stay in business.
“Time is running out for SMEs who haven’t yet taken the step to offer their customers payment options,” she says. ”It’s time to go cashless to keep ahead.”