It was not that long ago that SMEs would only accept cash as payment for goods and services.
But these days, many of the same SMEs are now relying on contactless technology to process payments as their tech-savvy customers want and expect easier, faster ways to pay without using cash.
SMEs can no longer think of accepting cashless payments as a luxury – it is now an option that most customers expect businesses to offer.
According to data released earlier this year by trade association UK Finance, debit card payments exceeded cash last year as the most widely used payment method for the first time. Since the number of contactless cards in circulation in the UK now exceeds 100 million, this milestone should not come as a surprise.
In the report, it was revealed that consumers in the UK made 13.2 billion debit card transactions in 2017, which is a 14% increase from 2016. Over the same period, the frequency of cash transactions decreased by 15% to 13.1 billion, and the volume of cash payments should fall by 50% over the next ten years to only 6.4 billion, which would represent 16% of all transactions.
The increasing popularity of payment apps shows that businesses of all sizes need to prepare for the cashless economy or risk losing customers to their competitors.
The declining use of cash is already being utilised by many disruptive fintech companies. Kashing is a payment processing business which enables businesses to take cashless payments online and face to face. Kashing was established with the sole purpose of helping independent businesses as they felt they were being underserved by the current payment service providers. The Kashing Reader works with a free app you can download on your tablet or smartphone. Kashing was backed by the SFC EIS Growth Fund in spring 2018.
Can we expect a contactless only future?
The UK is quickly joining the ranks of the most cashless countries in the world, but it still has a distance to travel to overtake Sweden and other Nordic countries, which are at the forefront of the cashless revolution. According to a study by Capgemini and BNP Paribas, just 2% of payments in Sweden are completed using cash, and that number is expected to fall to below 0.5% by 2020.
Wales is also leading the march to a cashless economy, with 46% of consumers expressing a preference to pay using a card as compared to the nationwide average of 37%.
However, it is still too early to declare the death of cash. A survey conducted by Censuswide revealed that only 17% of UK consumers only use their card to pay for purchases and that 50% of SMEs in London still do not accept card payments.