Whether you’re from the “cashless capital” of London or other corners of the UK, experts are advising small business owners to get to grips with cashless payments. This modern method of payment is transforming the transactional landscape so it’s becoming increasingly important that SMEs are in the loop, to keep customers satisfied with their service.
The cash to card generation
Contactless payments are the next stage in the evolutionary process of customer transactional behaviour as the switch from cash to card picks up speed. Research done by the UK Cards Association revealed that UK consumers spend over £19,000 a year, every second using credit, debit and charge cards. Statistics published by the Payments Council also showed that July 2014 was the first time that the value of non-cash transactions exceeded cash payments.
During 2014, total spending on UK-issued cards hit an unprecedented amount of £600.3bn following an 8.2% rise, while the number of purchases increased by 12.1%. More than 35million card payments per day were made during the year, with food and drink being the most lucrative sector accounting for £19 in every £100 spent.
Online shopping comes under the umbrella of card payments that are taking the country by storm with £21 of every £100 spent being accredited to online sales. However, it’s currently bricks and mortar businesses that are reaping the real benefits of contactless payment facilities.
What is contactless all about then?
Contactless transactions are a highly secure way of making a payment via card without having to enter a PIN number. ‘No PIN number? Is that really safe?’ you might ask and yes, it is actually an extremely secure method of paying. The service is available for debit, credit, charge and pre-paid cards and there are currently around 60million contactless cards in circulation around the UK. The card is touched on the reader rather than inserted into the device, giving rise to the new ‘tap & pay’ generation.
The rise of contactless transactions
With nearly the entire population of the UK owning a credit or debit card, it comes as no great surprise that consumers are now looking for faster, more efficient ways of making payments. A whopping 75% of the transactions made at retailers across the country during 2014 were done via credit or debit card, which is up by 10% since 2009. Already a quarter of the cards owned by these UK consumers are fit for contactless use.
According to figures issued by card processing company and secure payment service Worldplay, 71% of consumers agree that contactless payments are far easier than chip & PIN. In fact, contactless payments have more than trebled since January 2012.
Dave Hobday from the company, said:
“Consumers demand convenience, and contactless offers this beyond any other payment method. It makes paying for your morning coffee or a well-deserved glass of wine after work faster than ever before, while helping businesses cut queues at peak times.”
Queue cutting and super-speed payments aren’t the only benefits of contactless transactions though. We’ve put together a list of a few more to outline why you, as a business owner, should be getting on board with this emerging mode of payment.
Why you should be using contactless
Currently, contactless is most effective for SMEs that sell a lot of goods worth £20 or less due to the transaction limit but this cap is due to rise to £30 in September of this year. We suspect that over the next few years, contactless payment will fast become a service customers expect no matter what, as opposed to the novel luxury it is at the moment. Boots, Lidl and Marks & Spencer are amongst those already bringing contactless to the mainstream.
Ease and efficiency – As Hobday pointed out, this new mode of transaction reduces the time spent on the payment process. This means less queuing for busy customers and more sales per day for you. If the customer has a positive experience, you reap the rewards.
Safe as houses – Contactless payments accommodate a harmonious marriage between convenience and Along with its transactional limit, the method also requires the occasional chip & PIN transaction just to ensure that the card is still in the right hands. For you, the business owner, it negates the dangers attached to holding large amounts of cash on your premises.
Future potential – High Value Near Field Communication (NFC) has actually already been launched which means customers can ‘tap & pay’ with their smartphones for a sale of any value by entering a PIN on their device. There are even rumours in circulation that suggest one day soon, we will be able to use contactless transactions to make payments via our vehicles and key fobs.
This really is the tip of the iceberg for contactless so watch this space! In the meantime, we would love to hear from you if you’re a small business owner who already offers contactless facilities to your customers. Leave a comment below or catch us on Twitter @AccountancyPart.
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We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!