A recent cash census report revealed that more UK consumers are increasingly switching to digital payments.
They explained that as early as 2019, debit card payments were already more than 50% higher than cash payments. And this trend seems to be growing since credit card payments, which include debit and credit, accounted for 52% of the transactions in 2020. Because of this, the same report saw a significant 40% decline in cash withdrawals among UK consumers. Experts believe this change in consumer behaviour is because people want to reduce contact with sellers, and they are more convenient to use when making transactions.
Continued Increase in Credit Card Usage
Aside from consumer preferences, credit card usage in the UK increased because of the recent economic crisis. A Bloomberg article discussed that in a survey of 1,000 UK consumers, data showed that nearly three in five or 59% of respondents have relied on credit cards to make ends meet during the past two years. According to authorities, credit cards have provided a lifeline for many consumers as they offer flexible payment options as consumers overcome the economic crisis. For instance, individuals can purchase essentials when they need them while paying for them when they are financially stable. Because of this, the frequency of credit card usage also increased. 64% of consumers reported using credit cards at least once per week, while over two-fifths of the respondents claimed using their credit cards to make five or more weekly purchases.
Since more consumers are utilising credit cards, it’s necessary that small businesses take advantage of this trend by adopting cashless payment methods, whether it’s online or in traditional stores. This is especially important if small businesses are bootstrapped companies. Our article on funding your business shared that bootstrapped startups rely on money like personal finances rather than outside investments. So, if you’re a small business with no external investors, you have to self-finance your business through organic growth, and using contactless payment methods can help you make this possible.
How Can SMEs Employ Cashless Payments
Today, there are various ways you can implement contactless payments in your stores. The two most common methods to achieve this are offering credit card and smartphone wallet payment options.
Have a card payment service
Contactless card payments are gaining traction in the UK. UK Finance revealed that there are now over 135 million contactless cards in circulation, covering 88% of debit cards and 81% of credit cards. As a result, the number of contactless payments made in the UK increased by 12% to 9.6 billion payments in 2020. These figures indicate that small enterprises that want a competitive advantage should start having contactless card payment solutions in their businesses.
Most card payment services for small businesses offer different card machines for varying situations. Countertop card machines take payments from a fixed point, such as cashiers in cafes, retail, and convenience stores. Another type is a portable card reader machine which allows you to take payments anywhere on your premises. They are wireless devices that easily connect through your Bluetooth or WiFi for seamless transactions. Both machines read well-known credit cards like Visa, Mastercard, and American Express.
Enable payments through mobile wallets
Some credit cards are also digitally encoded in digital wallets, allowing customers to make payments conveniently with their smartphones. UK Finance shared that the number of people who used mobile payments increased in 2020. From 7.4 million users in 2019, nearly a third, or 17.3 million people, were registered to use mobile payments by the end of 2020. It shows that consumers are taking credit card payments to the next level by storing card information on their mobile devices.
Similarly, you can start accepting mobile payments for your business by choosing a credit card processor that supports mobile payments since most card readers today accept payments through Apple Pay, Samsung Pay, and Google Pay. Instead of using physical credit cards, mobile payments require customers to scan a code using their phones or place their phones near NFC-enabled payment terminals to complete the transaction.
Read more:
Consumers Continue to Pay with Credit Cards — What SMEs Can Do