Card spending in the UK continues to rise and the explosive popularity of contactless payments means that consumers are increasingly reaching for their cards for small purchases. Contactless spending leapt to a milestone £1.02bn in November 2015, according to statistics from the UK Cards Association, a staggering increase from £0.3bn the previous year.
As it becomes commonplace for cards to be used to buy small, everyday items, more small businesses are considering their payment options to ensure they don’t miss out on this growing market. Many businesses are alert to seeing cashless customers walk out the door, taking their potential spending with them. What’s more, handling cash comes with its own complications. Cash can be a security risk, both on site and for staff who have to take it to the bank, which can push up insurance premiums, etc. Card acceptance can also reduce book-keeping admin, plus capture valuable data on sales and trends to enable better-designed marketing strategies which increase takings.
However, for a number of smaller shops, the process of accepting card payments can still seem overwhelmingly costly and complicated compared to the traditional method of simply taking cash. Establishing an effective Merchant Account in particular has been seen as something of a ‘dark art’, which has deterred some small businesses from accepting card payments. A lack of transparency on commercial and operational processes has contributed to this perception, and many businesses find it hard to assess the actual cost of taking cards. Unlike with other business services, many small companies do not know where to find a trusted partner who can help them better understand the processes and costs involved.
The best starting point for small retailers to understand the different payment options available to them before committing to a contract is with impartial advice. As a first port of call, trade associations such as the Federation of Small Businesses (FSB) can be a useful source of objective information. These organisations can help to decode the cost of taking cards beyond the headline rate, which can be difficult to fully understand, and compare different deals. For example, businesses may not realise that they don’t have to purchase or rent a terminal through their merchant services provider, which can constrict them to lengthy contracts.
Trade associations often provide beneficial rates with trusted suppliers, which makes the process of sourcing equipment straightforward and transparent. Some companies (including 123Send), will offer a free, no obligation health check to identify the most cost effective option for the business. Different types of businesses will each have different technology requirements for example, and need to take considered advice on making sure they comply with security regulations to ensure customer data is kept safe. For businesses with a website, or thinking about expanding online, they will need to work with a supplier that can integrate their activity across different channels with a careful eye on fraud prevention.
As the usage of cards increases, many small businesses will find it is no longer a viable option to be a cash-only company. Taking a considered first step to expanding payment options is vital to maximising the business advantage of taking cards.
By Jeff Woods, Managing Director, 123Send