31 October 2014

UK SMEs losing £7bn a year by not accepting cards - Barclaycard

16 June 2014  |  2102 views  |  2 Source: Barclaycard

Research from Barclaycard reveals SMEs are losing out on hundreds of pounds a week - £7.5 billion[1] across the country each year - by not offering customers the option of paying by debit or credit card.

Despite three quarters (74.5 per cent)[2] of all retail transactions across the country now being carried out in this way, three in five (58 per cent) SMEs are not currently able to take card payments. Of these, a quarter admit this has resulted in lost sales opportunities.

By not offering customers the option of paying by card, these SMEs lose out on around one sale per week - with each opportunity worth on average £182. This quickly adds up, amounting to £10,884 lost revenue for each business over the course of a year.

In an increasingly cashless world, it is surprising how many SMEs are yet to offer a full array of electronic payment options, especially as a quarter (24%) say their inability to convert sales opportunities has had a significant impact upon the growth of the business.

At present, just four out of ten (42 per cent) offer customers the option of paying by credit or debit card. Of the 58 per cent that don't, over a quarter (28 per cent) choose not to because they believe this would entail significant cost, and one in ten (11 per cent) think it will be too complicated and wouldn't know where to start.

Recognising these issues, Barclaycard has launched a new mobile point of sale solution, 'Barclaycard Anywhere', which allows businesses to take secure card payments wherever they are. Incorporating a secure card reader which attaches to a smartphone or tablet it uses a purpose-built app to accept card payments from any UK location[3] securely, using chip and PIN technology. There are no monthly fees or contract tie-ins and will be especially appealing to start-ups, seasonal traders and mobile businesses.

Barclaycard Anywhere also has an advanced reporting system which allows users to keep track of transactions via their mobile app or a secure online portal. This gives businesses crucial information about sales performance and customer buying behaviour, all at the touch of a button.

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This will be particularly useful to the six in ten (62 per cent) of SMEs who don't currently track customer buying habits and are losing vital information, as well as the one in five (20 per cent) who currently do this manually. This will have a significant impact on not only client relationships but also the overall growth of the business.

Philip McHugh, CEO of Barclaycard Business Solutions, said: "For any business, the challenge is to first secure customers' interest and then to convert the interest into sales. However, our research has shown that many small businesses are falling at the final hurdle and losing customers and vital revenue by not accepting card payments. This is a problem that can be cheaply and easily solved.

"Barclaycard Anywhere is a simple, low-cost portable solution which will appeal to many SMEs from mobile hairdressers and florists to taxi drivers and plumbers, enabling them to accept secure card payments on the spot, helping ensure they don't miss out on sales. Having quick and easy access to vital sales information such as payment trends and performance data will also enable time-strapped business owners and staff to quickly learn about their customers' buying behaviour. The insights they gain will be invaluable in helping them become more successful." 

1] Opinium Research carried out an online survey of 512 SME owners and decision makers, from 23rd to 28th May 2014, split approximately evenly between sole traders, micro businesses, small businesses and medium sized businesses. 296 said that they did not accept credit or debit cards as payment and 72 said that they sometimes have situations where a customer is unable to carry out a transaction because of this.

They were asked how often this tends to occur (median average of 1.15 occasions per week or 59.8 occasions per year) and how much the most recent 'missed' transaction was worth (median average £182). This gives an average annual "loss" of £10,884 among those who experience issues and don't accept cards, recalculated to £1,531 among all SMEs. The ONS estimated in 2013 that there were 4,895,655 private sector SMEs. £1,531 x 4,895,655 = £7,482,736,887

2]   Figures from the UK Cards Association in its UK Card Payments 2014 report.
Britons spent £520 billion on UK good and services using their debit and credit cards last year, a rise of 6.7 per cent since 2012 (£488 billion) and up from £244 billion in 2003.

3] Card payments can be accepted from any UK location as long as there is a connection (3G or wi-fi). 

Comments: (2)

A Finextra member | 18 June, 2014, 09:34

I wonder how much SMEs "save" on taxes by not declaring cash revenues to HMRC - pretty sure it's much more than £7bn...

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Sian Bentley - AEP - Loudwater | 18 June, 2014, 11:18

With so many alternative ways to take card payments now available, maybe SME's just need an education about what is available and banks need to give impartial advice rather than purely promoting their own acquiring businesses.

It would be good to see a comprehensive report on the options available to SMEs comparing the costs of newer SME options like Square and PayPal's phonejack plugin for card payments to traditional terminals. If the economy could benefit from empowering SMEs with choice perhaps this is something for HMT and the regulatory authorities to consider.

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