The analysis finds that around half (46%) of small businesses use physical money each month, while a third (32%) regularly use it every week.

Cash and the pandemic

While three in ten small businesses have reduced their use of cash since the start of the pandemic, the majority are using it to the same extent, with some even seeing greater demand from customers. Over half of SMEs (54%) say their use of notes and coins has remained stable despite the increase of contactless and online payments being rolled out during the pandemic, with more than one in ten companies seeing an increase (11%).

Small and medium-sized companies still use cash for a variety of reasons, with flexibility for customers coming out on top. Nearly six in ten businesses back cash to promote consumer choice (57%), while a quarter are concerned that card payment costs remain too high (24%).

The future of cash

While the use of cash has declined among many small businesses, SMEs are evenly split on whether cash should be phased out in future. Two-fifths say that they want to keep using coins and notes with their customers, while the same proportion wants to stop using them entirely.

When asked to predict the use of cash in the future, iwoca’s research found that nearly a third (28%) still planned to use physical money in five years’ time, compared to half (49%) who didn’t think they would.

Colin Goldstein, Commercial Director at iwoca, said: “For hundreds of thousands of small businesses, access to physical money is still essential for the day-to-day running of their company. Yes - the pandemic has moved more businesses towards contactless payments, but the real story here is the strong resilience of cash. From coffee shops to hair salons, restaurants to construction sites, it seems that SMEs want to continue using coins and notes long into the future.”