Cash still favoured over electronic payments by some SMEs
3rd October 2016 | News
Though the vast majority of small businesses and their consumers are steadily transitioning to electronic payments, those who continue to trade and pay solely in cash are still highly unlikely to make the move to electronic, according to new research from HM Revenue & Customs (HMRC).
HMRC’s report, titled ‘Uses of Cash and Electronic Payments’, found that almost one-in-five (17%) of firms report that cash is still most used by their customers and a further 18% report cheque being the most favoured payment. Subsequently, more than a third (35%) of consumers still do not favour electronic payments.
As a consequence, small businesses report that online transfer including PayPal is most used by their customers and is most preferred by small firms.
Four-in-five (79%) of those that do not offer electronic payments at the present time stated they are ‘definitely not’ offering debit or credit card payments or contactless (81%) or mobile payments (79%) within the next two-to-three years.
It would appear there are two very clear ends of the spectrum in this research with almost one-third (29%) of small business surveyed stating they didn’t accept cash whatsoever.
The Bank of England said: “Cash continues to be important in the UK, with demand for Bank of England notes growing faster than nominal GDP.
“There is now the equivalent of around £1,000 in banknotes in circulation for each person in the UK.”
Consumers stated that the size of the transaction heavily influences whether they pay by cash or electronic card.
Purchases less than £10 are more regularly paid using card, while regular transactions, monthly bills and outgoings are paid more frequently using direct debits, card payments and online transfers.
Although some respondents stated that by paying in cash they can keep track of what is coming in and what is going out easier, other respondents admitted that paying vast sums of money in cash was less comfortable given the lack of a trail of the purchase and no resource to refer to should an issue occur with the acquisition.
To read the full report of HMRC’s Uses of Cash and Electronic Payments, click here.