Raj Sond, general manager of payment solutions company First Data, looks at the demise of cash as research shows half of customers walk away if its the only payment option
Analysis carried out for UK Payment Markets 2017 forecasts that debit cards will become the most frequently used payment method in late 2018, three years earlier than previously predicted due in large part to the increasing popularity of contactless. Although larger businesses usually offer a range of payment methods, many independent retail stores are failing to offer the variety to meet customers’ needs.
In a recent consumer survey, carried out by First Data, Card payments emerge as the preferred method of payment for 59% of shoppers. Rather than seek an ATM, 43% said they would either not make the purchase, or go elsewhere if they found themselves without cash, and no other payment option was offered. However, worryingly, almost two thirds of consumers said the SMEs they visit do not accept cards whatsoever.
A lack of payment options causes frustration
Shoppers have come to expect to pay with their preferred payment method at the point of transaction. Without the ability to pay how they prefer, customers become frustrated and often abandon the sale and do not shop at the business again altogether. Therefore it is crucial to get it right from the outset to retain and grow customers.
Speed and security are top considerations for consumer payment preferences. The vast majority (98%) of people who prefer contactless cards because it’s faster, followed by those that cite the convenience and security of not having to remember and type a PIN. Nearly half (48%) say they look for an efficient shopping experience “with little interaction with store advisors”.
Customers frustrated with cash-only acceptance say locating an ATM (50%), that cash can be easily stolen or lost (35%), harder to keep track of spending (27%) and a heavy wallet as top concerns.
But not all Brits are ready to go cashless just yet. 69% of over 55s still carry cash “in case of emergency”. Just 20% of this age group are ready to abandon coins and notes in a completely cashless society, compared to 50% of 18-24 year olds.
Meet customers’ needs to close the sale
Time pushed, busy consumers want a fast, hassle-free shopping experience. Convenience is paramount and a smooth payment mechanism is vital for a tailored, seamless service. With multiple shopping options on the high street and online, it’s easy for consumers to take their business elsewhere. Successful companies would be wise not to make assumptions about what their customers want.
Historically, smaller retailers are put off by the perceived cost of card acceptance. However, when considering the banking time, cost and handling risk when it comes to dealing with cash, the cost of card acceptance is not the prohibiting factor it once was. Payment is a crucial part of the customer journey and experience and cannot be ignored in the quest for growth and loyalty.
Regardless of whether a business is small or medium sized, making a careful consideration about payments acceptance is crucial. In any business – identifying and meeting the changing needs of customers is essential to long term business growth and success.
Failing to do so means not only a lost sale but repeat business. Furthermore, for many independent retailers, word of mouth is incredibly important. No business wants to be ‘that’ retailer that only accepts cash. In an economy where cash is no longer king, businesses cannot afford to ignore the payments preferences of their customers.