Cash-only payments driving away customers, research suggests

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The writing is on the wall for cash-only payments which are increasingly making shoppers vote with their feet, new research suggests.

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Research from Paymentsense among more than a thousand customers of small and medium-sized businesses, including independent c-stores, found 53% would leave immediately if card payments were refused and 30% said they would be less likely to return in future.

Steve Basset, who owns two Londis stores in Weymouth, one in Bridgewater and another in Christchurch, thought it “crazy” not to accept cards.

Shoppers would use competitors if they knew a store did not take cards. “I would have thought people would get hacked off within a few visits.”

The cost used to be 8.5p-9p per debit card transaction, he said, but now we are looking at 0.3%-1% and maybe a penny on top so there is no excuse anymore in my opinion.”

David Gilroy, co-founder and managing director of Store Excel, said independents should drive down merchant fees as low as possible. Buying groups and wholesalers may be able to help.

“Increase prices on as many products as possible to lift gross margin. I know that this won’t be at all well received! But it may be a reality that has to be accepted.”

Gilroy added that it would be “unwise” for small stores not to prepare for the change to card payments because they needed to appeal to everyone.

James Lowman, chief executive of the Association of Convenience Stores, said HIM! research showed, however, that cash remained the most common method of payment in convenience so it still had a place in the sector.

“The Local Shop Report shows that 94% of convenience stores already accept debit cards, and for many who don’t it’s often because they’re in very rural areas with connectivity issues.”

However, customers, who often had connectivity issues themselves in such areas, tended to be understanding in such cases.

“Convenience stores pride themselves on responding to customer needs, as evidenced by the growth in acceptance of contactless payment,” said Lowman.

Guy Moreve, chief marketing officer of Paymentsense, said cash usage in the UK was shrinking at a rapid rate and consumers were now living totally cashless lives.

“Although it’s important to recognise there’s still a place for cash, it’s difficult to ignore the signals that we’re moving towards the complete digitalisation of money.”

By Andrew Don.