Small businesses that ignore next-generation payments technologies like invisible payments or cryptocurrencies are losing out big time, but new research suggests that tens of thousands of dollars are lost by SMEs because they aren’t even accepting cards.
Analysis from Expert Market found that some small businesses in the U.K. are losing nearly $30,000 every month because they operate as a cash-only establishment.
Nearly half of all payments in 2015 were made using a credit or debit card, according to Expert Market, which equates to more than $121,000 in profits for a single small business. One-quarter of spenders said they actively avoid businesses that are cash only in favor of businesses that will accept their card payments, which, according to researchers, suggests small businesses lose out on about $30,000 a month because they don’t take cards.
Looking forward, the report estimated that small businesses risk losing more than $45,000 between now and 2025 if they don’t start taking card payments.
“With such rapid innovation and competition in the financial technology space, the importance of cash payments is only set to dwindle further,” said Expert Market Head Adelle Kehoe in a statement. “Our findings highlight the need for cash-only businesses to adapt in order to remain competitive or miss out on huge profits by choosing not to keep up with consumer buying behavior trends. As the millennial generation comes of age and their purchasing power becomes stronger, businesses will have no choice but to pay attention to their preferences.”
According to Expert Market, nearly two-thirds of spenders aged 24-34 said they prefer not to carry cash and instead prefer to use cards. By 2025, analysts estimate contactless payments will account for 47 percent of payments every year.
Earlier this month, separate research from Barclaycard found that U.K. SMEs miss out on a collective $2.1 billion because they don’t accept next-generation payments technologies, with 15 percent of shoppers across all age groups reporting that they have abandoned a transaction because a small business doesn’t accept a next-gen payment technology.