Smaller businesses who do not take card payments often lose business from customers with no cash in their wallets. But the expense of implementing card payments can be offset by the introduction of mobile payments.
Cash is no longer king, but many small businesses are still unable to maintain a card payment service. Typically a machine will cost more than £50 a month to rent, needs to be connected to a fixed line and will deduct about 1.5 per cent of all payments. For an SME that wants to receive payment in multiple locations, the systems have been too expensive and inflexible.
However, that has now changed. Card issuers, banks and technology startup companies have opened up mobile payments to SMEs through small card readers, which communicate with a smartphone or tablet via Bluetooth. They operate in the same way as fixed card readers, only they are portable, do not require a monthly rental fee and typically charge a slightly higher transaction fee of up to or just over 2 per cent.
With Apple Pay lurking on the horizon, large retailers have already began setting up their payments structure to support it – or its direct competitors. But some smaller retailers are already reaping the benefits of mobile payments technology.
Here are just a few ways that small businesses can benefit from adopting mobile payments:
Reduce the risk of losing a sale
If there is one thing that Stacey Galfskiy has come to realise since co-founding Chillilicious near St Andrews in Fife, it is that if people do not have money on them and you are unable to take card payments, you will lose a sale. At the same time, being able to take card payments means people are likely to spend more because they are not eating into their wallet’s cash reserves.
“Our chilli growing farm is based in a very small village and people simply expect to be able to pay for everything by card nowadays,” says Galfskiy. “We found that people would always love our preserves and chutneys but, if they didn’t have cash, we’d have to point them to the nearest cash point. People would say they’d be back, but they rarely returned.”
“We also do a lot of country shows and fairs and, again, if you can’t take cards people wander off and don’t come back. So, we now use a WorldPay Zinc mobile payment gadget that means we can accept cards. The greatest benefit is you don’t eat into the cash someone’s got on them. Typically, people on a day out are working on a cash budget and so if you’re not eating in to that sum, they’re far more inclined to buy. They also nearly always buy more than if they were paying by cash because it’s not coming out of the money they’ve set aside for the day.”
Improve the process of receiving deposits
Increasing the size of an order, or at least securing a deposit for a large order, is possibly the biggest benefit Sam Jennings gets from the Barclaycard Anywhere mobile payment service she has been using for more than a year. She owns and runs FlowerGirl London, which sells flowers to commuters coming home to Norbury train station, in south London, in addition to providing arrangements for weddings and funerals.
She found that relying on cash alone has two big downsides. It makes her a potential target for thieves and people are less likely to have a large sum of notes in their wallet to secure a wedding booking.
“Nobody wants to go to a cash point to get a couple of hundred pounds out to secure a wedding date,” she says.
“If you can chat through their options and they’re really keen and don’t want to lose a date, because slots soon fill up, I can now simply ask them to put a deposit down through their card. I’m never pushy but it just makes it so much easier for people to make a booking.”
“It’s exactly the same for flowers I sell at the station. People just expect to be able to pay for things by cards so they often don’t have the cash on them. If I didn’t take cards they wouldn’t buy. It’s also a lot safer for me to be taking electronic money. It’s banked instantly so it’s not sitting in my money belt.”
Deliver a professional service
Safety is a critical concern for Perfect 10, whose 11 beauty therapists offer treatments at clients’ homes within the M25 area. Its founders, Claire Aggarwal and Charlie McCorry, wanted their staff to feel safer on the road and be freed from regular trips to the bank. So, each therapist is now given an iPad and a PayPal Here card reader. It works through an app installed on the iPad to process card payments but, as with other mobile payment systems, emails clients a professional receipt.
“It’s worked so well we don’t take cash payments anymore, we are 100% card-based,” says Aggarwal. “It’s more convenient for customers because they’re not having to find money and it’s so much easier for our therapists. They can get so much more done because they’re not having to drive off to find a bank, find a parking space and bank their notes. Instead everything goes in to the company account instantly.”
“From an owner’s point of view it’s really great because we have instant access to our cashflow, which is always completely up to date. Also, we found dealing in cash can make you look a bit ‘Del Boy’. Our readers look professional and they’re trusted by customers who know the PayPal name and, because it’s digital, they get a receipt emailed to them instantly. It just looks so much more professional.”
An added bonus of moving to mobile card payments is that because transactions are digital, they can be analysed later so the flow of money into an SME can be monitored. It can help in balancing the books to have income neatly aligned by time and date order on an app rather than the alternative of retrospectively going through dog-eared paying-in books to reconcile who paid what, when and how it impacted the company’s cashflow and bank balance.