Jenny Blyth says taking card payments as a small business owner is a “damned if you do, damned if you don’t” situation.
Her gift business, based in London, accepts plastic payments, but Jenny says this reduces her income.
“I will happily accept card payments because, more often than not, people don’t carry cash, but it does ultimately shrink my profit margins,” says Jenny, 37 , who runs Storm in a Teacup Gifts.
“When I’m selling at events, particularly those not near a cash point, I end up having to take very tiny amounts via my card machine because people don’t carry money,” she adds, saying that she has sold things for 50p on a card before.
She says not only does a proportion of the sale go to her provider – around 1.75 per cent – but that when she takes card payments, she often has to wait for the money to hit her account.
A sale on Saturday may not be deposited into her account until Wednesday.
However, despite her aversion, she says not accepting card payments would come with disadvantages, as she thinks around 90 per cent of people prefer to pay via this method.
“If I refuse to take card payments, I’ll most likely miss out on a number of sales, so it is a really tough choice to make,” she adds.
Jenny’s fears are borne out by data. According to UK Finance data from last year, half of all payments are now made by card.
And the direction is clearly going against cash. “Over the next decade, we are forecasting further growth in the use of card and mobile payments,” Adrian Buckle, head of research at UK Finance, has said.
Access to cash is becoming harder. Some 54 bank branches are closing every single month, free-to-use ATMs have declined by almost a quarter since 2018.
Phil Pinder, who runs the Potions Cauldron, a business based in York and Edinburgh that sells drinks and runs experiences, also says cash can be the most lucrative way for businesses – particularly smaller ones – to be paid.
He says that as his business has grown to having a £4 million turnover, he has negotiated card fees down, but that it’s still better value to take cash payments.
“We’re still paying fees of 0.8 per cent for card transactions, plus a terminal fee. It’s not till you get to say a 50 or 60 shop business perhaps that the advantage of taking card comes,” he says.
He adds that for smaller businesses, it can be even harder.
“You might get charged a £20 fee a day for just having a card terminal, so if you’re not making many transactions, that really hits you. I have a friend who runs a sweet shop selling things for say £1 or £2. If that’s paid for on card, it’s skimming a fair bit of that payment off,” he adds.
Surcharging, the practice of retailers charging a fee to the customer for using a certain payment method – such as card – has been banned since 2018, meaning if businesses take card, they cannot recoup the extra costs they face through higher prices.
But while some business owners are bemoaning the decline of paper payments however, others are embracing it.
Lawrie Chandler, a founder of BBQ accessories firm Bison Hill, based in Reigate, Surrey, says his preference is for card payment despite the fees.
He says taking payments this way – particularly at some of the food festivals his business operates at – is “practically easier, faster and more convenient.”
Many of the firm’s suppliers also require it to make digital payments, so in that respect, taking payments by cash is inconvenient. As Lawrie generally does not carry a cash kitty around, he needs notes and coin transactions to be in exact change.
He says there are disadvantages to non-cash payments – particularly the slowness of getting the money into the account – but the benefits outweigh these. The business keeps an amount in its account as a buffer to offset slower payments and absorbs the transaction fee.
Barry Whitehouse, who owns The Artery, an art shop in Banbury, Oxfordshire, says he will take whatever payment a customer has – and this sometimes extends to cheque, card, or cash.
He says the idea that cash is a free payment, as opposed to the card, is a “broad misconception” because using a card still requires him to deposit money into a business account, which he is charged to use.
He added cash payments are helpful in some ways and that all different payment methods have advantages and disadvantages.
“Having cash helps keep the float in the till at a constant. However, I also understand the need for some businesses not having cash on premises to help reduce the risk of theft or burglary,” he says.