Still only taking payments by card, cash or cheque? You could be losing out, says PayPal
‘Should I Pay or Should I Go?’ ask consumers
New research finds that small businesses in Scotland are more reliant than the national average on 20th century forms of payment such as cash, bank transfer and cheque
Small businesses in Scotland are losing sales by limiting themselves to the 20th century’s most common forms of payment such as cash, bank transfers and cheques, according to new research by PayPal.
A nationwide study, of 2,000 small businesses and more than 2,000 consumers, reveals the stark contrast between business owners who are failing to modernise and their customers who in the last few years have completely transformed how they browse, order and pay, says the digital payments platform.
Two in five (44%) small businesses in Scotland have never reviewed how they take payment from their customers, despite the radical changes of the 21st century being embraced by consumers.
Two thirds of Scottish consumers are shopping differently today versus 12 months ago. For example, they are choosing to shop on their smartphone rather than in-store; paying via a digital wallet such as PayPal; or using contactless.
PayPal says when it comes to doing business online, many small businesses are missing out on the smartphone revolution and this is leading to them being left behind by customers enthusiastic about the convenience of new technology.
Mobile shopping is growing at nearly four times the rate of overall online spending in the UK and 17% of Scottish consumers most frequently buy goods or services online using their smartphone – this rises to a fifth (20%) in the UK as a whole. However, only 17% of small businesses in Scotland have a website designed for access on a smartphone and just 5% have a mobile app that takes payments.
For small businesses in Scotland doing trade in person, cash (76%), bank transfer (64%) and cheques (60%) are still the methods of payment most relied upon, despite contactless card payments overtaking cheque books for the first time this year. These figures are even higher than the national average of cash (70%), bank transfer (62%) and cheques (56%).
Consumers’ payment preferences are increasingly incompatible with outdated small business, and this has the potential to hit their bottom line, according to PayPal.
Nearly two thirds (63%) of Scottish consumers admitted to abandoning a purchase whilst shopping online in the last three months because they couldn’t pay the way they wanted.
Meanwhile, 57% of Scottish consumers have abandoned a purchase in a physical store over the last three months for the same reason. In the UK as a whole, this proved to be the most significant barrier to making a purchase, putting more consumers off than poor customer service, queues at the checkout, restrictive returns policies or delivery charges.
Nicola Longfield, director of Small Business at PayPal UK, said: “For small businesses, understanding the number of new ways to take payment may seem daunting. At times it can feel like a new “pay” launches almost every week.
“However, consumers are embracing these changes and opting to use digital wallets, contactless cards and their smartphones when they go shopping. Businesses that don’t join the 21stcentury stand to lose out.
“The good news is that much of this technology is designed to make life easier for small businesses, as well as consumers.
“Integrating a simpler check-out process, where customers don’t have to enter their card and delivery details every time on a tiny screen can help convert more sales.
“Meanwhile, NFC-enabled card readers such as PayPal Here mean businesses of any size can accept Chip & PIN, contactless payments and even Apple Pay on the move.
“No long term contracts and low pay as you go processing fees make PayPal Here suitable for a wide range of businesses previously solely reliant on cash, cheques and bank transfers, such as plumbers, taxis or market traders.”