Cash is King. Or is it?
“Cash is King” is an expression that has been around for many years. But recent studies show that consumers are turning away from cash payments. Digital payment solutions should be on your business radar!
Small business owners need to be aware of the seismic shifts occurring in the payments space. There is a need to constantly adapt and be open to new ways of doing business. Otherwise, you might risk going the way of the T-Rex. You could be consigned to a page in the business history books with an obituary that might read something like:
Here lies Sam’s Super Seafood Servery. Once a mighty force in Bondi, sadly Sam’s business expired in 2018, neglected by his once loyal customers who simply stopped carrying around wads of cash. The liquidators reported needing a crowbar to prise the old cash register from Sam’s grim clutches.
Digital payment has arrived, with fast, convenient and sometimes cheap solutions. These new digital payment solutions have major benefits for small business. They can help boost sales, improve customer retention and potentially lower your merchant fees.
Some facts and figures around Digital payment solutions
Some of the key developments and findings in the digital payment space include:
- Massive increases in mobile payments and mobile banking shows that customers have embraced the new wave
- The rise of personal payment technologies such as Paym, which allows payment transfers using just a person’s phone number
- Payments via social media sites such as Facebook and Twitter
- Technology giants such as Apple, Google and Amazon are shaking up the banking industry
- Huge moves in the crowd-funding sector from firms such as Kickstarter, Indiegogo and Crowdfunder are turning traditional financing models on their head
- Proximity marketing apps can now send special offers direct to your mobile phone when you’re in the area
- Studies clearly show that customers are using less cash for their transactions and that many people perceive businesses that only accept cash to be behind the times
- Many people have abandoned a purchase because of a shop, supplier or tradesman not accepting a card payment
- There is now an abundance of choice for digital payment providers from big players such as Anovia, Square and Stripe and a number of smaller niche providers
- There is a strong drive for cashless societies with entire countries such as Norway and Sweden leading the way
- Statistics portal Statista.com forecasts the global mobile payments market to hit US$865B in 2021, with annual growth rates in excess of 40% over the next 5 years
- Convenience and speed of digital payments is a major attraction for consumers.
Merchant fees and transaction costs
Merchant fees and transaction costs can have a huge impact on the bottom line of your business. Costs vary between providers and a stunning array of different fees apply. Some newer payment service providers have a simple fee structure that combines all of the different fees into a single percentage fee per transaction plus a monthly flat charge.
Merchant fees depend on your sales volume, with lower sales generally meaning higher fees, which penalises small businesses. For example, research shows that small businesses can be charged up to 10 times more on an ‘interchange’ fee than big business!
So what does it mean for my business?
It’s clear that mobile payment technology is developing extremely quickly, with major banks facing stiff competition from financial technology firms. Small business can benefit from improvements in technology and competition among service providers with improved service offerings, more options and potential savings on fees.
Research clearly shows that we are moving towards a cashless society. If your business only accepts cash then you’re missing out on potential sales. If you already accept non-cash payments, chances are you’re paying more than you need to.
When investigating digital payment solutions for your business, be sure to do your homework – study your business, your transaction profile, monthly sales and number of transactions. Choose a system and a plan that best suits your business. Shop around for the right provider, someone who understands small business and has a system that is specifically designed for them.
Don’t get left behind with the dodos and the dinosaurs! Stay ahead of the game and position your small business for the future – make the most of what digital payments have to offer.