The way in which people pay for goods and services is evolving rapidly. With the traditional cheque looking increasingly outmoded and people carrying smaller amounts of cash in their wallets, there is a growing demographic of consumers for whom plastic is becoming the exclusive payment method of choice.
That even the smallest startup accepts card is now an expectation rather than a convenient extra. For such entrepreneurs, whose chief concern may be trading and building their business, embracing card payment technology can aid in boosting their bottom line. These are some common questions that often arise when retailers are considering offering their customers the option of paying with card.
Do my customers care about what payment method they use?
In short, the answer is ‘yes’. A recent YouGov survey carried out on behalf of CardSave revealed that, 62% of people carry £20 or less in cash on them, yet almost everyone (93%) carries a credit or debit card. On top of that, nearly a third (30%) of the UK public said they had been inconvenienced by a retailer not accepting cards with 16% admitting to having walked out of a shop for this same reason.
Our data shows that people spent an average of £64.27 at small, independent merchants in February – more than three times the amount of cash they carry. When this figure is considered alongside the statistics above, the message becomes clear: businesses not offering card payment as an option are falling short of the expectations of a growing demographic of modern consumers who hardly carry any cash. These merchants risk losing out on important business.
How do I start accepting card payments?
The first step to take is to make an agreement with a card services provider, who will process your business’s card transactions on your behalf.
Startups should be mindful that card service providers vary in the services they offer, the charges they levy and the amount of help and support they will give retailers. The UK Card Association can provide further advice on this topic, but if you are a new business, consider first a service provider that operates with the small business merchant in mind. Choosing one which meets your specific needs will make process simpler and more cost effective.
How can I expect taking card payments to change my business?
Choosing to accept card payments brings benefits above and beyond offering customers another method of payment. Some merchants may feel that, while card payments benefit their customers, they come at a cost to their business. However, while it is true that there are costs involved, such as transaction fees and terminal rental charges, it should be pointed out that banks often charge businesses even more for banking cash and cheques. As charges made by card service provides are relatively small, they will more than likely be offset by the increase in revenue from card-paying customers.
Accepting cards has been shown to change customer spending behaviour. For example, electronic payments allow customers to spend more than the amount of cash they carry in their wallet. This encourages customers to make higher value transactions and impulse purchases: as already pointed out, the average card spend in small retailers is double what consumers carry in cash. Moreover, the convenience and speed of being able to pay by card positively affects customers’ retail experiences, encouraging them to return for further purchases.
Are there any legal or legislative considerations that I must take into account when taking cards?
In accepting card payments, business owners must recognise that they are handling customers’ sensitive personal information and take appropriate steps to ensure that it doesn’t get into the hands of data thieves. The potential fallout from experiencing a data breach can be grave and include fines, loss of credibility and ultimately lost business.
The best way of keeping customer data safe is to become compliant with PCI DSS (Payment Card Industry Data Security Standards), a set of practical measures such as using not writing down a customers’ account details, that must be adhered to in order to achieve ‘compliance’. Cardholder data security is important and businesses can be fined by their card acquirer if found to be non-compliant.
There are card service providers that are specifically geared towards the needs of smaller or independent retailers and startups, and who will explain the steps required to become compliant, in simple, uncomplicated terms. They can provide support with administration and set up the certification appointment to make the process as easy as possible. So don’t be put off if much of the information you read on PCI seems like jargon!
Choosing to accept card payments allows new businesses to tap into a lucrative market and reach a broader range of customers. While there are things to consider before taking this step, they shouldn’t put you off. It is vital that small and independent businesses keep up with consumer trends, and choosing a card services provider that understands the needs and requirements of your business is your first step.
By Clive Kahn, CEO of Cardsave, specialist in card payment solutions for small businesses