Small to medium-sized enterprises in the UK are missing out on £1.6bn due to saying no to ‘next generation’ payment technology – this covers payment methods such as one-click purchasing and ‘conversational’ transactions.
According to a survey carried out by Barclaycard sent out to 2010 Britons, the figure is induced when looking into the amount of SMEs who deserted a payment because of the ‘next gen’ payment method, covering ‘invisible payments,’ online ‘invisible payments,’ ‘conversational payments’ and cryptocurrencies were not actually available.
Just under 50% of this generation’s consumers are for ‘next gen’ payment methods, in fact 29% of those surveyed admitted that they would abandon their item if the option to pay via ‘next gen’ methods were not available. Fact, of those surveyed – 15% of all ages have left an item due to this.
Almost one in four small businesses have revealed that they lost custom due to their inability to keep up with modern technology, including ‘new gen’ payment methods. More than a fifth of Generation Y (millennials) are eager to begin using ‘next gen’ payment methods, research found that innovation is growing and it is significant that SMEs are on board in order to keep their younger audience appealed with their spending rapidly climbing.
Even though nearly three in ten SMEs are keen to add invisible payments to their offerings a fifth still believe that they do not need to modernise to keep their younger audience, this is regardless of the fact that 27% of those aged between 18 and 34 anticipate invisible payments to become the most popular method of purchasing something, they also have confidence that cash will become none existent in the near future.
So, what are the new ‘next gen’ payment methods?
EMV Credit Cards
These are also known as a Chip-and-PIN card. It holds a chip within which features a cryptogram this then has the ability to detect whether the transaction has been modified. It also obtains a counter which becomes incremented after each transaction made – this is to ensure that there has been no duplicate or skipped purchases which recognises whether there is any fraudulent activity.
Contactless RFID Credit Cards
These cards are also known as contactless cards. How does this work? The cards use a radio frequency identification (RFID) which makes contactless payments secure when you hover them over the PDQ machine. RFID cards allow you to purchase an item without any physical pin typing. However, with contactless payments there is usually a maximum amount able to spend in one go via the contactless method, this is set by your bank to ensure the safety of contactless paying.
Apple and Android Pay
These methods of purchasing are through smartphones. This method has been taken on by Apple and Google worldwide since it was first put into action in Japan during 2004.
Apple Pay – This was first adapted in 2014, a payment method exclusive to Apple users which simply allows you to implement your card(s) of choice onto your device which with a double click and a recognisable finger print allows you to make purchases without the physical contact of using a card. This makes this method of paying secure and easy.
Android – Also known as Google Wallet, first launched during 2015 and similar to Apple Pay, but exclusive to Android users. This form of payment method is a simple ‘tap-and-pay’ process, again you must enter the information of your chosen card which is then available to use via your smartphone.
Despite all of this, a large portion of SMEs in the UK are still yet to enforce other ‘mainstream’ electronic payments such as contactless methods. Head of small business at Barclaycard, Greg Liset comments;
“Our figures show that SMEs are losing sales by not adopting increasingly popular technologies that facilitate invisible and conversational payments. While it’s encouraging that many smaller retailers are becoming aware of the importance of these emerging methods, they need to turn this ambition into action to steal a march on the competition and keep up with consumers both now and in the future.”
Head of Business Finance at Businesscomparison.com, Laura Thomas also comments;
“It is important SME’s embrace the digital innovations in the payment sector, making it easier for customers to pay can only be a positive thing. Having said that, I would always recommend SMEs research the best terminals for their business and compare services to ensure that SME’s and their customers are getting a fair deal on their processing fees.”