Although paying with cards has become almost ubiquitous in American economic life, nearly a third of small businesses surveyed in a recent study by Xero reported that they don’t offer credit or debit cards as a payment option. This can leave consumers scrambling to find another way to pay—or opting to visit another merchant entirely.
When credit and debit card facilities are unavailable at a small business, nearly one in five customers resort to another payment method at checkout, according to the I Want to Pay That Way report. However, a slightly higher percentage would simply choose to visit another business that accepts their preferred payment option.
Hair salons and food purchases remain the most common goods and services for which American use cash. Overall, three-quarters of respondents said they still use cash for payments, though just 20% of consumers ensure they have cash on hand when they go to the store.
Alternative Payments Pay Off
When small businesses adopt new payment methods, they pay off. More than 40% of small businesses surveyed that implemented new payment methods in the past six to 12 months reported an increase in sales as their primary benefit. Interestingly, small businesses led by Gen Z executives were more likely to see sales growth from new payment methods than those run by any other generation.
Of course, increasing sales isn’t the only, or even primary, reason for adopting new payment processes. Other benefits reported by small businesses included accessing a new customer base, reducing the time it takes to receive payments, and spending less time chasing late payments.
Looking for New Solutions
One reason small business owners might resist adopting credit and debit card payment processing is dissatisfaction with these services. According to research from J.D. Power published earlier this year, overall satisfaction with merchant services ranks lowest across all customer service aspects. On a 1,000-point scale, satisfaction with credit card processing scored 692 points, while debit cards scored 694 points.
Despite this, many small businesses are excited about future technologies coming to their establishments. The Xero survey found that at least a third of small businesses are optimistic about emerging payment methods like biometric authentication, bartering marketplaces/apps, and digital currencies.