Retailers that only take cash and cheques must think about introducing card acceptance now, says Payzone's Bill Thomson

The Payments Council, which represents financial institutions, recently announced cheques would be phased out by October 31 2018, to encourage other forms of payments. For retailers only accepting cash and cheques now may be the time to consider introducing card acceptance as a form of payment last year alone spending on plastic cards amounted to £380bn.

Card acceptance represents a money-making opportunity for retailers customers spend more when paying with cards than with cash, and cashback facilities are not only an important service for local communities, they drive footfall so why are some retailers still hesitant to offer the service?

Speaking to our retailers, there seem to be three main reasons they choose cash. Traditionally, card acceptance has been viewed as expensive and, in some instances, this is indeed the case. Many providers charge high rental fees just to have terminals in-store, as much as £30 a month. This is a substantial fixed cost for some retailers and a gamble are they going to make any money on this service, or is all the profit going to be poured away on additional card charges?

Secondly, the difference between credit and debit card charges is blurred. Many assume that both charge a percentage of the total sale, so a big bill paid by a customer also means a big charge for the retailer. While this is the case for credit cards, in general debit card charges tend to be on a pence-per-transaction basis, so the more the customer spends, the more you earn.

The other reason retailers have shied away from card acceptance is the misconception that cash is free. True, the costs are hidden and hard to measure but they still exist. Security and paying-in and taking out money are examples of the costs that add up over time.

So a cash-only approach is not always the best approach. Not only does the vast majority of the population your customers own a credit or debit card but, according to research, less than 40% regularly pays by cash while over 60% prefer to pay by card.

Furthermore, Payzone research has found that customers spend more on card than by cash in convenience stores on average £15 to £20 per transaction compared with around £3 in cash payments. That means, on average, you would need approximately five times the number of cash customers to earn the same as you could from a single debit card customer.

Other benefits to card acceptance are that it enables retailers to manage cash handling charges by reducing the amount of money they need to bank regularly. Some terminal providers will offer you a host of other offerings such as mobile top-up or bill payment, so you can offer a range of valuable community services on a single terminal.

So far, so good but is this service for every retailer? The honest answer is that it depends. If you can generate enough sales by card to counteract and exceed the monthly charge, then the answer is yes. But if you can't, the gamble won't pay off and you might find yourself locked into a long contract with a hefty monthly fee. The best advice is to do your homework. Check the contract length, terminal fees and the services on offer and, most importantly, ask your customers what they want.

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