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SME retailers forego £1.6bn as tech-savvy shoppers search for innovative ways to pay

19 May 2017 05:39

  • SMEs are missing out on an estimated £1.6 billion* by not accepting “next generation” payments technology
  • Invisible and conversational payments, such as online ‘one-click’ ordering and digital personal assistants, are now used by almost half of millennials to buy goods and services
  • One in four SME retailers have lost sales when shoppers couldn’t pay using emerging methods, rising to two thirds when modern technology such as contactless and mobile devices are included
  • Yet four in ten SME retailers are eager to introduce new electronic ways to pay – with 7 per cent of in-store retailers completely cash-free

Tech-savvy Brits are adopting and becoming increasingly reliant upon new ways to pay, but small businesses are struggling to keep up with changing consumer demands, research from Barclaycard has found.

A growing opportunity

The findings reveal that nearly half (46 per cent) of millennial shoppers (18-34 year olds) are opting to pay using a “next generation” payment solution including online “invisible” payments, where card and shipping details are saved in advance of transaction (such as one-click ordering), and “conversational” payments, where digital personal assistants such as Amazon’s Alexa are used to make a purchase.

Eager to embrace new technology, 15 per cent of shoppers, rising to almost three in ten (29 per cent) 18-34 year olds have chosen to abandon a purchase because they couldn’t pay using these “next generation” methods. As a result of customers taking their business elsewhere, SMEs have lost out on an estimated £1.6 billion worth of sales in the last year alone.

One in four (24 per cent) small retailers admit they have lost customers because of a lack of emerging, but increasingly popular payment options – rising to two thirds (65 per cent) when modern technology such as contactless, online payments, mobile and wearable devices are taken into account. With over a fifth (21 per cent) of millennials keen to use next generation ways to pay more frequently, the findings indicate that innovation is increasingly important for SMEs if they are to keep their appeal with younger shoppers, especially as their spending power increases.

No payment tech? I’ll go elsewhere

Despite growing consumer demand, a significant number of smaller retailers are yet to fully acknowledge the value that adopting next generation payment technology will bring to their business. Although almost three in ten (28 per cent) SME retailers have plans to update their offering in the next six months, a fifth (20 per cent) do not think they need to introduce invisible payments. This is despite the fact that 27 per cent of 18-34 year olds predict that invisible payments will become the most popular form of payment in the next five years and over half (54 per cent) believe cash will eventually become redundant.

What’s more, far from embracing these cutting-edge methods, a significant proportion of SME retailers are also still to introduce mainstream electronic payments technology such as contactless. Despite September marking 10 years since Barclaycard first launched contactless in the UK, a quarter (24 per cent) of smaller in-store retailers are yet to introduce this form of payment. With more than four in ten (42 per cent) consumers and over half (53 per cent) of 18-34 year olds choosing ‘touch and go’ as their preferred way to pay, and the usage of contactless having risen by 104 per cent in the last 12 months**, contactless is no longer an option but a necessity for retailers, with next generation payment methods not far behind.

Turning thought into action

While SMEs are sometimes falling behind the expectations of consumers, a distinct cohort of forward-thinking smaller retailers is considering making changes. Six in ten (61 per cent) believe cash will eventually become redundant and 7 per cent have already prepared for this by becoming completely cash free. In addition, four in ten (38 per cent) small retailers plan to introduce next generation technology in the future, with one in ten (11 per cent) admitting they are making this step as a result of lost custom.

To spur their intention into action, SMEs can obtain the support and consultancy they need to get started from their payment provider or acquirer. A third (34 per cent) of SME retailers have held off introducing a new method simply due to a lack of know-how when it comes to setting up the technology, and 38 per cent admit that they don’t understand how new payment methods work.

Greg Liset, Head of Small Business at Barclaycard said:

“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.

“Making these changes needn’t be complicated or time consuming – with support from their payment provider, SMEs can ensure they have the right solutions for their business while satisfying the ever-growing group of tech-savvy, digitally-minded shoppers.”


For more information please contact Chloe Wilkinson, Senior PR Manager, Barclaycard, on +44 (0) 20 3555 4036 / +44 (0) 7469 031 300 or chloe.wilkinson@barclaycard.co.uk

Online interviews were carried out with 253 decision makers within B2C SME retailers between 31 March and 1 April 2017. A separate study of 2,010 adults aged 18+ (nationally representative) was conducted between 4th and 7th April 2017. All research was carried out by Opinium Research.

*The figure of £1.6bn (£1,577,948,735) was calculated using the average total number of occasions consumer respondents estimated they abandoned a payment because a specific “next generation” payment method (in-store invisible payments, online invisible payments, conversational payments, and cryptocurrencies) – was not available over the past year multiplied by the average total estimated value of these transactions. These figures were then multiplied by the latest Office of National Statistics (ONS) estimate of the UK adult population (51,339,000) to provide a gross national figure. This gross figure was then multiplied by the ONS April 2017 estimate of the average proportion of total retail sales value going to SMEs over the previous twelve months (21.11%) to provide an estimate of the total amount lost by SME retailers.

** According to the Barclaycard Contactless Spending Index, May 2016 - April 2017