Although card payments have become almost ubiquitous in American business, nearly a third of small businesses surveyed in a recent Xero study said they do not offer credit or debit cards as a payment option. This can lead consumers to look for another payment method—or choose a different merchant entirely.
If a small store does not accept credit or debit card payments, almost one in five customers will use another payment method at the checkout. I want to pay like this report. However, a slightly higher percentage would simply go to another store that accepts their preferred payment method.
Hair salons and grocery shopping remain the most common goods and services for which Americans use cash. Overall, three-quarters of respondents said they still pay with cash, although only 20% of consumers make a point of carrying cash when they go to the store.
Alternative payment methods pay off
When small businesses adopt new payment methods, it pays off. More than 40% of small businesses surveyed that adopted new payment methods in the past six to 12 months cited increased revenue as the main benefit. Interestingly, small businesses led by Gen Z executives were more likely to see increased revenue from new payment methods than businesses of other generations.
Of course, increasing revenue is not the only or even the most important reason for implementing new payment processes. Other benefits cited by small businesses include access to a new customer base, shortening the time it takes to receive payments and less time spent collecting late payments.
Looking for new solutions
One reason small business owners are reluctant to adopt credit and debit card payments is dissatisfaction with these services. According to a JD Power study released earlier this year, overall satisfaction with merchant services is the 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 operations. The Xero survey found that at least a third of small businesses are optimistic about new payment methods such as biometric authentication, exchanges/apps and digital currencies.
