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.
The findings reveal that nearly half (46%) 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% of shoppers, rising to almost three in ten (29%) 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 £1.6bn worth of sales in the last year alone.
One in four (24%) small retailers admit they have lost customers because of a lack of emerging, but increasingly popular payment options – rising to two thirds (65%) when modern technology such as contactless, online payments, mobile and wearable devices are taken into account. With over a fifth (21%) 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.
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%) SME retailers have plans to update their offering in the next six months, a fifth (20%) 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% believe cash will eventually become redundant.
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.”