The saying goes, “Cash is king,” and the rise of electronic payments technology has yet to dethrone cash. A new report by HMRC reinforces cash’s reign among SMEs.
Reports on Monday (Sept. 3) said HM Revenue & Customs found that, among a significant portion of U.K. SMEs, cash is still preferred when engaging in B2B trade and payments, and this section of businesses is unlikely to make the transition to electronic payments.
The “Uses of Cash and Electronic Payments” report found nearly a fifth (17 percent) of SMEs said cash remains the most common payment method by their customers, while 18 percent said paper checks are most favored. According to those surveyed, 35 percent revealed that their customers continue to shun electronic payments.
While nearly 80 percent of the SMEs that reported not accepting electronic payments said they don’t plan to offer card payments, contactless or mobile payments in the next three years, a significant portion of pro-electronic payment SMEs (29 percent) said they don’t accept cash at all.
Checks also remain unfavorable among SMEs, the survey found.
“Many regarded them as an insecure and inefficient method of payment,” the report stated. “Payment is not guaranteed, they have to physically take time out of running their business to deposit the check and the business is charged a processing fee, as well as a fee for bounced payments.”
Further, while most SMEs surveyed said they offer check and cash payments, these aren’t customers’ most common payment tools. Instead, online money transfer technology, like PayPal, is the most common payment method by SME customers and remains the most preferred by SMEs.
Unsurprisingly, cash remains king in low-value transactions, with 37 percent of cash transactions valued at £30 or less.
The findings include both B2B and B2C payments, but when broken down to B2B payments, researchers found that 54 percent of SMEs said they pay their suppliers by electronic payments only. Nearly a fifth said they only pay suppliers via cash and checks, and 22 percent said they use both cash/checks and electronic payments.
When paying employees, 64 percent said they use only electronic payment methods.