Irish small businesses are at a crossroads as consumers increasingly choose digital payment methods over cash. Contactless payments are one of the key drivers behind this transition, with the technology now accounting for one in three of all face-to-face Visa transactions in Ireland.
We believe this trend will accelerate due to new payments innovations, particularly around mobile technology. What’s more, the evolution of payments is likely to remain dynamic over the next ten years due to developments in areas like biometrics and the Internet of Things.
Despite Irish consumers’ preference for cards, there is a perception among some parts of the Irish SME community that cash is less expensive to process. As such, Irish small businesses are falling behind international peers in their adoption of digital payments technology. Many are still unable to accept new payment methods, and so risk missing out on sales and incurring excessive costs.
Digital payments can also enable small Irish merchants to become more efficient and automated. New digital till systems have the potential to provide businesses with immediate data and insights, helping them reduce costs with automated accounting and inventory control. These additional benefits of accepting card transactions over cash have the potential to truly transform a small business.
It is against this backdrop that we have released a white paper entitled ‘The Future of Payments for Irish SMEs’. The white paper, which was launched at an event held at the Dublin Chamber of Commerce, reveals the cost of accepting cash payments versus card payments for small business in Ireland.
Our research investigated the hidden costs of cash in terms of back office and security costs to better understand how these compare to card transactions across a number of merchant sectors known to be highly cash-centric, including coffee shops, beauticians, dry cleaners, petrol retailers and pubs & hospitality.
In-depth research was undertaken amongst 40 merchants, including 1,250 hours of interviews, 4.3 million transactions and a total annual sales volume of €51 million. This report was independently endorsed by the University College Cork Business School Financial Services Innovation Centre.
The findings of the research were enlightening. In particular, it revealed that the average time spent counting cash transactions by the businesses we spoke to is 94 minutes a day, versus totalling card transactions at an average of 28 minutes per day. As a result, some Irish SMEs could save between €5,000 and €6,000 per year on cash handling costs by increasing the amount of electronic payments they process.
In addition, the study established that for the businesses involved in the study it is cheaper to accept €1 as a card payment rather than cash, with cash handling costing 2.5 cents per euro of sales compared to 1.6 cents for a card transaction.
The Dublin launch event will be followed by a second event in Galway on 16th November 2017, where we have again invited our clients, stakeholders and local merchants to join a discussion about the findings of our research.