With more and more spending carried out digitally, small businesses can’t afford not to accept digital payments. But a significant number of these firms still don’t have the technology. Cost is a factor and alternative finance can help them afford the investment.

According to new research from payments provide Square, 40% of micro businesses in the UK do not accept card payment, despite the fact that this is the preferred method of payment for nearly 50% of shoppers. The potential for lost sales is clear and given the current market climate, the impact of these losses could be catastrophic.

It is essential that micro firms and the small business sector in general keeps pace with the rapid digitalisation of payment systems and customer shopping habits, not least given the pace of innovation in this area. For example, NatWest launched the first biometric fingerprint card issued by a UK bank earlier this year, while the pay-with-your-finger payment system, Fingopay, is currently being trialled in various markets.

Furthermore, the use of QR codes and mobile payment continues to grow in popularity, with Apple Pay, Google Pay and Samsung Pay digital wallet technology revolutionising how consumers spend their money. Going further into the online payment world, small businesses also need to consider PayPal and similar payment systems that more and more people are using, such as TransferWise, Checkout and Payoneer.

So, what is stopping small businesses from investing in digital payment technology?

A major barrier is cost. Tellingly, the study from Square also found that micro-business owners are twice as likely to have a loan application rejected compared with other SMEs. Indeed, research from Funding Options shows that accessing capital is a much wider problem in the SME sector.

There is where alternative finance can help.

In the wake of prolonged caution from traditional lenders, a position that Brexit has helped to entrench, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are providing small businesses with access to capital for vital investment, including in digital payment systems.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new equipment.

The move towards a cashless society continues apace. While it might not happen in the UK as soon as it is expected to elsewhere, such as in Sweden, where cash will no longer be accepted after March 2023, the transition is well under way.

For small businesses to survive and grow, they need to offer digital payment platforms and to afford this technology, small business owners need to be aware of all the funding options available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.