As almost half of all adults in the UK carry less than £5 cash on them, businesses should accept card payments to remain competitive.

According to UK Finance, the body that represents leading finance and banking firms, debit card payments surpassed cash for the first time in 2017 with a total of 13.2 billion transactions made. The percentage of card purchase is also set to grow year after year, predicted to reach a lion share of 79% of all transactions made by 2026.

For many UK-based small and medium enterprises (SMEs), accepting card payments isn’t an option but a necessity, because failing to do so can drive a potential customer into the arms of a direct competitor. In fact, according to a Barclaycard survey, around one in three adults would consider cancelling a purchase if a retailer didn’t accept card payments.

At TaxAgility, our team of Accountants work very closely with SME owners across London, and we understand the concerns shared by many SME owners with regards to card payment, particularly card fraud. So in this article, we aim to discuss the best ways to integrate card payments for your business as well as methods to prevent card fraud. Before we start, let’s take a look at the benefits of accepting card payments.

The benefits of accepting card payments

Accepting card payments brings numerous benefits to a small business owner and here are the top favourites:

You’re likely to get more sales

Research has shown that consumers spend more and are more likely to make impulse purchases if they can pay by card. Prelec and Simester of MIT did one of the most significant studies in 2001, which found out that shoppers spend up to 100% more when using their card instead of cash. Other researchers also found a similar pattern.

You can compete

Your competitors may already be accepting card payments and meeting the needs of consumers today. By being able to accept card payments, you are then capable of competing.

It’s safer and more efficient

With less cash in hand, you are reducing the time spent counting money and reconciling your accounts, given that most cloud accounting software can link to your Electronic Point of Sale digital systems directly – allowing you to know the total sales amount by pressing a button. Also, as you don’t have to transport the cash to a bank, you can significantly reduce the risk of being robbed.

How do I start accepting card payments?

The first step to accepting card payments is determining where the transactions are made. To accept debit or credit cards in a physical venue, you need a card reader and a merchant account, though in some instances you can also accept payments on a smartphone or tablet. To accept credit cards online, you need an e-commerce site and a payment gateway (like Paypal).

For in-store card payments, you can typically choose one of the following three types of electronic points of sale (POS) systems:

  • Countertop card machines – Typically recommended for high street retailers, small goods stores and service providers. These terminals are fixed and part of a countertop till.
  • Portable card machines – The ideal solution for retailers in the hospitality industry, e.g. bars, restaurants and cafes. This type of device allows you to accept credit and debit card payments from anywhere on your premises.
  • Mobile card machines –  These terminals are designed for businesses whose work involves a high volume of movement across the country such as tradespeople, contractors, taxi drivers and couriers. The machines utilise mobile connectivity and allow you to accept card payments wherever you have a network reception.

Please note that not all payment machines come ready to accept Apple, Samsung and Android Pay, so it is worth checking with the provider considering the increased popularity of these payment methods.

Beware of card fraud

According to UK Finance, £1 billion was lost to fraudsters in 2017, and card fraud accounts for 80% of all recorded fraud cases. Merchants, i.e. small business owners, may be liable when fraud happens, which is why it pays to stay vigilant and make sure that you follow the right process to mitigate risks.

The Barclaycard website outlines a few common card fraud scenarios and determines who’s liable in each situation:

  • Card fraud happens when a customer pays for your services/ products using a contactless card or a Chip & Pin method – the merchant is not liable
  • Card fraud happens when a customer pays for your services/ products not using a contactless card or a Chip & Pin method (meaning they use the Chip & Signature method, or you have to manually key in the card number) – the merchant may be liable
  • If your customers pay for a service/ product by calling you up and supplying the payment card details over the phone or via postal mail – the merchant is liable
  • If you take an online payment using the 3-D Secure method like Mastercard SecureCode, Verified by Visa and American Express SafeKey – the merchant is not liable
  • For online payment that is processed without the 3-D Secure method – the merchant is liable

TaxAgility works with small business owners

Although we can’t recommend any particular brand of EPOS systems, we have worked with many small business owners across London to know that card payment is an issue. As a result, we have put together this blog post in the hope that it will be helpful for you when you’re deciding whether or not to accept card payments.

In addition, if you’d like to talk to us about any of the financial issues you face, from bookkeeping to tax planning, please give us a call on 020 8108 0090 or get in touch with us via our contact page.

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