Accepting cash payments costs UK small businesses to £2.5bn annually in overheads, according to research commissioned by PayPal. The e-commerce specialist said that the time and money required in dealing with notes and coins reduces their profits.
The poll of 500 UK cash-taking businesses found that on average they spend 12 days counting cash every year, as well as travelling to the bank to deposit takings. Business owners are also subject to banking charges when paying in cash at high street banks. The combined time and financial impact could equate to £942 a year, or approximately two days’ takings for the average small business.
Fifty-six per cent of UK small businesses take cash, and one in 10 still operate as cash and cheque-only. PayPal comments that when two bank branches close every week in the UK, cash is becoming increasingly inconvenient and costly to rely on. Nearly one in three of the firms surveyed employ at least two people who count cash regularly, and 55% of respondents still count it by hand.
“Many small businesses only allow customers to pay with cash because they think it’s a cheap way to get paid,” said Narik Patel, director of mobile merchant services at PayPal UK. “But our research reveals that the hidden costs of cash really add up. And that’s before you consider the sales you lose through turning away customers who want to pay by card.
“The research shows that more than two thirds of small businesses still think card payments are too expensive.”
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