It is important that businesses offer the right digital payment methods – failure to do so risks losing sales. However, cost is proving a barrier to adoption for some small firms. How can they manage digital payment tech investment costs?

How consumers want to pay and why

The message from consumers is clear: they expect small businesses to offer digital payment methods. How people pay for goods and services has changed massively in the last decade, with digital tech innovation driving this transformation.

According to a new survey from SumUp, over 50% of people prefer to pay with debit or credit cards, while almost 20% said that mobile payment options are their preferred choice. Notably, the preference for mobile payments rose to over a third for 18-24 year olds.

Alongside these digital payment formats, cryptocurrency is being used more and more as a payment method, in particular in the retail sector, while account-to-account payment is another niche solution that is expected to witness significantly greater adoption going forward.

Furthermore, Visa has reported a 320% growth rate in the adoption in the UK of its Tap-to-Phone point-of-sale technology, which allows businesses to accept contactless payments without dedicated hardware. For context, the global adoption rate is 200%.

Notably, for consumers, safe and reassuring is what matters when it comes to using digital payments, as is speed – slow and confusing is a definitive turn-off: one that could cost a firm a sale or repeat business.

Managing digital payment investment and how alternative finance can help

As the new reports show, the use of digital payment technology is becoming more and more important for small businesses, in the retail sector and beyond. But the adoption of new technology comes at a cost and this is proving to be an obstacle for some firms.

Given the current climate, this caution is hardly surprising – balancing accessing money for investment and safeguarding cash flow is very challenging. However, firms have to find a way, and this is where alternative finance can help.

Small business lending from traditional sources remains subdued in Q2, with 65% more SMEs experiencing difficulty in accessing finance from high-street banks. As a result, alternative lenders have become increasingly embedded in the small business finance landscape.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate. These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

Small firm finance options for investing in digital payment tech

While the conversation is often around the use of cash, the dramatic change in payment methods in recent years suggests that the focus should be elsewhere. As preferences continue to evolve, it is vital that small firms offer the right digital payment methods.

However, accessing finance for investing in payment technology is far from easy, in particular with traditional banks continuing to be cautious about small firm lending. This is why it is important that key decision-makers are aware of all the finance options available to them, including the services of alternative lenders.

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