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  1. Analysis
February 7, 2019

Cashless Countdown: how square is fixing the pain points

By Briony Richter

The payments landscape is rapidly evolving, with regulation and technological innovation combining to change both consumer and merchant behaviour. Melinda Roylett, head of Europe at Square, discusses how the business enables SMEs to grow in the new environment. Briony Richter reports

There can be no doubt that Europe’s payments landscape is undergoing a major transformation.

Regulatory enforcement and digital advancement have pushed the whole financial industry onto a new playing field. The landscape is constantly shifting as industry players strategically position themselves to take advantage of emerging market opportunities.

One trend that is sweeping globally is cashless technology. Use of non-cash payment devices has continued to grow exponentially, and small businesses that do not accept card payments are increasingly losing out.

Square supports small businesses adapting to the new landscape by making it simpler and quicker than ever to accept credit and debit cards. The Square Reader is easy to use, simple to set up and completes card payments within a matter of seconds.

Speaking about the possibility of a completely cashless society in the UK, Square’s Melinda Roylett says: “With £68.9bn [$90.5bn] in circulation, it’s unlikely that the UK will become a cashless society any time soon. However, cash is certainly going out of fashion in our daily lives. You only have to look at the numbers: 44% of Brits carry less than £10 in cash and only 13% of people are using a cash machine more than once a month.”

She notes that small businesses across the UK would suffer massively from a cashless society. There are around 3 million small businesses that still rely solely on cash, although they are increasingly putting themselves at a serious disadvantage compared to their card-accepting competitors. In an environment that is rapidly becoming more digital for convenience and speed, cash-only businesses are getting left behind.

“Our research showed that consumers are likely to avoid shopping with businesses that don’t accept cards,” Roylett states. “Eighty-one percent say they would be more likely to shop locally if they were able to pay by card, and of those businesses that have started to take card payments, 62% found that their overall takings have increased by up to 25%. This is an issue – and an opportunity for UK small businesses – we don’t hear so much about.

“As cash goes out of fashion, cash-only small businesses need to be able to accept the alternative ways their customers want to pay. The easiest way to do that is to start taking card payments.”

In October 2018, it was reported that consumers using contactless cards surpassed chip-and-PIN payments for in-store purchases for the first time. Shoppers preferred the convenience and security features of contactless over chip and PIN, leading to a 30% increase in contactless payments during that year.

Impact of cashless

It is not just small businesses that the cashless revolution will affect; ATMs are taking a hit on the high street. Roylett notes: “As banks close, their ATMs are closing too; banks are finding the upkeep of the physical cash machine network increasingly expensive and time-consuming. This, coupled with the fact that people are carrying less cash than ever, means the number of free-to-use ATMs in the UK is falling. We know this poses huge challenges for small business owners, especially those that rely only on cash.

“As long as people want to pay with cash, there remains a role for ATMs; however, we do also recommend that small businesses future-proof themselves with new technologies like accepting card payments to help keep pace with the trend toward ATM closures and ensure they don’t miss out on sales – especially in areas where cash is harder to get hold of.

“One positive example is the town of Holywell in North Wales, which experienced the closure of three banks and all but one ATM in rapid succession. Square partnered with MP David Hanson and the local council to help the town’s small businesses start taking card payments, often for the first time. The high street now has 95% card acceptance, reducing the reliance on the single remaining cash machine.”

This trend is part of a much bigger story that is reshaping the industry: it is not just about tap and go, it revolves around convenience and reducing the pain points for both consumers and businesses.

Square is out to help every company – especially small businesses – accept card payments, creating a broader community of sellers to enable growth. The advantage for small businesses using Square is its simplicity. The owner will know exactly how much they are going to pay, so there is no need to worry about figuring out how much is being spent on card-processing fees.

“In the past it has been very expensive and complex for small businesses to accept card payments. New technologies such as Square make it easier than ever for independent business owners to accept card payments quickly and affordably,” Roylett highlights.

“If you’re a small business owner that relies on cash, now’s the time to think about starting to accept cards, if you don’t already.

“Square enables millions of small and medium-sized businesses around the world to take credit and debit card payments without monthly fees or long term commitments. Whether you’re a traditional bricks-and-mortar shop or a mobile business, you can use the Square Reader to take chip-and-PIN cards, contactless cards and mobile payments like Apple Pay and Android Pay anywhere you are doing business.”

The key trends

The trends impacting the financial sector are evolving at breakneck pace. To be ahead of the game, merchants need to have their customers’ needs at the forefront of their strategy.

Small businesses put a lot of work into engaging with customers, and often have loyal and regular customer bases. Square believes larger businesses can learn from this personal touch to improve customer satisfaction.

Speaking about her experience and the trends she believes will affect the financial industry, Roylett states: “I’ve worked in the payments industry for the vast majority of my career, and I would say that the rise of mobile technology is one of the biggest trends I have observed. From both a consumer and merchant perspective, it has put control of finance back into the hands of the customer.

“In the past you might have had to go into a branch or make an appointment, fill out extensive paperwork for an application, wait in line for basic services – all on the terms of the financial institution. We’re seeing innovation within the traditional financial sector, like banking apps that allow customers to check their balance and move money while on the go, and also the rise of challenger financial services companies.”

She continues: “These include companies like Square, which allows small businesses to take payments with their smartphone or tablet for the first time. It’s a fascinating time to be in the industry and see this change that is giving control back to the customer, saving them time and money.”

At the beginning of January, the Square In-App Payments software development kit (SDK) was introduced to remove friction from the buying experience. The SDK creates a customisable payment flow within an app that improves the efficiency and speed of the overall payments process.

Added queuing and payment times have often led to customers ditching purchases altogether. By eliminating that friction, both customer and merchant will enjoy a quicker and more convenient service.

Currently, there are 5.7 million small businesses. In 2018 Square launched a series of new products, including the SDK and its Instant Deposit feature, which helps business solve one of the biggest challenges they face: managing cash flow. The feature enables sellers to receive money into their bank accounts within minutes.

Carrying on through the year, Square intends to help even more small businesses operate smoothly. “We continue to listen to customer needs in the UK and to bring products and services to market that meet their demands,” Roylett says, concluding: “Our goal continues to be to help sellers of all sizes start, run and grow their business – and helping them grow their business is good business for everyone, so watch this space!”


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