David Prosser: Card payments remain unavailable for small businesses

Billions are lost by smaller firms that can’t offer a feasible mobile-phone payments service

Why don’t more small businesses accept debit and credit cards? As many as three in five firms decline plastic payments, despite claims that this costs them a fortune in lost trade – a Barclays Bank survey earlier this year reckoned one in six consumers walks away from a purchase if they can’t pay by card, costing those businesses £7bn a year.

It might be wise to take Barclays’ numbers with a healthy pinch of salt – it has something of a vested interest given its status as Britain’s biggest credit card provider – but there is no doubt many small businesses recognise they would reap a benefit from offering customers a card payment option.

One factor holding them back is a fear of fraud. In particular, research published last week by payment procession firm WorldPay suggested small businesses are particularly vulnerable to the growing problem of computer hackers stealing customers’ card data. This problem is now costing British businesses millions of pounds and WorldPay estimates small businesses account for almost two-thirds of the costs incurred.

However, the bigger issue for many small businesses may be the practical considerations involved in setting up a process for accepting card payments. There is no single standard for doing so: a number of competitors now provide card payment solutions that rely on small businesses’ mobile phones, but each one works slightly differently and costs vary. Meanwhile, the banking industry’s payments experts aren’t doing much to help.

The launch this month of a card payment solution by US retail giant Amazon rather rubs salt into the wounds of British smaller companies as the new service, Amazon Local Register, is not being made available in the UK. That’s a pity since the card reader it uses is effectively being handed out for free via refunds of transaction charges and those latter fees undercut what other providers in the US market offer.

In the US, Amazon’s launch into is seen as a major challenge to Square, the mobile phone card payments business launched by Twitter founder Jack Dorsey that currently leads the market. But Square isn’t available to British small businesses either.

Ironically, the fact that Britain’s card payments system is more secure than its US equivalent has been a disadvantage in the context of mobile phone transactions. The US has yet to switch to chip and pin technology, relying instead on the old swipe system. As a result, Amazon and Square’s card readers aren’t suitable for the UK market – especially as Visa won’t allow European cards to pay in the old-fashioned way.

To be fair, there are still several options for small businesses here. Paypal offers one solution, while other options include iZettle, Intuit and Worldpay. Nevertheless, competition from the US market leaders would certainly be a shot in the arm for mobile phone card payments in the UK.

Square is now finally talking about a launch on this side of the Atlantic, though it isn’t clear when that might happen. Amazon, meanwhile, is tight-lipped on its intentions for the UK.

Meanwhile, the banking industry’s mobile phone payments service, Paym, remains disappointingly out of reach for small businesses. In many ways, this would be an ideal solution for small firms, since it doesn’t require the merchant to have a card reader.

Instead, customers with the Paym app on their phones use it to make money transfers to the bank account registered to the mobile phone number of whoever they’re paying.

Unfortunately, most banks will only let customers set Paym up on their personal current accounts and it can only be used to pay individuals, rather than organisations. That rules Paym out as a payments service for the vast majority of small businesses.

These issues are set to become more pressing if, as most analysts expect, cash becomes an even less popular way for people to settle even quite small transactions. And if commercial card payments providers are finding it difficult to offer the right solutions, the extension of Paym would be of huge benefit to many small businesses.

Attraqt set to fly after finding retailers’ sweet spot

Look out for Attraqt Group, which makes its debut on the Alternative Investment Market tomorrow allowing a fund-raising that has picked up £1.25m from investors.

Attraqt, which is now valued at just over £10m, sells software to retailers looking to improve their online trading performance, and already counts the likes of Tesco, Superdry, Laura Ashley and Paperchase as customers.

With retailers’ dependence on internet sales growing all the time – UK shoppers are amongst the world’s most enthusiastic online purchasers – Attraqt operates in something of a sweet spot, assuming that it can produce tangible results for its customers. The company says its software enables retailers to improve conversion rates online by giving them greater control over tools such as product searches and recommendations.

Dan Wagner, one of the founders of Attraqt argues that while online sales will continue to increase, not all retailers can expect to benefit. “Many retailers are still struggling to truly capitalise on the change in the market by deploying sophisticated merchandising to bring their products to shoppers and stand out from the competition,” he warns.

No further forward on outstanding bills

There is still no evidence of any improvement in Britain’s late payments culture. Almost two-thirds of small businesses have had clients fail to pay their bills on time over the last year, new research suggests, while one in five have had payments that are still outstanding three months after they were supposed to be settled.

Satago, an online business that enables firms to post anonymous reviews of how good clients are at paying on time, said small firms were struggling to put pressure on their clients to do better. Two-fifths simply write off bad debts, while only one in four have formal processes in place for securing late payments.

Steven Renwick, the founder of Satago said small businesses had no choice but to step up their efforts. “SMEs that offer customers trade credit must ensure they are effective and professional when collecting debt,” he said. “Businesses must invoice correctly and on time and proactively chase for payment.”

Powerful web tool restricts number of  unhappy customers

Wilmott: We’ve grown 100 per cent this year alone Wilmott: We’ve grown 100 per cent this year alone Small business woman of the week: Lindsay Willott, Chief Executive, Customer Thermometer

“I came up with the idea for Customer Thermometer when I was running my old marketing agency firm. We had some really impressive clients but they were all on retainers and, with 80 staff, it was scary waiting to see if the phone would ring each month. I knew we couldn’t afford to have unhappy customers so we developed a tool to enable our clients to tell us quickly each week if they were satisfied with what we were doing for them.

“I knew this was a powerful tool so, when I sold the agency four years ago, I set up Customer Thermometer to exploit its potential with external clients. We now have more than 2,500 companies in 40 countries.

“It’s a software-as-a-service business – our customers sign up online and pay monthly for the tool, but there’s no contract. The idea is to embed our feedback tools in the communications and transactions firms have with clients. We even have a red alert facility so a really unhappy customer can make their feelings known. The business can then get in touch instantly to try and put things right, which is amazing for customer retention.

“Some of our clients use it to monitor staff morale and we’re also now looking at geo-location services. A restaurant manager might be able to speak to an unhappy diner before they’ve even left the restaurant.

“It’s a very different type of business to my agency. I only have four staff but it’s been very exciting. We’ve grown 100 per cent this year alone.”

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
people'I hated him during those times'
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
Dame Vivienne Westwood has been raging pretty much all of her life
peopleMemoir extracts show iconic designer 'felt pressured' into going out with Sex Pistols manager
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
fashionAlexander Fury's Spring/Summer 2015 London Fashion Week roundup
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late on stage in Brixton show
News
i100
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
News
people''Women's rights is too often synonymous with man-hating'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam