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Irish retailers who are unable to accept new payment methods risk missing out on sales

Written by Robert McHugh, on 25th Oct 2017. Posted in Financial

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Irish small businesses are at the risk of falling behind international peers in their adoption of digital payments technology, according to new research commissioned by Visa.
 
The research shows that Irish SMEs could individually save between €5,000 and €6,000 per year on cash handling costs by increasing the amount of electronic payments they process. It is estimated that Irish consumers now spend more by card than cash, with shoppers spending an average of €10,465 on cards per capita each year, compared to €5,388 in cash. Contactless payments are one of the key drivers behind this trend with the technology now accounting for one in three of all face-to-face Visa transactions in Ireland.
 
Visa commissioned research to investigate the hidden costs of cash in terms of back office and security costs and better understand how they compare to card transactions. The research established that for the businesses involved in the study it is cheaper to accept €1 as a card payment rather than cash, with cash handling costing 2.5 cents per euro of sales compared to 1.6 cents for a card transaction.
 
The study explains the difference by showing that card costs are, for certain merchants, fundamentally fixed, whereas the cost of handling cash has more variable elements. For example, back office administration accounts for 25% of the cost of cash, with the physical volume handled representing the other 75%. As the volume of cash accepted increases, greater resources are needed for counting, checking and controls during the day and for banking purposes.
 
Furthermore, the research showed that time businesses spent counting cash transactions was on average 94 minutes a day, versus totalling card transactions which was 28 minutes per day. Visa says these figures reflect the efficiencies that cards can deliver for a business. As a result, business owners could save anywhere between €5,000 and €6,000 per year on cash handling costs. 

Commenting on the research findings, Country Manager at Visa Ireland, Philip Konopik said, "Despite consumers embracing electronic payments, Irish retailers who are unable to accept new payment methods risk missing out on sales and incurring excessive costs. Digital payments can also enable small Irish merchants to become more efficient and automated."

He added, "New digital till systems have the potential to provide retailers with immediate data and insights into their business, helping them to reduce costs with automated accounting and inventory control. These additional benefits of accepting card transactions over cash have the potential to truly transform a small business."

Source: www.businessworld.ie

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