Small Business Report: 11.8 millions customers lost due to lack of electronic payment facilities
Study into the potential impact of cash-only businesses
It costs a lot of money to run a business. So it’s not surprising to find many business owners cut costs like installing an electronic payments facility. But how does this impact the potential revenue of a business?
We’ve investigated this issue by asking Americans if they’d leave a store if it didn’t offer card paying services and they had no cash on them.
We commissioned a survey of 6,838 American adults conducted by global research provider pureprofile in April 2016.
The study found that three-quarters of people (73 per cent) would leave a store without making a purchase if they had no cash on them and the merchant didn’t offer a credit or debit card terminal. A 2015 report by ATM Marketplace found that 5 per cent of Americans don’t carry cash on them. Seventy-three per cent of these people make up 11.8 million Americans.
For a retailer with an annual turnover of $2 million, this is worth $73,000 in lost potential annual revenue.
Out of the 73 per cent of people who would leave a store, 36 per cent would not buy anything at all, while a further 37 per cent would actively make the effort to shop somewhere else. Just over one in four (27 per cent) said they would leave the store, find an ATM to withdraw cash, and return so that they could see out their purchase.
Interestingly, Millennials, aged 18-34, is the demographic most likely to shop somewhere else (45 per cent), as opposed to Gen X aged 35-54 (37 per cent) Baby Boomers at 55-74 years (33 per cent). However, Baby Boomers are more likely to walk out of a store and not buy anything at all, with 43 per cent stating they’d leave, compared to 35 per cent of Generation X and 22 per cent of Millennials.
Across the genders, 63 per cent of females stated they wouldn’t return to the business if a vendor didn’t have a card terminal, as opposed to 37 per cent of males. Interestingly, 27 per cent of both males and females stated they would make the effort to withdraw cash and return to the shop to continue their purchase.
Higher income earners are more likely to leave a store empty handed than those on a lower income. 77 per cent of high income earners (with an annual salary from $175,000-$199,999) would choose to shop somewhere else or not make any purchases at all, with only 23 per cent deciding to withdraw cash externally and return. However, for low income earners of up to $9,999 per year, 70 per cent discontinue their purchase, and 30 per cent withdraw cash and return.
State by state
Oregon had the fewest number of people who would withdraw cash and return to the shop, with only 21 per cent, as opposed to Oklahoma which had the highest number, with 39 per cent.
Nebraska had the lowest percentage of people who wouldn’t buy anything (25 per cent), with the remaining 50 per cent of respondents choosing to shop elsewhere if they had no cash on them and the store didn’t offer card facilities.
On the other hand, Kansas and Kentucky both had the highest percentage of people who would choose not to buy anything at all, with 47 per cent of respondents each.
- American small businesses lose an estimated 11.8 million customers per year by not offering electronic payment facilities
- For a business with an annual turnover of $2 million, they could potentially lose $73,000 in lost revenue annually
- 73% of Americans would leave a store without making a purchase if they had no cash and the merchant didn’t offer electronic payment
- 5% of Americans don’t carry cash on them – 73% of this population size equates to 11.8 million Americans
- Out of those who would leave a store:
- 36% would not buy anything at all
- 37% would actively make the effort to shop somewhere else
- 27% would leave a store, find an ATM to withdraw cash, and return to make a purchase
**Please note, 11 states were excluded from the state by state analysis due to sample sizes below 40 people.**