Large businesses lag behind in payment technology

The Payments Council has published the findings of its research exploring the payments that UK businesses make and receive. The findings show that small businessesare lagging some way behind larger businesses, but seem to be more savvy than individuals in terms of adoption of modern payments technology. Smaller businesses are nearly twice as likely to go online and make payments via online banking, than individuals.

Individuals are far more likely to make cash payments or to use plastic cards, which are not used as extensively by businesses. Small businesses are more likely to make payments by cheque, Direct Debit or Bacs Direct credit, although their use of Direct Credits lags far behind large businesses, which use these for over two-thirds of outgoing payments. Large businesses are also far more likely to make CHAPS payments. This said, not all payments made by large businesses have transferred over to electronic methods; there remain a small number of large businesses that send out very large volumes of cheques (for example, insurance companies and insolvency practitioners).

The research also shows how businesses receive payments.  Cash remains an important method of receiving payments for both small and large businesses – though cash is far less significant by value terms (representing just eight percent of income for small businesses and three percent of income for large businesses). Businesses who accept payments from consumers are far more likely to accept plastic cards and cash than those who accept payments from other businesses. Businesses tend to pay other businesses using electronic methods.

Otherwise, most payments tend to be received by plastic cards or, in the case of large businesses, direct into the business bank account.  Interestingly, sole traders experience a different pattern of payments from other small businesses, being far more likely to receive cheques and far less likely to receive plastic card payments – potentially as they have not invested in card accepting facilities. Sole traders, which make up about three quarters of businesses, make only 15 percent of their payments using Direct Credits, with a greater proportion instead using cheque (27 percent) or Direct Debit (23 percent).