What the Treasury’s Decision to Phase Out 1p and 2p Coins Means for SMEs

Following the Treasury’s announcement to halt the production of new 1p and 2p coins from The Royal Mint this year, concerns have arisen about the potential extinction of copper coins. Although a Treasury spokesperson assured that the coins are not being phased out entirely, many are anxious about the impact on cash-dependent businesses.

SumUp, experts in card payments, are emphasizing how traditionally cash-reliant industries have successfully integrated card payment options. They highlight that cards and cash can coexist without one needing to replace the other.

Are People Still Using Cash?

For businesses dependent on cash transactions, there is no need for immediate concern. SumUp’s analysis of recent YouGov data indicates that 29% of Brits still frequently make cash payments, with 7% almost always using cash. Only 8% of adults reported never using cash.

The data reveals that both the 18-24 and 65+ age groups are the most likely to almost always pay in cash, at 8%. Additionally, men are more likely than women to use cash, with 9% of men almost always paying in cash compared to 6% of women.

How Cash-Dependent SMEs Can Incorporate Digital Payments

To enhance efficiency, reduce costs, and cater to a wider customer base, cash-reliant businesses can adopt the following digital payment methods:

• Point of Sale (POS) Systems: Invest in modern POS systems that accept credit/debit cards and contactless payments, including NFC methods.
• Mobile Payment Solutions: Utilize mobile payment apps to accept payments via smartphones and tablets.
• Online Invoicing and Payments: Offer online invoicing with integrated payment options.
• QR Code Payments: Implement QR code payment options, displaying QR codes at checkout or on receipts for customers to scan and pay using mobile banking apps or digital wallets.
• eCommerce Platforms: Set up an eCommerce website or use platforms to facilitate online sales and digital payments.
• Payment Links: Send payment links via email or SMS, enabling customers to click and pay through a secure online portal.

These digital payment methods can help businesses adapt to the evolving payment landscape while maintaining the option of cash transactions.

Corin Camenisch, Product Marketing Lead at SumUp, discusses how SMEs can adopt card payment methods alongside cash to align with consumer spending habits: “We won’t see previously cash-reliant industries die; we will just see them innovate. Businesses need to adapt to work in the digital environment as well as cash. Offering both payment options will only help your business and cater to all customer payment preferences.”

8 cash-reliant businesses that have successfully adopted card payment

SumUp also highlights that many businesses and sectors have successfully embraced card payments to meet changing consumer preferences and increase sales by accommodating customers who prefer not to carry cash, such as:

1. Taxis: Traditional taxi services have widely adopted card payments,
2. Street vendors and food vans: Many now accept card payments through mobile point-of-sale systems.
3. Market stalls: Vendors at local markets increasingly offer card payment options.
4. Small local shops and convenience stores: Many have transitioned from cash-only to accepting cards.
5. Vending machines: Modern vending machines often accept card payments and cash.
6. Parking meters: Many cities have upgraded to systems that accept card payments for parking.
7. Public transport: Buses in many cities and towns now offer card-based payment options.
8. Barbers and hairdressers: Many small, independent salon businesses now accept card payments.

Adopting mobile payment technologies and point-of-sale systems has facilitated this transition for many small businesses and individual vendors.