In an era where customer expectations evolve as rapidly as technology, small businesses in the UK must adapt to changing payment preferences to stay competitive. The 2024 Xero Global Payments Report reveals valuable insights into how modern consumers prefer to pay and what this means for businesses aiming to streamline operations and enhance customer satisfaction.
Understanding the gap in payment preferences
The Xero report highlights a significant disconnect between consumer payment preferences and the methods offered by many small businesses. While 87% of UK consumers prefer credit or debit cards, only 55% of small companies offer this option. Similarly, mobile payment methods like Apple Pay and Google Pay, while increasingly popular with Gen Z and Millennials, are available in only 33% of businesses.
Consumers, especially younger ones, prioritise convenience and speed in their transactions. The report also found that nearly one in four customers would consider switching to a competitor if their preferred payment method wasn’t available.
The financial upside of adopting modern payment systems
For small businesses, meeting these expectations isn’t just about keeping customers happy—it’s also financially advantageous. According to Xero, businesses that adopt digital payment methods can see payments processed up to 15 days faster than traditional methods, helping to improve cash flow and reduce administrative burdens.
Moreover, integrating solutions like Buy Now, Pay Later (BNPL) has been shown to encourage higher-value purchases, particularly among younger consumers. This approach not only boosts immediate sales but also builds long-term loyalty by aligning with consumer financial habits.
How UK businesses can adapt
- Offer diverse payment methods: Expanding beyond cash and traditional card payments to include mobile wallets, BNPL options, and direct debit ensures customers can pay how they prefer. With Xero’s integrations, small businesses can seamlessly manage multiple payment methods.
- Prioritise transparency: The report reveals that 66% of consumers cite hidden fees as a major frustration. Clear, upfront communication about costs builds trust and reinforces loyalty.
- Automate payment processes: Leveraging tools like Xero’s payment systems can reduce manual errors, accelerate invoice reconciliations, and free up time for business owners to focus on growth strategies.
- Leverage technology to target Younger Consumers: Gen Z and Millennials are leading the shift towards mobile-first payment solutions. Businesses that adopt these technologies now are better positioned to attract and retain this demographic.
Xero: A partner for payment transformation
Xero offers tools that integrate with modern payment platforms, allowing businesses to manage payments, track invoices in real-time, and automate billing processes. By adopting these systems, small businesses can not only meet consumer demands but also gain operational efficiencies that drive profitability.
The future of payments
As cashless transactions become the norm, UK small businesses must embrace the changing landscape of consumer payments. The Xero Payments Report calls for businesses to evolve their strategies, ensuring they remain competitive in a fast-paced, customer-driven market.
By aligning payment options with consumer preferences, businesses can unlock new growth opportunities, improve cash flow, and build stronger customer relationships. For small businesses ready to make the leap, Xero provides the tools and insights needed to thrive in the modern payment ecosystem.
