Visa reveals plans to offer cash to UK small businesses who only accept cards
Already launched in the US, the scheme has been criticised for its potential to alienate cash-reliant customers and cost businesses more in interchange fees
Payments giant Visa has revealed plans to potentially offer UK small businesses and start-ups thousands of pounds if they opt to refuse all cash payments in favour of debit card, credit card and mobile transactions.
Having already launched the scheme in the US, Visa is currently offering $10,000 to 50 US small businesses who have gone completely cashless. The company has said that, as of yet, it has not confirmed when it will bring a similar initiative to the UK.
According to the British Retail Consortium’s (BRC) 2017 Payments Survey, which was released last week, UK retail purchases made by card now outnumber those made with cash for the first time.
As well as an increase in the number of customers using cards to pay for smaller, cheaper items, the rise of mobile ‘tap and pay’ transactions – which enable customers to make contactless payments with their smartphone – has contributed to a decline in the use of cash. In 2016 alone, mobile payments made in the UK topped a massive £288m.
Despite this, Visa’s scheme has been met with criticism from financial professionals and consumer groups, which have pointed out that millions of UK adults still rely solely on cash, and would be alienated from small businesses that do not accept it.
It has also been highlighted that retailers pay interchange fees for each card payment they process, at an average of 16p per credit card purchase and 5.5p per debit card transaction. 2016 saw UK retailers pay a staggering total of £800m in these fees.
With this in mind, UK retailers may be hesitant to forgo cash purchases entirely as they do not incur these costs.
Discussing Visa’s scheme, James Daley of Fairer Finance told the BBC:
“It is easy to categorise it as a bribe, but ultimately they are incentivising companies to do away with cash, and that’s not the job of people like Visa.”
“In 50 years it seems unlikely that most of us will be using cash. But banks need to let evolution follow its natural course, rather than accelerating it. As a responsible society we need to look after vulnerable customers who rely on cash.”