78 For small businesses, processing payments is essential, but they face significant challenges. The transition from cash to digital payments has been substantial, yet maintaining the ability to accept cash is crucial. This flexibility is key to staying competitive, particularly in rural locations where cash remains popular. Despite this need, accessing cash has become more difficult, with more than a 40 per cent reduction in bank branches across our high streets since 2012. For one in four high street businesses, cash is still the preferred payment method among their customers. The challenge extends beyond customer access to cash: businesses also need safe and convenient ways to deposit their cash earnings. An important step Banking hubs are an important step in filling this seismic decline in cash infrastructure and access. However, as of March this year, only 37 of these had opened. Other potential future solutions include cash deposit facilities in supermarkets, although concerns about safety and security are far from being addressed. The Treasury and the Financial Conduct Authority must develop broader strategies to ensure the cash system remains viable. This should include actions like designating high street banks under the Financial Services and Markets Act 2023 to ensure banks closing branches are responsible for measuring the impact of withdrawal from the high street, and enhancing proposals to support the accessibility and management of cash services for SMEs. Cash still poses the risk of counterfeit notes, although the UK has seen fewer counterfeits with the introduction of new polymer notes and increased law enforcement efforts. FSB is now a Strategic Partner of the Bank of England’s Banknote Checking Scheme, to encourage small firms to join the scheme, which helps businesses train their staff to spot fake notes and keep up with best practices. Keeping cash Keeping cash as a payment option helps control card fees. If cash access declines, card providers might raise fees, increasing costs for everyone. Preserving cash payments is essential to keeping costs manageable and ensuring consumers and businesses have choices. Elsewhere, LINK and PayPoint are expanding their ‘cashback without purchase’ program, enabling thousands of small shops to offer this service. Customers can use their bank cards at participating retailers to withdraw the exact cash amount they need, directly from the till, without needing to buy anything. We strongly support this. Buying into convenience While the importance of cash cannot be understanded, neither can card payments. The rise of Apple Pay and Android Pay makes it a convenient way for consumers to buy something. However, many retailers find the card fees associated with taking card payments too high. FSB is part of the Axe the Card Tax coalition, which has been raising awareness about rising card fees that heavily impact small retailers, affecting almost every transaction and adding financial pressure. There needs to be greater transparency around these fees to help small businesses manage costs more effectively. Small firms welcomed the announcement of the upcoming National Payments Vision, which aims to preserve diverse payment options and reduce fee competitiveness. The future of payments should balance cash, digital methods, and a potential digital currency that works both online and offline. We commend the Payments System Regulator for its efforts and are eager to see the new Government continue this important initiative to develop a payments system fit for the future. FSB National Chair, Martin McTague, looks at how essential it is for small businesses to remain flexible in terms of processing payments CASH FLOW ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk. FSB
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