For small businesses, offering a great product or service isn’t always enough to secure a sale. Customers increasingly make purchasing decisions based on convenience—including how they can pay. In the UK and globally, reliance on digital wallets, contactless cards, and Buy Now, Pay Later (BNPL) services is growing. Yet, many small businesses continue to offer a limited range of payment options, creating friction at checkout that can lead to abandoned purchases.
The 2024 Xero Global Payments Report highlights the critical gap between consumer payment preferences and what businesses offer. With one in four consumers switching to competitors when their preferred payment method isn’t available, the ability to provide flexible payment choices is becoming a key competitive advantage. This article explores how consumer expectations are shifting, the risks businesses face by not keeping up, and how payment trends are shaping the future of commerce.
The changing face of consumer payments
The 2024 Xero Payments Report findings show that consumers’ payment habits have changed significantly over the past decade. Digital-first transactions, including mobile payments and BNPL services, are now mainstream across various age groups, with younger generations leading the shift. According to the report, 87% of UK consumers prefer credit or debit cards, yet only 55% of small businesses currently offer this option. This mismatch between payment preferences and business capabilities is a growing concern.
Consumer frustration with payment limitations is a well-documented issue. 31% of UK consumers now use Apple Pay or Google Pay, but just 33% of UK businesses accept mobile payments. With digital transactions increasing in volume, businesses that fail to modernise their payment offerings may find themselves struggling to attract and retain customers.
The business impact of limited payment options
Beyond customer dissatisfaction, restrictive payment policies directly affect a business’s bottom line. Xero’s research shows that 38% of global consumers cite a lack of preferred payment options as a key frustration. In the UK, 37% of consumers report leaving businesses due to payment inconvenience. This means that not offering digital payment methods is not just an operational oversight but a revenue-limiting factor.
Furthermore, businesses that still rely on manual invoicing or cash transactions often face delayed payments, inefficiencies, and unnecessary administrative burdens. Those who have adapted to digital payment solutions experience faster transactions and improved cash flow management, making it easier to reinvest in their growth.
Overcoming business hesitation
Many businesses hesitate to expand their payment options due to concerns over cost, fraud risks, and implementation complexity. Xero’s report found that 33% of global small businesses cite transaction fees as a significant barrier, while 30% worry about fraud risks. Additionally, 23% believe integrating new payment systems would be too complex or time-consuming.
However, the reality is that consumer demand for payment flexibility is only increasing. Businesses that embrace a wider range of payment methods can reduce transaction friction, increase conversions, and foster long-term customer loyalty. By staying informed about evolving payment trends, business owners can make strategic decisions supporting their operations and customer satisfaction.
The future of payments: key trends to watch
Emerging technologies and regulatory changes continue to shape how businesses approach payments. Biometric authentication, including fingerprint and facial recognition payments, is becoming more widespread, with 24% of global consumers expressing confidence in these innovations. Meanwhile, digital currencies remain a topic of debate, with 27% of global small businesses expressing concern about their adoption.
While businesses do not need to adopt every new technology immediately, it is essential to stay informed about trends that will shape the next decade of payments. The shift towards mobile-first and contactless transactions is already well underway, and businesses that anticipate consumer preferences will be best positioned for long-term success.
How businesses can future-proof their payment strategies
For small businesses, the key to staying competitive lies in understanding and adapting to shifting consumer payment habits. To prepare for the future, businesses should:
- Diversify their payment options to include digital wallets, BNPL, and instant bank transfers
- Stay ahead of regulatory changes that may affect transaction fees, security requirements, or digital payment adoption
- Monitor emerging trends to anticipate future customer expectations and business opportunities
The 2024 Xero Global Payments Report provides in-depth insights into how payment behaviours change across the UK and global markets. By leveraging these findings, businesses can make data-driven decisions to refine their payment strategies, improve customer experience, and drive sustainable growth.
Understand consumer demands with Xero
Failing to adapt to consumer-driven payment trends does not just lead to occasional lost sales—it can significantly impact a business’s ability to compete, scale, and retain customers. With cash transactions declining and digital payments becoming the norm, small businesses must prioritise payment flexibility to remain relevant in a rapidly changing marketplace.
The 2024 Xero Payments Report offers a comprehensive breakdown of regional trends, emerging technologies, and regulatory shifts that will define the future of payments. Downloading the report will provide businesses with actionable insights into how they can evolve alongside consumer expectations and remain competitive in an increasingly digital world.
