Reported on Wed, 24 May 2006

Small and medium-sized enterprises (SMEs) could be set to suffer through the decline of payments in cash, according to a new report, but taking out a business loan could help them to upgrade.

A study by Alliance & Leicester warns that many smaller firms have failed to develop the technology for new card or chip and pin services, with 45 per cent of SMEs in areas such as Wales and the East Midlands still seeing cash as their preferred method of payment.

More starkly, over 300,000 companies that fall within this range are concerned that the disappearance of cash could mark the end of their business, through an inability to afford the new payment systems.

The report suggests that about 650,000 businesses, almost one fifth of SMEs, said they would have to make "significant changes" to the running of their companies if cash became obsolete, with anxieties running at their strongest in the retail and hospitality sectors.

"Not only do many SMEs still say cash is their favourite payment method, many sectors in the UK rely on cash for the smooth running of their business and without cash many small businesses would be forced to close down," said Russell Carter, head of cash marketing at Alliance & Leicester Commercial Bank.

SMEs worried about their ability to match changing consumer trends could take out a business loan to modernise their payment facilities.

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