Future’s cashless, but shops still don’t do plastic

Costs borne by businesses to accept card payments are too overbearing, fostering a negative attitude towards cashless payments, the director of small business chamber GRTU, Abigail Mamo, has said.

Eight branches of HSBC Bank Malta will be shuttered in a cost-cutting exercise that was greeted with some outrage by elderly residents who do not make use of the bank’s digital online system. The bank has insisted that the closures reflect more investment in digital capabilities for customers.

But a GRTU study issued in September reveals that a third of Maltese shops still do not accept card payments, a reality that makes the prevalence of cash in the hands of those who do not use cashless and contactless payments, all the more vital – especially for elderly clients who do not use cards or even contactless solutions such as Revolut and its integration into smartphones.

Asked why such a large portion of businesses still don’t accept card payments, Mamo said that the percentage that goes out of card payment for the service is a big dig at their profit margins and they refute this.

The study, commissioned by Mastercard and the GRTU, and conducted by Grant Thornton, found that 40% of the Maltese’s total expenditure was affected in cash. Those who refused to allow card payments mentioned additional costs as the reason, with 53% saying they would consider integrating new payment solutions in the near future.

“Why should the banks have a piece of the cake every time a sale is made, based on the size of the transaction?” Mamo asked.

With businesses citing additional costs when refusing card payments, Mamo was asked how these charges can be overcome. “I’d like to say that costs not only can, but will be overcome, through competition. It’s a matter of time and business confidence.”

Mamo thinks new market entrants are intent on challenging the status quo and there is a healthy momentum picking up.

“A stronger effort from the country’s banking sector to be innovative and excel in customer service through technological advancements is required. This, however, should translate in an increase in service, not a step back, and that is what we see as a priority. GRTU knows its members and the absolute majority appreciate the direct professional relationship, something the banking sector has been steadily moving away from for different reasons,” she said.

Mamo also said cash transactions can have negative impacts on businesses. “It exposes businesses to risks and is a less efficient system,” she said. “With the safety and security that electronic payments have, these systems should become a requirement rather than a choice for local businesses. As things stand, we do not believe that imposing payment conditions is fair because the market conditions themselves are not fair.”

Mamo says new contactless payments – such as Revolut cards integrated into smartphones – are on the rise, and would surely move consumers to using cards more and therefore business will follow.

“The GRTU is making members aware of the new opportunities, and we’re encouraging them to pursue. We are also in advanced discussions on addressing bottlenecks from an incentive perspective,” Mamo said.

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