A nationwide study, of 2,000 small and growing businesses and more than 2,000 consumers, reveals a stark behavioural contrast between business owners and their target customers.

The research from PayPal shows that business owners are still holding on to old forms of payment. Two in five business owners have never revamped their payment forms even though their customers are increasingly reliant on digital wallets, contactless and phone-based payments.

Mobile shopping is growing at nearly four times the rate of overall online spending in the UK, and a fifth of consumers most frequently buy goods or services online using their smartphone. Despite this, only 17 per cent of UK SMEs  have set up their websites for mobile view, and just 4 per cent have a mobile app that takes payments.

For businesses doing trade in person, cash, bank transfers, and cheques are still the most commonly accepted payment methods, despite contactless card payments overtaking cheque books for the first time this year.

According to PayPal UK’s director of small business, Nicola Longfield, the payments technology landscape itself can be a huge barrier for SMEs hoping to keep up. “For small businesses, understanding the number of new ways to take payment may seem daunting. At times it can feel like a new “pay” launches almost every week. However, consumers are embracing these changes and opting to use digital wallets, contactless cards and their smartphones when they go shopping. Businesses that don’t join the 21st century stand to lose out,” she said.

Consumer payment preferences are now increasingly becoming incompatible with the ‘cash is king’ ethos many SMEs still believe. The research shows that almost two thirds of consumers abandon an online purchase because they couldn’t pay the way they wanted. This isn’t just a phenomenon that will affect eCommerce stores alone: 56 per cent of consumers have abandoned a purchase in a physical store for the same reason. This proved to be the most significant barrier to making a purchase, putting more consumers off than poor customer service, queues at the checkout, restrictive returns policies or delivery charges.

The main goal of new payment technologies is to simplify the way goods and services are sold and consumed, PayPal’s Longfield said. Integrating a simpler check-out process, where customers don’t have to enter their card and delivery details every time on a tiny screen can help convert more sales. NFC-enabled card readers mean businesses of any size can accept Chip & PIN, contactless payments and even Apple and Android Pay on the move.

PayPal’s own system, PayPal Here, is designed with mobility in mind, Longfield added. “No long term contracts and low pay as you go processing fees make PayPal Here suitable for a wide range of businesses previously solely reliant on cash, cheques and bank transfers, such as plumbers, taxis or market traders.”