UK: Online businesses are losing million due to failed payments

Around 440,000 companies in the UK may go out of business this year if invoices aren’t paid on time, according to one of the country’s leading business organizations. According to the Federation of Small Businesses, the issue of late payments has been exacerbated by the Coronavirus pandemic and is keeping thousands of entrepreneurs awake at night.

Three of ten firms surveyed by the group for its quarterly small business index acknowledged this problem had grown over the last three months, while only 6% agreed to new payment terms during that period.

Brian Coburn, CEO at Br-dge, said: “December is the busiest month for online retail sales, yet with 65% of merchants not receiving detailed failed payments data, the majority are largely in the dark about the impact payment failures have on revenue. To protect themselves from these hidden costs and capitalize on heightened consumer demand around festive periods, merchants must prioritize sourcing payment solutions that integrate multiple providers and payment methods to avoid ongoing failures.”

Br-dge is a payment orchestration service for merchants trading online, which channels a world of payment options through a seamless, single point of integration, meaning merchants no longer need to pick and choose between one or two payment providers at great cost and administrative burden.

A report from online payments giant Stripe has highlighted several common shortcomings, including a lack of Apple Pay compatibility and basic error messages to flag up problems with transactions.

Alarmingly, the research found that one in three (32%) of the busiest UK e-commerce outlets were allowing customers to submit transactions with invalid card numbers. A further four in five (82%) of big online retailers still don’t offer Apple Pay or Google Pay to customers in the UK.

The latest ONS retail data released shows online retail spending in December 2021 was £2.16b. Yet, fragmented payment systems, put under increasing pressure by the massive growth in digital payments, can result in failed transactions and unprocessed baskets, with both merchants and customers. If this was eradicated, December’s spending would have been £2.36bn.

The Nationwide Building Society in the United Kingdom has had a bad start to the new year, with payments to and from accounts stalled as the year 2022 approached.

Concerned customers contacted Nationwide to inquire about the status of incoming and outgoing payments. The building society’s status page confirmed that there were issues and that “incoming and outgoing payments are currently delayed,” but that “everything else is operating normally.”The issue appears to be with money sending and receiving.

Nationwide stated that “direct debits and standing orders are unaffected.” According to the bank, cash points and card usage are unaffected. However, there may be a delay in receiving money (for example, a salary payment).

According to FSB research, approximately 50,000 small businesses fail each year as a result of late payments. Late payments totalled approximately £23.4b, owed to small and medium-sized businesses last year. The Conservative manifesto for 2019 promised to crack down on late payments and strengthen the commissioner’s powers to assist small businesses that are least able to cover financial shortfalls and find temporary finance more difficult and expensive to obtain.