A recent report by Link, the UK’s primary cash machine network, has highlighted a growing reliance on digital payments and the potential risks this presents to consumers and, by extension, small businesses.

The findings suggest that while convenience is a key driver of this trend, it is creating a fragile payment ecosystem that could leave both customers and merchants vulnerable.

The report, titled Tapping into Trouble? The UK’s Growing Digital Payment Dependency, reveals that less than half of people - 48% - consider carrying a physical wallet to be an essential part of their daily routine. This shift is particularly pronounced among younger demographics, with nearly three in ten people aged 35 to 44 now habitually leaving home with only a digital wallet.

For a small business, this trend carries significant commercial risk. Payment failures, which more than six in ten people have experienced, can directly result in lost sales.

The report notes that when such failures occur, “some people abandoned the purchase they were trying to make, or relied on someone else to foot the bill for them.” For an independent shop, café or market stall, a single lost transaction can be acutely felt.

The vulnerability is compounded by the fact that many people have a limited choice of payment methods. The research found that 40% of those using a digital wallet have only one card configured on it. This lack of a backup option means a technology failure, whether a network outage, a broken card reader, or a phone battery dying, can bring a transaction to a complete halt, with no alternative recourse for the customer.

In response to the findings, Adrian Roberts, deputy chief executive of Link, warned of the increasing risk. “Our research shows that growing reliance on digital comes with growing risk,” he said. “Recent experiences from around the globe have demonstrated that digital payment systems can fail and two-thirds of people have faced some form of disruption already.”

Mr Roberts added that it is “vitally important that the UK maintains a breadth of payment methods,” calling for a two-pronged approach that supports both cash and digital systems.

While the Bank of England's work on the National Payments Vision is seen as a positive step towards creating more resilient digital infrastructure, the report also advocates for easier cash acceptance for retailers and urges consumers to maintain a diverse range of payment methods.