A study by payments company Square has revealed that more than three million small businesses are expected to miss out on sales this Christmas because they rely solely on cash.

The research, conducted by Censuswide, found that nearly half (47%) of UK consumers would rather pay by card, which means cash-only small retailers are struggling to accommodate shoppers as they move away from cash.

Square found that many business owners surveyed are put off by monthly fees (39%) or signing contracts (23%) in order to offer card payments. However, 62% of small businesses that have started to take card payments over the festive period found that their overall takings have increased by up to 25%.

Commenting on the findings, Square head of Europe Melinda Roylett said: “The UK is a really progressive market when it comes to card payments. Our research shows that 47% of Brits prefer to pay by card, compared to only 30% who prefer to pay by cash. However, only a third of sole traders (34%) take cards. There’s clearly a disconnect here, and the result is that small businesses are missing out.

“We want to help the UK’s cash-dependent businesses to better understand the hidden costs of cash, and how taking cards can be fast, easy and affordable, and help their businesses and communities to keep pace with customer demands.”