FOLLOWING the pandemic and the cost of living crisis, small businesses have been hit hard. Now more than ever, they are in need of consistent business.
An impact on businesses often overlooked is customer refunds. Despite the loss of money, there’s also the issue of re-selling the product. With that in mind, card payment provider Paymentsense has looked at which regions in the UK are home to the biggest offenders when it comes to refunding, and the residents of Edinburgh are one of them.
Small businesses in Edinburgh suffer a loss of £90 a month due to customer refunds
According to Paymentsense’s report, small businesses in Edinburgh lost a total of £90 a month due to customer refunds- just over £1,000 a year.
However, it’s not all bad news for small businesses in the area, as this number has actually fallen by 4.2% in the last year from £94.
Accommodation and travel businesses in Edinburgh saw the most refunds in 2022
Within the report, Paymentsense also looked into which industries were the most affected by refunds by region. According to the data, accommodation and travel was the heaviest-hit industry in Edinburgh in 2022. This includes anything from trains to hotel bookings.
The data revealed that £535 was refunded per location per month. This totals just over£6,400 for the year, which is a huge hit for small businesses.
Which other industries were affected?
| Rank | Industry | £ refunded per location per month | £ refunded per month growth vs 2021 |
| 1 | Accommodation & Travel | -£535 | -3.5% |
| 2 | Home/Office Furnishing | -£367 | -12.3% |
| 3 | Apparel/Clothing | -£226 | -14.4% |
| 4 | Entertainment / Recreational | -£200 | 93.8% |
| 5 | Retail | -£197 | -1.3% |
| 6 | Automotive | -£149 | 147.5% |
| 7 | Health Care | -£110 | 10.1% |
| 8 | F&B Hospitality | -£54 | 31.8% |
| 9 | Personal Services | -£37 | 18.9% |
| 10 | Speciality Retail | -£36 | 31.8% |
*Ranked by the amount refunded per location per month. Where N/A is used, the data from the previous year is not available to uncover a percentage difference.
Entertainment and recreational businesses in Edinburgh saw 93.8% MORE refunds in 2022
Based on Paymentsense’s data, entertainment and recreational businesses include anything from cinema tickets to sports camps.
Both the percentage increase in refunds from last year and the value refunded per location per month are high with each location losing £200 on average monthly to serial refunders. This is somewhat unsurprising given that in 2022 we were still somewhat transitioning out of the pandemic, with many uncomfortable in crowded locations still.
Will an overall decline in refunds continue for Edinburgh businesses?
An expert from Paymentsense commented on the positive effects this has on SMEs in Edinburgh: “Customer refunders can prove very expensive for small business, so seeing a 4.2% decline in refunds overall is a very positive thing for business owners. However, it’s likely that the reduction is a result of consumers spending less, thus needing to return less.
Despite this, we do know that retail sales volumes did grow by 0.5% in January 2023, following a dip of 1.2% in December 2022, according to data from the ONS. [1] Whilst this is positive, as the economic state of the UK remains unsteady, this number is likely to fluctuate but seeing a YoY reduction in refunds and an MoM increase in retail sales, overall, is very positive for small businesses in Edinburgh.”
