Smaller enterprises are hitting a critical turning point. As long-time owners near retirement, many are looking to exit, but potential buyers are often held back by one persistent issue—outdated systems, especially in payments infrastructure.

According to data from Zelle, nearly half of small business owners over 50 have no exit plan in place, and roughly 41% said they would shut down if they can’t find a buyer.

However, fewer than a third of these owners report that their businesses are fully modernized, which can be a major barrier for prospective buyers—often younger adults who expect a sleek, digital-first experience. Payments, in particular, are a key concern. Approximately 88% of respondents said faster payments are critical to mitigating risk during the first year of operations.

Non-Negotiable Optionality

It is difficult to overstate the importance of a digitally driven business model for younger demographics. This preference has also fueled an evolution in financial services, where mobile and online banking have become the primary ways younger users engage with their banks. Gen Z and millennial business owners are also more open to using AI to support their banking experience—but not for major business decisions.

Another hallmark of this digital shift is an expectation of choice in nearly every aspect of business—from banking relationships to supplier selection. This expectation is even more pronounced in payments, where the rapid proliferation of payment types in recent years has driven demand for real-time payments and acceptance of digital assets.

The Zelle study found that this optionality has become non-negotiable, with more than two-thirds of respondents saying outdated payment options could derail a business deal entirely.

Heating Up the Competition

All these factors are reshaping the small business landscape, though it remains unclear whether the sector will evolve quickly enough to remain attractive to younger buyers. If not, millions of businesses could ultimately shutter as owners retire without a buyer in place.

Fortunately, business owners today have more tools than ever to modernize operations, including payments infrastructure. Much of this progress has been driven by fintechs emerging as key players in the small business space. As more owners approach retirement and look to increase buyer appeal, competition among providers is likely to intensify further.

The post Payments have Become a Make-or-Break Facet of Small Businesses appeared first on PaymentsJournal.

Banks are underselling one of their most important small business products. While they emphasize rates and fees, business owners are looking for something far more valuable: tools that help them run their businesses more effectively.

While these features are undoubtedly important, focusing on them alone overlooks what many  business owners value more—credit cards as powerful tools for managing finances effectively.

Since a credit card is often the first product a business owners pursues, banks are missing a critical opportunity to establish deeper, long-term relationships when they fail to communicate this broader value.

As Ian Benton, Senior Digital Banking Analyst at Javelin Strategy & Research, explored in the Winning the Upgrade to the Business Credit Card report, many banks need to fundamentally rethink how they position credit cards to small business customers. Too often, financial institutions focus on acquiring new business owners, even though many of these customers are already embedded within the bank’s existing ecosystem.

The First Business Product

To better understand current approaches, Benton examined the websites of leading U.S. issuers. While there were some bright spots, most messaging still centered on financial benefits rather than operational value.

“That’s all well and good, but a lot of the times they’re missing an opportunity to communicate the operational value of a credit card,” Benton said. “You can separate your business and personal finances, you can help build your business’s credit score, you can delegate responsibility, and you can control payments for employee cards—all these benefits that are great justifications for upgrading to a business credit card.”

Among these advantages is the ability to integrate business spending into cash flow analysis tools, giving owners a more holistic view of performance.

Reconciliation is another major challenge as businesses scale. Credit cards make it easier to match transactions with receipts or invoices—saving valuable time for businesses that are still reconciling manually, or not at all.

Business credit scoring is also frequently misunderstood. Even when business owners know their creditworthiness is being tracked, many don’t fully grasp the implications. This creates an opportunity for banks to educate customers on how credit cards can help build credit and establish trust with suppliers and lenders.

Additionally, business credit cards enable owners to delegate spending authority to employees while setting individual limits—an important operational control as organizations grow.

Taken on their own, each of these advantages is compelling. Collectively, they reinforce a broader value proposition. Still, one of the overriding reasons business owners adopt credit cards is to separate business and personal expenses—especially for those transitioning from freelance or gig work. Supporting customers at this critical stage is crucial.

“The business credit card is often the first business product that somebody ever opens—even before a business checking account—so it’s articulating the value of even having a business product in the first place,” Benton said. “A lot of people are probably just operating a small business on their consumer personal accounts; they’re commingling spending and that becomes complicated come tax time.”

Spurring the Upgrade

Since many small business owners begin with personal accounts, there is a high likelihood that banks already serve these customers—without realizing it.

“A lot of the marketing and communication is designed for new customers to the bank, when in reality the majority of people who opened a business credit card already had an account with the bank, whether that’s a personal account or a business account,” Benton said. “It’s about putting into context how this can support the broader relationship.”

With a growing share of new business owners coming from millennial and Gen Z demographics, banks must also align with their expectations. These digital natives demand choice, speed, and seamless experiences across digital platforms.

This makes it critical for financial institutions to communicate the operational benefits of business credit cards on public-facing websites. However, given that many of these customers are already within their ecosystem, banks should rethink how they deliver messaging within authenticated digital experiences.

“A lot of banks know who the businesses are that are operating on personal accounts. They can see volumes or if they’re sending certain types of payments, so it’s using the authenticated environment to sell the upgrade as well,” Benton said. “For instance, I’m a personal banking customer of Bank of America and they have an inline advertisement saying, ‘Would you like to open a business credit card or a business account?’”

“It’s little nudges like that, or maybe even a bit more,” he said. “It’s saying, ‘Separate your personal business finances with a business credit card,’ and using the in-app or authenticated website environment where they’re already managing their personal finances—and probably managing some business finances—to help spur that upgrade.”

Holding Within the Institution

Improving how business credit cards are positioned is increasingly important. The digital economy has expanded the range of options available to small business owners. While fintechs have long challenged banks in consumer banking, fewer players have focused on small business banking.

However, those fintechs operating in the corporate credit card space recognize that these products deliver far more than access to credit at competitive rates—they are comprehensive financial management tools.

“Some of those companies like Brex and Ramp are aimed at high-growth businesses; they want to be their corporate credit card as they grow,” Benton said. “If you look at those websites, they’re selling operational benefits rather than financial benefits. It’s about getting out in front of that and saying, ‘We can help you as your business grows, and there’s also this benefit of holding all these things within the same institution.”

The post What Banks Get Wrong About Small Business Credit Cards appeared first on PaymentsJournal.

For many small business owners, the workday doesn’t end when customers leave. It continues late into the evening—logging into multiple dashboards, exporting spreadsheets, reconciling transactions, and trying to make sense of scattered financial data.

In the absence of a centralized solution, many have been forced to stitch together a patchwork of banks, fintech apps, payment processors, and accounting tools just to keep their business running. Reconciling these fragmented systems has become a drain on merchants who are already stretched thin.

This growing complexity has implications beyond the merchants themselves. As small businesses expand their financial relationships across multiple providers—and as physical banking touchpoints become less frequent—financial institutions are finding it harder to cultivate meaningful connections with this segment. What was once a relationship-driven business risks becoming transactional.

In a recent PaymentsJournal podcast, Eleanor Bontrager, VP of Product Management at Fiserv, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed how banks still hold an advantage in small business financial services. However, many financial institutions will need to shift their strategies to become the centralized financial hub that SMBs increasingly expect.

Eliminating the Spreadsheets

While financial management is critical to any business, it is only one facet of running an organization. The more time business owners devote to managing finances, the less time they can spend on other key tasks.

As digital payments have evolved, merchants have adopted a growing array of tools to deliver the payment experiences and financial services customers expect. As a result, small business owners often cobble together fragmented solutions that were never designed to work in concert.

“They’re having to look at the disparate data that comes from those tools and try to imagine what their cash flow position might be,” Bontrager said. “Many aren’t even really using tools; they’re using Excel spreadsheets. They’re literally sitting down with a pen and paper trying to figure out what money they expect to be coming in and what money they expect to be going out and trying to figure out what that means for their business.”

Amid these challenges, merchants don’t want more tools to bolt on. Instead, they are seeking a streamlined solution that enables seamless, transparent transactions and provides a holistic view of their cash flow.

Cost remains an important consideration. Yet many merchants would willingly invest in a unified platform that reduces administrative burden and minimizes the errors common in manual processes.

“We’ve seen research recently where small businesses will spend an average of 25 hours per week just trying to manage data between various financial applications,” Apgar said. “They’re not doing that when the store is open, that time is family time—after hours and on weekends—where people are constructing spreadsheets and poring over paper statements.”

“The data from their point of sale has to be reconciled back to their bank statement,” he said. “You have payroll to manage, vendors have to get paid, and those invoices have to get reconciled to inventory. There are so many moving parts.”

All Their Financial Eggs in One Basket

These variables have led SMBs to increasingly seek a single financial home. Ironically, this desire often stems from the complexity created by maintaining multiple financial relationships—business owners now need a centralized cash flow hub that aggregates their various accounts and functions.

While such a solution may not eliminate every external relationship, it provides merchants with a critical anchor. Once engaged on a centralized platform, banks are well positioned to differentiate themselves and deepen relationships with their SMB clients.

“All in all, money moves faster within the financial institution environment, so the FIs have a clear advantage here,” Bontrager said. “That’s what small businesses want and need, to be able to make those payments easily and quickly. They’re also looking to have that secure, trusted relationship. Within the bank environment, those fraud and risk protections are very much built into that experience.”

“As we think about the ideal solution, it’s taking some aspects of the fintech solution and making those available in the FI channel,” she said. “For example, many small businesses have a strong preference for putting all of their spends on a credit card. Being able to make that available within a payment application and not just relying on DDA accounts. That can be important to package all of that up together, just for the convenience of the small business.”

Consolidating banking and fintech relationships into a single hub may seem counterintuitive, given the adage warning against putting all one’s eggs in one basket. However, diversifying an investment portfolio to mitigate risk is fundamentally different from streamlining a small business’s banking infrastructure for efficiency and clarity.

“When we say having all their eggs in one basket, it not suggesting that the way for FIs to win in small business is to be a one-stop shop and provide every single financial service that a business could want,” Apgar said. “It’s really about having all the financial data in one basket to the extent that data can be exchanged.”

“Even if businesses are using some fintech services, API architecture that’s common today facilitates that kind of data exchange, so the FI can come to the forefront with a complete snapshot of the small business’s financial health and cash flow—and really become the primary partner,” he said.

From Data Harvester to Trusted Advisor

Data has become central to modern financial services because it helps organizations personalize their offerings in a digital environment.

“There can be so much data; it’s being able to take that data and translate that into timely, accurate advisory nudges to the small business that help them anticipate when they’re at risk or see that there’s an opportunity,” Bontrager said. “That’s becoming more of an expectation. It’s, “Hey, you might go cash flow negative next week’ or ‘Looks like your revenues are increasing, are you looking to open a second location? Can we help you with that?’”

Yet solutions that deliver these types of actionable insights to small businesses have been limited. Historically, many financial institutions didn’t treat the SMB segment as a strategic priority. Smaller merchants were often funneled into consumer products or served by commercial and treasury solutions built for much larger enterprises.

The traditional small business strategy—such as it was—centered largely on branch-based relationship building and small business lending.

“There’s so much more that they can be doing,” Bontrager said. “Being able to meet small businesses where they are and provide solutions that allow them to make payments, receive payments, reconciliation, automated workflows. Providing those solutions is key to being able to continue having the small business relationships that they have today.”

“That relationship aspect is always going to be super important, but you need to be able to have an excellent digital solution from a payments and receivables perspective in order to keep fostering that relationship,” she said. “As they do that, they’re going to have more data about that small business and that’s going to help them better serve their small business customers.”

Becoming the Central Financial Hub

While holistic SMB platforms are quickly becoming a market expectation, many financial institutions lack the infrastructure or resources to build and deliver them in-house.

This moment represents a tipping point. To stand out in a crowded market, banks must rethink and modernize their small business banking strategies.

“The reality is that the customers are already filling in those gaps on their own today,” Apgar said. “Rather than wait until you can build everything internally to provide 100% of your customer needs, it makes sense to embrace relationships strategically with the right partners to be able to create that end-to-end digital solution—both from service delivery and also from a data perspective—to deliver those key insights that businesses are looking for.”

The first step is simple: listen. By engaging small business customers and understanding their pain points, banks will uncover common themes—such as the need for intuitive workflows that simplify payments, receivables, and cash flow management.

The ultimate objective is to provide a solution that helps small business owners focus on growing their business rather than managing its financial complexity. For many banks, achieving this vision will require strategic partnerships and external support.

“Think about where those partnerships can come from that will help them be able to deliver a solution like that and have some speed to market that will allow them to quickly meet the needs of small businesses,” Bontrager said. “In doing so, if they’re able to provide the key insights that the small business is looking for, the upside for the financial institution is they have that data, and they can also benefit from those insights and make better risk or underwriting decisions.”

“There’s a lot of potential in the solutions that are available,” she said. “It comes down to evaluating the problem, figuring out who their small business customers are and what their needs are, and then being able to provide them with solutions that meet their needs.”

The post Despite Fintech Encroachment, Banks Can Remain the Go-To for SMBs appeared first on PaymentsJournal.

From streaming platforms that learn your favorite shows to social apps that adapt to your moods, today’s users don’t just want options—they expect flexibility. If something doesn’t work, they switch, tweak, or move on. This mindset is especially true for Gen Z and millennial consumers, digital natives who have grown up navigating a world designed for instant control and constant choice.

As more of Gen Z enters adulthood, organizations are searching for ways to engage these digital-first consumers. Many financial institutions have struggled, even though these cohorts represent the future of business.

As Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research, noted in the Millennial and Gen Z Business Owners: 5 Priorities for Winning the Next Generation report, younger adults are often unreceptive to the banking solutions that worked for their parents.

Instead, they seek business banking platform that mirror their consumer experiences: convenient, digital solutions that combine personalization with guidance to navigate the challenges ahead.

Risk and Opportunity

The primary reason to develop such solutions is that they offer financial institutions a way to build relationships with the next two generations of business owners. To better understand their preferences and behaviors, Magana researched their commonalities among these entrepreneurs.

“At their core, what we’re seeing from Gen Z and millennial business owners is that they tend to have more banking products and they tend to be spreading them across more FIs,” Magana said. “On average, they’ve got 7.1 accounts and the portion of those that are going to secondary FIs is larger, whereas older business owners have fewer accounts, and they tend to concentrate a larger proportion of them within the FI that they consider to be their primary FI.”

Smaller financial institutions, in particular, are starting to see their market share erode. Credit unions and other niche institutions often have limited reach, serving specific occupational groups like teachers or farmers.

Yet, smaller institutions still have opportunities to engage the business owners of tomorrow—if they modernize their approach.

“It breaks down this risk/opportunity where you’ve got Gen Z and millennial business owners who are willing to have more products, but they’re also dabbling with these secondary FIs as well,” Magana said. “There’s this question of which parts of their financial lives are they not doing with you and is there a risk that they’re going to turn to one of these other FIs?”

Self-Service AI

To create more relevant banking platforms for young business owners, Magana identified five key focus areas. The first is a top priority for most leaders: artificial intelligence.

Gen Z and millennial business owners show strong interest in AI, but primarily for certain functions.

“We asked business owners, ‘What AI use cases would you definitely use if they existed?’” Magana said. “As one would expect, there’s a lot more interest among the younger business owners than the older ones. It’s finding features within the app, researching new accounts, insights about companies, payment behaviors, and understanding tax obligations.”

“The common thread as you go through use cases like resolving fraudulent transactions and researching new accounts and finding features—a lot of this is self-service type of stuff,” he said.

Younger business owners are cautious about using AI for major business decisions or customer-facing applications, likely because the technology is still evolving and errors remain possible.

These concerns have left many financial institutions unsure of how to leverage AI effectively.

“Implementing AI is going to be a challenge,” Magana said. “If you’re a smaller FI, you might just not have the resources. You’re going to be relying on vendors a lot, so you should definitely focus on self-service feature discovery and app guidance and making simple tasks faster and easier.”

“It’s about making sure that AI is easy to understand, but also making it transparent,” he said. “You can opt in and opt out; It’s not mandatory. Everybody’s pushing AI so hard in society more broadly, make it optional for business owners and reversible.”

Smoothing Logistical Struggles

The next three priorities address logistical challenges that younger business owners face.

Digital invoicing has grown rapidly in popularity among Gen Z and millennial leaders. Yet many electronic invoices are overlooked by recipients. Banks could help by providing follow-up and reminder tools, keeping businesses and customers aligned.

Cash flow analysis is another area ripe for improvement. Despite widespread technology, many business owners still rely on pen and paper or Excel spreadsheets. Embedding cash flow insights and alerts into the banking experience—through bill pay, ACH, or wire services—could eliminate the need for separate tools.

Cross-border payments present another opportunity. While relatively few young business owners currently use them, they are nearly twice as likely to operate internationally compared with older cohorts. Banks can simplify these processes to support younger entrepreneurs’ global ambitions.

“When it comes to commercial banking, cross-border payments can be this whole thing that requires a dedicated staffer,” Magana said. “If you’re a smaller business and you’re trying to work with cross-border payments, you’re going to need an interface that feels familiar and that works well with the rest of your digital banking that you’re using for your business.”

“A small business, especially if it’s a sole prop, is probably going to struggle with some big bells and whistles commercial banking cross-border payments solution,” he said.

Social Media Selections

To delve deeper into the mindset of young business owners, Javelin researchers took to social media. Specifically, Reddit has gained prominence as a forum to share human insights.

After perusing the r/small business subreddit, there were surprisingly few questions focused on fundamentals like invoicing or cash flow. Instead, many centered on choosing the right business account. This spotlights the final area of improvement in business banking.

“What this is telling us is that FIs need to be doing a better job with the account selection process,” Magana said. “You should explain what the value of a business account is and make sure that your landing pages are informative, user-friendly, and that they’re not just rate sheets.”

“We see that a lot in retail banking, where it’s, ‘How do I pick the bank account that’s best for me?’ and it’s like, ‘This one has 0.59% APY, this one has 0.65%, and this is what each of them cost,’” he said. “That doesn’t really tell you anything; that’s not a help-me-do-it approach to picking a bank account.”

These questions highlight a common challenge. Many Gen Z and millennial entrepreneurs start with gig work or side hustles, where business and personal finances are intertwined. Even tech-savvy users often seek clear guidance on account selection.

“It’s offering wizards and helping set up that advisory fiduciary relationship from the start,” Magana said. “Even with prospects who are trying to pick an account, it’s a big way forward. It’s also possible that winning the next millennial or Gen Z business owner might start with satisfying the ones that you currently have, because there’s a lot of cross-chatter in these social media spaces.”

‘Sometimes they’re like, ‘XYZ financial institution sucks and I’m switching away from them as fast as possible,’” he said. “That is probably not something that you want young business owners to see when they’re asking for help on social media. It might be important to tend your own garden first and let word of mouth help drive some of that acquisition.”

Alleviating Churn Risk

Fostering these relationships is critical because business owners have more options than ever. Beyond traditional banks, fintechs continuously expand their repertoire.

“We’ve seen Venmo in the retail space,” Magana said. “Venmo is perfect for settling up after dinner with your friends, but they also want to say, ‘You can keep your money in here and we’ll give you a debit card so you can spend your balance; we can do all this financial stuff and we’ll give you a credit card.’”

“It’s all well and good to have your younger business owners messing around with PayPal to send payments back and forth,” he said. “But what happens when PayPal wants to be their business bank, and all of a sudden you’ve silently lost this customer?”

Optimizing business banking across the five focus areas is key. Many young business owners already rely on third-party tools—Square for digital invoicing, QuickBooks for cash flow analysis, and PayPal for cross-border payments. Once these tools meet one need, they are likely to seek others, underscoring the importance of a comprehensive, modern banking experience.

“There is a percentage of these younger business owners who are using in-house tools, but some of these third parties—your PayPals, your Squares—they are happy to get you for payment services, but they’ve got other ambitions, too,” Magana said. “They wouldn’t mind also offering you a credit card or helping you run your business.”

“They pose this higher risk of churn if you’ve got a bunch of your younger customers banking with these tech-savvy third parties—and that’s a threat,” he said.

The post Gen Z and Millennials Are Business Owners: Are Banks Ready? appeared first on PaymentsJournal.

Running a business shouldn’t mean navigating a maze of payment options. But the sheer variety of ways there are to pay today puts pressure on businesses to accommodate every option—or risk losing a sale.

To meet this challenge, many businesses with simple payment needs are turning to payment gateways for businesses, which help them seamlessly accept a wide range of payment types. These systems manage the entire transaction process, from the moment a payment is initiated at the point of sale to when it’s submitted to the processor. Payment gateways can accept credit and debit cards, eChecks, digital wallets, contactless payments, and transactions made online or via mobile.

You can simplify things even further by choosing a payment gateway that also provides a merchant account. Authorize.net has an all‑in‑one solution that means you don’t need to separately contract with a bank or third-party processor to get set up. This can speed up onboarding, reduce administrative overhead, and give you a single point of contact for both payment processing and gateway support. For small and mid‑sized businesses, this often translates to faster access to funds, fewer integration headaches, and a more streamlined payment experience overall.

But it’s not just about convenience. A payment gateway can give you access to more innovative payment experiences that let you capture more sales, give you greater control over the payment process, enhance fraud prevention, and access to a wealth of data to drive your strategies.

How to Keep Up With Innovation

Payment gateways are creating better ways to serve their users all the time. Visa’s recent relaunch of Authorize.net introduced features that make it even more user friendly, with an updated interface that’s seamless to navigate, a customizable dashboard, and an AI support tool with expanding capabilities.

Authorize.net has also optimized its merchant onboarding, withpricing templates that reduce repetitive tasks and minimize errors, plus a portfolio default that automatically generates sales profiles for a seamless start every time.

How to Accept More Kinds of Payments

Authorize.net is currently one of the most popular payment gateways for businesses, supporting 400,000+ small to mid-size businesses in the U.S.

Today’s shoppers expect their preferred payment method—whether it’s a physical credit card, a digital wallet, or something else—to be accepted wherever they shop. In addition to online purchases, in-person point-of-sale transactions have also grown more complex. Consumers may want to pay with a gift card, tap to pay, or even use cash. At one time, investing in hardware to handle all these options required significant effort.

But gateways like Authorize.net can provide a virtual point-of-sale (VPOS) that allows you to connect a compatible card reader to a computer. You can simply log in and start accepting payments. This flexibility gives you the ability to stay up to speed with trends and offer customers a way to pay that feels right for them.  

How to Manage Recurring Payments

Recurring payments have long been a challenge for businesses looking to save customers the hassle of manually re-entering billing or payment details for every transaction. The problems multiply when a customer’s card is updated or replaced and the payment information changes.

A payment gateway can communicate with the card issuer to update the card details automatically—without any input from the business. Not only does this make the process smoother, but it also helps retain customers. Repeatedly asking for payment details—or even just re-confirming a card number—gives customers an opportunity to reconsider whether they want to continue the service.

If your business is subscription-based or relies on repeat customers, look for a payment partner that offers an easy-to-use recurring billing tool. Make sure it allows you to customize billing schedules to fit your business model and includes features like trial periods so customers can try your product or service before being charged.

How to Prevent Payments Fraud

Over the next five years, analysts project that small and medium-sized businesses will lose more than $130 billion due to payments fraud, per Jupiter Research. Most businesses with simple needs would be overwhelmed trying to handle such challenges.

Consider a payment gateway that offers fraud detection capabilities, like Authorize.net. Its built-in fraud tool, Advanced Fraud Detection Suite, has 13 configurable filters to help you set things like minimum transaction thresholds, payment velocity, and country limits—so you can be vigilant against fraudulent transactions

How to Leverage Payments Data

Another essential feature of a payments gateway is the ability to view payment results and data at a glance. A high-quality payments dashboard should provide a clear overview of any urgent and pending tasks and offer you one-click access to common actions such as accepting payments, locating transactions, and sending invoices. And the dashboard should be customizable to fit your needs, highlighting relevant opportunities and information. It should also leverage the full range of payment data flowing through the gateway.

Compiling and analyzing payment data can be a key advantage for any business. It’s important to ensure your gateway includesvisualizations of key trends and metrics—like settled payments and transaction volumes over time—to help you focus your efforts.

“Analytics are the lifeblood of any business today. Data tells us things about a business that we may not observe anecdotally. A business owner takes hundreds or thousands of credit card transactions a month, and you’re not going to sift through them to identify patterns. A good dashboard packages them up gives you key metrics so you can see how the business is doing. What ZIP code are my customers coming from? What are the payment trends in my business? That’s the crucial kind of information a payment gateway can give you.” – Don Apgar, Director, Merchant Payments Practice, Javelin Strategy & Research

Authorize.net in Action

One business that has fully leveraged the benefits a payment gateway can provide is online mailing service Click2Mail. They’ve relied on Authorize.net for years, going beyond simply processing payments to helping improve their business operations.

When a customer enters their payment information during a purchase, it’s stored securely for future transactions, making recurring payments seamless. With Authorize.net’s Account Updater, Click2Mail can automatically update expired or reissued card details, reducing the time spent reaching out to customers for updated information.

And when a customer’s payment is declined, Authorize.net gives specific information about why the payment was unsuccessful. This helps resolve issues more quickly, reducing chargeback fees and creating a smoother experience for customers. The secure tools now immediately identify and review suspicious transactions, allowing Click2Mail to act swiftly and prevent losses. The gateway’s proactive approach allows Click2Mail to approve legitimate transactions, void fraudulent ones, and flag suspicious activity.

Click2Mail has already utilized Authorize.net’s new features, like the dashboard that groups together related tasks for easier navigation. At a glance, a Click2Mail associate can focus on customers, payments, reports, accounts, or the marketplace—whichever needs attention.

This means Click2Mail’s team can concentrate on delivering cutting-edge software solutions that simplify sending mail for their customers.

“Because the gateway’s whole business is getting the transaction from the merchant to the processor, the process can focus on that ‘first mile’ of the transaction. That lets them support more transaction types from different kinds of hardware, gives them the rich data they need, and leaves the retailer free to run their business, not the payment process.” – Apgar

Learn more about what a payment gateway like Authorize.net can do for your business.

The post How Payment Gateways for Businesses Can Help You Offer Your Customers More Options appeared first on PaymentsJournal.

Small businesses power the U.S. economy, but for many, the access to reliable financing remains a persistent challenge.

To help close that gap, Visa has launched Visa & Main, a platform designed to centralize working capital and provide critical tools for smaller enterprises.

“Offering working capital and client acquisition tools are not new in the merchant space, acquirers and processors have been offering these tools for over 20 years,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “However, they are not available uniformly across the merchant market.”

“Some acquirers (like Square) have been very active in offering these tech and financing tools to merchants, while other acquirers don’t have them on their radar,” he said. “So, the play lines up with what Visa is doing. Rather than competing with our processor/acquirer customers, we will bring services to market that enable them.”

Walking a Fine Line

The growing small business market has become a central focus for many leading payments firms, fueling the launch of new point-of-sale systems, embedded finance platforms, and payments gateways.

“It’s an interesting move, although it tracks with their recent strategic moves in acquiring,” Apgar said “Within the last two years, Visa brought previous acquisitions Authorize.net and CyberSource together with VeriFi under the banner of Visa Acceptance Solutions (VAS). This strategy walks a very fine line between enabling your customers and competing with them.”

“Customers here are the banks and processors that deliver Visa services to merchants,” he said.  “Visa is no longer relying on their distribution through customers to bring technology to merchants, it advertises VAS directly to merchants and then works in conjunction with the merchant’s named acquirer to implement the tech.”

Controlling the Narrative

Visa also aims to entrench its solution by delivering a holistic platform for smaller merchants that helps level the playing field. For example, Visa & Main includes cloud-system capabilities and fraud detection tools.

“Both VAS and Visa & Main are designed to provide Visa with more control over the narrative that merchants hear,” Apgar said. “In other words, they are taking their tech story direct to market rather than relying on their acquirer/processor distribution channel to tell it. But at the same time positioning their efforts as helping their distribution partners, rather than competing with them.”

The post Visa & Main Brings Holistic Tools and Financing to Small Businesses appeared first on PaymentsJournal.

The relationship between financial institutions and small businesses has grown increasingly strained. Many small businesses are becoming dissatisfied with their payment and banking services. In fact, more than half obtain their merchant payment accounts from providers other than their primary bank.

In a PaymentsJournal podcast, Fiserv’s Tim Ruhe, Head of FI Payment Strategy, AJ Levin, Senior Director for Small Business Market Strategy, and Don Apgar, Director of the Merchant Payments Practice at Javelin Strategy & Research, discussed why small businesses are turning to fintechs for payment services and what banks need to do to remain competitive in this critical market.

Fragmented Relationships

Research shows that small businesses are turning to multiple providers—typically three to five fintechs—to meet at least one of their financial needs. This means they’re stepping outside their primary financial institution and relying on nonintegrated solutions—a complex and fragmented approach. To run their day-to-day business, they’re spending nearly 20 hours a week on cash flow and financial processes. Part of this burden stems from juggling so many different providers.

“They’re fragmenting their relationships, going to multiple places to serve their banking and payment needs,” said Ruhe. “They’re not getting everything in one place the way we would like them to. If you ask them how they pay and get paid, you generally hear a pretty incredible fragmented journey and to me that leads to: OK, there’s some work to be done. It’s not enough to just have a lending product and a bill pay product, we need solutions tailored to the needs of those small businesses.”

Take invoices, for instance. Many small businesses still send paper invoices but want to move to electronic invoicing and receive payments digitally. Ideally, they’d do that through their financial institution rather than a fintech, so the bank has visibility into where deposits are going.

That’s an area where banks haven’t competed as well as they could. Fintechs and banking-as-a-service providers are gaining ground by leading with specialized offerings in niche categories, then expanding into payments. Before long, they start pulling customers away. To prevent that, banks have to make sure they’re offering the right solutions to protect against that.

Small Business Is a Tweener

Historically, banks have served small businesses using a mix of consumer and commercial mid-market products. Small businesses have to choose between consumer services—which are intuitive and easy to use but lack advanced capabilities—and commercial banking services, which are typically geared toward businesses with hundreds of millions in revenue and dedicated staff to manage payables and receivables.

Small businesses are a tweener segment. They have merchant services, invoices, accounts payable, payroll cards, and loans, but they still need the simplicity of consumer banking. Often, the staff is just the owner and an accountant. They don’t have the time to learn new tools. If using their bank requires a learning curve, they’re likely to move on.

“That ultimately is the conundrum we’ve seen with financial institutions not having a dedicated small business solution,” said Ruhe. “We saw the seismic shift in real-time payments and mobile 10 or 15 years ago. Should banks offer P2P services? Now, it’s no longer a question. This is in the same category. Should we have a small business-focused integrated payment capability? Increasingly the answer is yes.”

These are revenue generating services. Small businesses expect to pay for quality solutions—whether it’s invoicing, expedited payments, real-time payments, or the ability to pay with a card to better manage cash flow. Fintechs are actively monetizing many of these revenue levers, while traditional financial institutions are not.

“For folks that have been in the merchant services space for a while, you remember the old race to zero,” said Apgar. “It was all about price, and it squeezed all the margin out. But in today’s market, it’s less about price for the small business and more about the interoperability, the convenience of being able to do everything in one spot. The verticals companies have made inroads into payments and grabbed basically half of the market share away from banks. Because of that, it’s extremely profitable for these software companies, because they’re not selling it on a low price.”

Making the Customers Aware

Banks now see the opportunity to step into that space with a completely interconnected product set that lets business owners run their operations more efficiently. But simply having the capability isn’t enough—it won’t be successful if customers aren’t aware of it. Small businesses are among the busiest customers a bank serves. They’re focused on running their business, which means they have limited time and capacity for new things.

Every bank and credit union needs to make sure their customers know what’s available to them. Banks still have staff in branches who engage with customers—and while many customers no longer visit branches, small business owners still do. That’s an opportunity to become the Genius Bar for small business at the branch.

“Today, we’re only seeing merchant services added to the bank account at opening 15% of the time,” said Levin. “To make sure that you’re beating the competitors to the punch, getting in front of the small business at the right time, that conversation has to be moved up further along in the process at account opening. Make sure that you’re able to capitalize on this buying moment with the small business.”

The Lure of the One-Stop Shop

The average small business owner wants the simplicity and digital capabilities of a consumer bank account, but also needs some of the features of a commercial demand deposit account. The opportunity for banks today lies in making it easy for small business owners to access all the functions and data they need to run their business in one place.

By bringing these products together and creating a one-stop shop—where merchants can not only access banking services but also payroll, insurance, and other essential business tools—banks can deliver a win for both the small business and the institution itself.

“Merchant services can help financial institutions deepen their small business relationships and improve their cross-selling abilities,” said Levin. “Merchant services can help financial institutions grow and protect their deposits—they result in twice the deposit growth versus accounts without merchant services. If you offer the one-stop shop, there’s less reason for the small business to go outside of those banking walls.”

The post How Banks Can Bring Small Businesses Back to the Fold appeared first on PaymentsJournal.

As lenders increasingly turn their attention to the small and medium-sized business segment, Plaid is launching a solution designed to provide better access to data.

The company’s Transactions for Business platform builds on Plaid’s existing infrastructure, originally developed to parse consumer transaction data. By shifting this model for small business clients, the platform will allow financial institutions to get a holistic view of an enterprise’s financial profile—including revenue, payroll, loans, and expenses.

With these insights, banks may be better positioned to support their small business customers through more personalized financial tools, both for managing operations or obtaining capital.

A Difficult Situation

Securing financing has been a pain point for small businesses over the past few years. Federal Reserve data found that a little over a third of small businesses that applied for financing last year received either partial financing or nothing at all.

Because many larger financial institutions view smaller organizations as too small to be profitable, many small businesses have increasingly turned to fintechs or nontraditional lenders to make ends meet.

Many cash-starved small business owners have even turned to credit cards, with more than half reporting they have relied on personal credit cards to cover business expenses. This can often worsen an already difficult situation, as small business owners typically face less favorable credit card rates than the average consumer.

Taken as a Whole

Taken on its own, a small business may seem like too much effort for too little profit. However, when taken as a whole, there are roughly 34 million U.S. small businesses. This creates a $150 billion opportunity for financial institutions.

This opportunity can be even greater for community banks and credit unions that have struggled to grow their consumer banking base in a competitive environment. Not only are small businesses a new customer base for these institutions, but building relationships with local business owners gives them a way to make inroads in their community.

As more institutions eye the small business segment, Plaid is banking on its established network. The company noted that it supports business checking, savings, and credit accounts from nearly all U.S. banks that serve small businesses.

The post Plaid to Expand Data Coverage to Small Business Banking appeared first on PaymentsJournal.

For busy business owners, the constant stream of push notifications can quickly become overwhelming. As a result, many financial institutions haven’t seen value in trying to elbow in amid notifications about orders, industry news, and social media updates—especially when there are other ways to reach their business customers.

However, as Ian Benton, Senior Digital Banking Analyst at Javelin Strategy & Research, detailed in the report How to Turn Push Notifications into a Powerful Engagement Tool in Business Banking, many businesses are open to receiving relevant updates from their bank through push notifications. Even more, this underutilized channel has use cases that can strengthen a financial institution’s communications.

Benefits That Stand Out

Although push notifications may not be top of mind for banks, they offer an open channel to business owners. The study found that roughly two-thirds of mobile banking users have enabled push notifications, a rate that outpaces the monthly adoption rates of SMS and email.

Many financial institutions have shied away from push notifications amid concerns that they could be intrusive, but that largely isn’t the case. Benton’s study found that only 18% of business owners said they received too many alerts from their bank.

Additionally, most respondents said they would be comfortable with automatic enrollment in alerts designed to improve their organization’s financial health.

Despite this receptiveness from business owners, push notifications haven’t been an effective communication mechanism for banks for one main reason: They are mostly used to report routine information like account balances or suspicious purchases.

According to the Javelin survey, this is not what most business owners want. When the respondents were asked how they would like to receive messages like “We noticed an unusual transaction” or “Your monthly statement is ready,” they overwhelmingly chose channels other than push notifications.

Financial institutions are not only using push notification for the wrong type of messages but also failing to take advantage of the format’s full potential.

“Push notifications have certain benefits that email and SMS don’t have,” Benton said. “You can deep-link; you can put actions directly within the notification. The notification can go to any device type. You can control their timing a little bit better. There are some definite benefits of using push notifications, but the problem is that business owners and people in general receive dozens of them on a daily basis.”

“If you really want to use them, you have to stand out,” he said.

Rethinking the Banking Experience

The expanded capabilities of push notifications also include adding rich media like images, progress bars, and graphs. This gives financial institutions a much more powerful way to personalize the content they send.

Benton identified five ways that banks can optimize this content, each directly correlating to the major day-to-day areas of business management. These include cash-flow analysis, accounts receivable, accounts payable, spending oversight, and business performance.

“With cash flow analysis, it’s letting people know, ‘Hey, you have a shortfall upcoming’ or ‘Payroll’s going to be due in the next few days and here’s what you need to do to run that,’” Benton said. “It’s ‘You’ve got a large bill upcoming, but you might not need to make a transfer.’ That’s something that’s going to be proactive, and it’s going to demonstrate that the bank is on the side of the business owner.”

A few other examples:

Accounts receivable: The bank could remind the business owner that they have outstanding invoices that need collection and offer assistance.

Accounts payable: The institution could remind the business owner that a quarterly tax payment is due and offer to schedule it.

Spending oversight: The bank could send a notification when a company has exceeded budgetary constraints in a specific area. A push notification regarding performance insights could be generated when a company reduces its debt or expenses.

“You do have to build the back-end capabilities behind that to be able to even generate those types of insights, but it’s not just about the messaging capability itself,” Benton said. “It’s about rethinking the banking experience in general.”

Tactical Relevance

Beyond better content, financial institutions can tactically use push notifications to reach their customers. The onboarding process can often be complex, but enrollment for notifications is often more intensive, often with a series of menus rife with dozens of on-off toggles that a customer has to wade through to select their notifications.

This complexity often daunts business owners, and many will stick with default configurations and rarely adjust them.

However, financial institutions can take the onus off the user and make push notifications more relevant. One of the most effective methods is to bundle notifications.

“Let’s say you have a delegated user like an accountant,” Benton said. “You could pre-enroll folks like that in a set of bundle notifications that are going to be useful for them, versus a business owner who might need to make approvals and things like that.

“It’s thinking about who the user is and prompting people—not just during onboarding, but if they’re making a payment or creating an invoice—and asking if they would like to set up alerts for this, and taking them to the right setting. There are opportunities to make it easier for folks to enroll in push notifications.”

Associating with Action

Though email and SMS are well-designed for many of the most common alerts, financial institutions should also incorporate push notifications. These messages can be a highly effective avenue for banks to engage with their customers—once they find the sweet spot.

“It has to be contextual,” Benton said. “It has to have an action associated with it, but it can’t be super urgent. It has to be something like, ‘You probably want to act on this now, but we’re not going to pull you out of a meeting to act on it.’”

The post From Bland to Beneficial: Using Push Notifications to Reach Business Customers appeared first on PaymentsJournal.

Recent technological breakthroughs have given merchants more payment optimization options than ever before. However, the increasing complexity of the landscape makes it challenging to identify value and create opportunities while keeping expenses down.

In a recent Javelin Strategy & Research report, 2025 Merchant Payment Trends, Don Apgar, Director of Merchant Payments, and James Wester, Co-Head of Payments, examined the impact of three emerging trends shaping the merchant experience: artificial intelligence, the fintech bubble, and the shift toward value over cost.

Saving a Dime

Merchants are increasingly focused on payments performance, constantly seeking ways to optimize their payments operations. They closely track their organization’s metrics and often employ dedicated staff or vendors to monitor payments activities.

In pursuit of lower costs, many merchants have turned to payment orchestrations platforms. However, in some cases, the expense of these solutions outweighs the intended savings.

“If you’re running on a payment-orchestrated platform and you’ve got two or three processors, you may have somebody on the finance team whose job title is analyst, but in reality, they spend 100% of their time working on payments-related reconciliation and cost allocation,” Apgar said. “Also, you may have added a vendor who does loyalty or risk reduction or some other ancillary process that only applies when a transaction has certain characteristics.”

When multiple processors and vendors are introduced, the added complexity makes it difficult for merchants to ascertain the true cost of payments.

“It’s the old adage: ‘I saved a dime, but it cost me a dollar to do it,’” Apgar said. “I optimized authorization, and I sold an extra $100 in goods, but it cost me $1,000. I think there’s going to be a focus on drilling down in the merchant organization and asking, ‘What is the real cost?’ The answer is always somewhere in the middle of a completely deconstructed operation with multiple vendors, versus doing everything on your own.”

A Historic Bubble

The vendors that become an integral part of many merchants’ operations are often fintech companies that have sprung up in the past few years. However, these firms face stumbling blocks of their own, and an overreliance on fintech partners could create risks for merchants in the long run.

“I think we’re seeing another fintech bubble,” Apgar said. “History is repeating itself, like the dotcom bubble in the early 2000s. Investors were throwing money at every business plan that didn’t have a typo on it, and it didn’t have to make money, it just had to get market share. We’re seeing a lot of that in fintech, too. We have so many business plans that don’t have a navigable path to positive revenue, but it’s being obscured by all the headlines and the buzz.”

Some of these challenges became evident last year, exemplified by the collapse of Synapse, a fintech whose documentation lapses left banking customers unable to access $85 million of their funds.

The fallout from Synapse’s failure prompted regulators to scrutinize the role of fintechs in the modern financial system—an oversight that is set to intensify this year.

“We’ve seen a blizzard, not even a flurry, a blizzard of compliance fines come down from the Federal Trade Commission, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Commission,” Apgar said. “Everybody is worried about compliance, fraud, and money laundering. Banks can contract these things out to a fintech, but at the end of the day, the bank owns the responsibility for them.”

As regulators increase their focus on fintechs, pressure will mount on the organizations that don’t have a durable value proposition. Under this heightened scrutiny, some firms may consolidate, others may be acquired, and some may be forced to shut down entirely.

Second Movers

Despite these hurdles, financial technology has irrevocably altered the banking model, and its impact will only intensify as more financial services firms integrate AI. However, this adoption faces obstacles. While artificial intelligence is one of the most powerful and transformative technologies ever developed, it still has many imperfections.

For example, Google faced backlash after its Gemini AI engine provided inaccurate feedback on multiple occasions. There have also been instances where AI has “hallucinated,” generating fictitious information.

As organizations race to capitalize on AI’s advantages, they should be cautious about entrusting critical functions entirely to to artificial intelligence. For example, a financial institution may deploy AI to sift through millions of transactions as part of its compliance efforts—a task for which artificial intelligence is generally well-suited.

However, if AI overlooks something, fails to report an issue, or malfunctions, the bank will still be held accountable for any compliance failures.

“There’s another old adage: ‘You can spot the pioneers—they’re the ones with the arrows in their backs,’” Apgar said. “Our prediction for this year is there is going to be a second-mover advantage. I think that the folks that jump on the bandwagon early and are the first to roll out AI-driven chatbots on their website, they’re going to get a black eye because it’s not going to work.”

While there are still too many gaps to fully rely on AI, companies can’t afford to ignore it. In the coming years, organizations—and the world—will effectively help train the language learning models that power AI. As time goes on, AI will learn from its mistakes, and the technology will improve significantly  in the long run.

Therefore, organizations that take a slower, more measured approach to AI implementation will be in the best position to reap the rewards when the technology is fully optimized.

“It’s certainly not too early to start mapping out how a highly functioning model could create efficiencies and potential savings,” Apgar said. “Once the technology becomes more accurate and reliable, then you’ve already got a plan. You will have a framework to evaluate the progress of the technology and say, ‘I think this model is at a point where it’s suitable for this function.’”

“When you look at it in that light, when you do implement AI, you’ve got a much higher probability of success,” he said. “Success being defined as it didn’t blow up and cost me anything.”

The post Merchants Are Searching for Value in an Increasingly Complex Environment appeared first on PaymentsJournal.

Amid the surging demand for cross-border payments, India’s BRISKPE has launched a platform designed to provide global reach for even the smallest businesses.

The platform is geared to address the needs of marketplace sellers, gig economy workers, exporters, and other micro, small, and medium-sized enterprises (MSMEs). Payment issues have long been a persistent concern for small business owners, with high fees, complex currency conversions, delays, and fraud risks often acting as barriers to entry into global markets.

Another issue has been the dearth of payment types available to merchants. To remedy this, BRISKPE’s platform will support both pay-by-bank payments and card transactions facilitated by PayPal and PayU, a Netherlands-based firm that has gained significant traction in India. PayU has been a strong supporter of BRISKPE’s cross-border efforts, contributing millions in seed funding to help launch  the platform.

Currency Capability

For pay-by-bank transfers, BRISKPE said that funds will be credited within one day. Initially, the platform will support transactions in six currencies—USD, GBP, EUR, CAD, AUD, and SGD. And it also support transfers in over 30 currencies using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) protocol.

SWIFT operates a global messaging network that has widely been considered a contender to handle cross-border operations. The organization has been actively working to support new payment types, including crypto and digital assets.

Unlocking Potential

Although SWIFT’s solution has gained greater traction, it doesn’t specifically address the cross-border payment issues faced by small businesses. To that end, the BRISKPE platform will charge business owners a flat 1% fee on all pay-by-bank transactions.

BRISKPE aims to streamline the onboarding process for merchants by offering instant Know Your Customer (KYC) approvals and providing tools to track and manage payments. To mitigate fraud, the platform will leverage the existing fraud detection capabilities that PayU and PayPal have in place for wallet and card transactions.   

“Our goal is to empower MSMEs by breaking down the financial and operational barriers that have held them back for too long,” said Sanjay Tripath, CEO and Co-Founder of BRISKPE in a statement. “By simplifying cross-border payments and offering a variety of payment options, including A2A, card-based and wallet-based collections, we’re not just helping businesses save costs—we’re enabling them to address diverse client needs and focus on growth, innovation, and unlocking their full potential.”

The post BRISKPE Launches Cross-Border Payments Platform for Small Businesses appeared first on PaymentsJournal.

New U.S. Treasury Department regulations set to take effect next year aim to keep criminals from using businesses as fronts for fraud or money-laundering.

The rules represent the realization of the Corporate Transparency Act, which was passed several years ago, which requires over 30 million U.S. small businesses and corporations to submit a Beneficial Ownership Information report identifying individuals who directly or indirectly own or control organizations.

“When conducting money laundering investigations (and some fraud investigations), many organizations fail to address the identities of businesses and other legal entities,” said Jennifer Pitt, Senior Fraud & Security Analyst at Javelin Strategy & Research. “Until the Corporate Transparency Act of 2021, small businesses were not required to provide beneficial ownership information.”

“When setting up an LLC and obtaining an employer identification number (EIN) with the IRS, some businesses would list only one person (such as an attorney) as the statutory agent,” she said. “No one was able to determine who had a vested interest or beneficial ownership in the business. Money launderers used this lack of required transparency to create LLCs with vague ownership to conduct or facilitate illicit activity.”

Threatening Viability

Though the new framework is expected to reduce the use of anonymous corporations for illegal activities, the new rules could also have substantial effects for law-abiding small business owners.

If they fail to submit their ownership data to the Treasury Department by January 1, they could face significant fines. According to FinCEN, businesses that don’t file their report on time may incur civil penalties of up to $591 per day, while owners could face criminal penalties of up to $10,000 and up to two years in prison.

These fines could quickly mount and threaten the viability of many small businesses at a time when so many are under financial pressure and scrambling for financing. According to CNBC, many organizations are unaware of the new rules—as of December 1, only roughly a third of companies have filed their reports.

Following the Developments

The Treasury Department has insisted that the regulations—and the accompanying penalties—aren’t designed to punish small businesses. FinCEN said that businesses who correct a mistake or an omission within 90 days of the January 1 deadline can avoid penalties. In addition, larger companies and financial institutions are exempt from the rule, as they already report ownership data to the government.

The new regulations have faced some legal pushback, most notably in Texas. However, in most states, small businesses will still be required to file their BOI reports in the coming weeks. While small businesses may undoubtedly experience some pain points in the months ahead, the new regulations could ultimately have a positive impact on banks.

“For financial services providers, the Corporate Transparency Act of 2021 allows them to more effectively conduct know-your-business (KYB) checks and assess the risk of banking their business customers,” Pitt said. “With the newly required information, financial services providers can conduct research on each person listed as a beneficial owner, searching sanctions and watchlists—as well as known criminal history—and understand their behaviors.”

“This business transparency does have some concerned about privacy and government overreach, as exemplified by the Texas federal court ruling,” she said. “It will be interesting to follow the developments with the Corporate Transparency Act, and Javelin will be creating a KYB scorecard that will focus on the need to understand beneficial ownership.”

The post Rules Designed to Mitigate Fraud Could Impact Small Business Owners appeared first on PaymentsJournal.

Wisconsin and Vermont have become the latest states to propose laws requiring retailers to accept cash as payment. Wisconsin’s bill, introduced late in 2023, would prevent establishments from refusing cash for any in-person transaction of less than $2,000. The Vermont bill has no such limits. It states simply: “A seller or lessor who offers goods or services to consumers shall not refuse to accept cash as a method of payment.”

Arizona, Colorado, Massachusetts, Michigan, New Jersey, New York, Mississippi, and the District of Columbia already have payment laws allowing people to use cash at all physical points of sale. Several cities, including Philadelphia and San Francisco, have similar laws.

The Federal Reserve has made it clear that there is no requirement for businesses to accept cash. “There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services,” the Fed’s website says. “Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.”

In Wisconsin, sports venues such as Lambeau Field and the state fair have moved to a card-only policy. But The Cap Times reported that Brunch, a breakfast chain in Milwaukee, recently shifted back from its card-only policy after customers complained.

At times, this movement appears to be a solution in search of a problem. According to a report in Seven Days, an independent Vermont media outlet, even the lawmakers proposing the new rule didn’t know if there were retailers who refused to take cash. “While several members of the committee said on Tuesday that they had heard anecdotes about cash-only requirements, including at food trucks,” the article reads, “none of the cosponsors could name a business they were certain has a card-only policy.”

Fueling the Movement

Card-only retailing has been gaining steam for years but became much more popular during the pandemic. Some laws requiring businesses to accept cash predate COVID-19, though. New Jersey, for example, banned cashless retail outlets in 2019.

The resulting movement to retain cash has been fueled in part by Cash Matters, a nonprofit group supported by the ATM industry. Cash Matters was formed in 2017 to “support the existence and relevance of cash as an integral part of the payment landscape now and in future.” According to Cash Matters, cash is used in 12% of all point-of-sale transactions in the U.S.

Laws requiring retailers to accept cash are also under consideration in Georgia and Miami, among other areas. States such as Mississippi and North Dakota have already considered and rejected such bills.

The post Proposals Requiring Merchants to Accept Cash Move Ahead appeared first on PaymentsJournal.

Small-business owners want to focus on serving their customers and growing their business, not deal with time-consuming manual processes that come with managing payments and invoices. And they’re not getting the help they need. A recent survey showed that 64% of small businesses were unsatisfied with their current payment offerings, and nearly 20% said they will leave or consider leaving their current financial institution.

What are these businesses looking for in a financial institution, and what is being done to meet those needs? In a recent PaymentsJournal podcast, we asked Tim Ruhe, VP, Head of Small Business Payments at Fiserv, and Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, about the pain points that small businesses experience and what FIs can do to serve them better.

Looking for Simpler Solutions

Small-business owners want to focus first and foremost on the business itself, not on collecting and processing payments. “They don’t have a lot of time for managing all the payment inflows and outflows there,” Ruhe said. “But instead, they typically end up using two to four tools to manage how they pay suppliers, how they collect invoices, how they collect payments from their customers, and how they send invoices. What they want is a single place to manage all that—and they don’t really have good answers for that today.”

Ruhe has seen many business owners with invoices stacking up—on paper and in emails—alongside accounting software that they’re trying to integrate into the business. Many operations remain under-digitized as business owners try to deal with sending out bills and getting paid. “We’ve found that 56% of small-business owners consider cash flow and invoice payment management an ongoing pain point,” Ruhe said. “And 81% of small businesses expect to create payment flows that align with their businesses, and they don’t believe financial institutions are delivering on that yet.”

According to Riley, sometimes it’s easier for small businesses to log all of their transactions in their personal account, but that’s not a good business procedure. “It leaves you exposed to tax problems, leaves you exposed to opportunities, and it doesn’t set the stage for growing the business,” he said. “That’s something we should address with more integration and capabilities.”

Fit for Purpose

What these business owners seek is a well-engineered process that takes them all the way through from delivering an invoice to receiving payments. With a wider variety of payment methods available than ever before, that can be harder than it looks. “There’s a bit of a rallying cry that we’re hearing from small businesses that says give us a fit for purpose,” Ruhe said.

Fiserv sees its mission as helping those small businesses grow by taking the complexity of managing payments and invoices off the table and simplifying their owners’ lives. Fiserv knows these business owners want a single financial institution to turn to for such solutions.

“We’re hearing from almost every FI that improving their small-business capabilities—and specifically their small-business payment capabilities—is a top priority in the next year or two,” Ruhe said. “If you’re hitting a low point in your cash flow and need to pay with credit cards, those are tools and capabilities that many small businesses don’t have access to.”

A new study from Intuit shows that a significant number of small businesses have had to rely on credit cards as a source of capital over the past 12 months. In the United States, 30% of small businesses have used credit cards as a primary or secondary source of funding, while only 22% relied on a loan or a line of credit. 

These businesses don’t want to go one place for credit cards and another for loans. They want an easily accessible, comprehensive view of their cash flow that helps them decide when they need a line of credit or to use a credit card.

Conclusion

Integrating all these cash flow needs has been a priority for Fiserv. “What we’ve been hearing is, ‘I need digital solutions that map to the work that has to be done, I need the jobs to be done right, and I need to bring all my invoices into one place so I can see everything that has to be paid,’” Ruhe said. “That’s what inspired us to launch CashFlow Central, which we (recently) announced as a powerful, simple, integrated, easy-to-use tool set for small businesses to pay and get paid through their financial institution.”

CashFlow Central combines easy-to-use accounts payable and receivable workflows with Fiserv’s large biller and merchant network and high scale payment processing capabilities. “With CashFlow Central, we help the small-business owner get fully automated so they can spend more time on growing their business,” Ruhe said.

That kind of holistic approach empowers the FIs and the small businesses. “While financial institutions are building deposits and portfolio loans, it also helps the small business automate their tasks,” Ruhe said. “They can speed up their payments and get paid reliably and electronically. And that frees the small business to focus on what is most important: managing and growing their business.”  

The post Navigating the Pain Points of Small Businesses’ Payment Needs appeared first on PaymentsJournal.

Today’s labor market has become increasingly tight, with nearly half (44%) of business owners reporting they had job openings they couldn’t fill earlier this year – which means businesses need to be as competitive as possible to attract the best and brightest talent. This is also true of the tools that business owners use to manage their employees – since complicated, disparate, outdated solutions can lead to employee frustration.

In a move aimed at making HR tasks and team management more streamlined and hassle-free, Intuit QuickBooks is enhancing and expanding features inside QuickBooks Payroll that can transform how businesses manage and compensate their employees. These new updates were announced at this year’s QuickBooks Connect, Intuit’s premier event exclusively for accounting professionals, where a range of innovations designed to improve the lives of accountants and their small business clients were highlighted.

With QuickBooks Payroll, businesses are now equipped with a solution that will incorporate human capital management (HCM) features to help meet the needs of a growing workforce by streamlining time-consuming and complex administrative tasks.

A Hub to Manage Employee Data

From enhancing the onboarding experience, consolidating employee data, improving employee engagement, and reducing manual workflows, QuickBooks will be a hub that includes integrated HR Information System (HRIS) functionalities in one place.

Small businesses using QuickBooks Payroll will be able to upload and share documents with their employees through QuickBooks Workforce, a hub for employees to access their pay stubs, manage their time, and more. Document sharing allows employers to share a variety of documents with an employee, including critical HR-related documents. In addition, eligible QuickBooks Payroll employers and employees will soon be able to leverage a new I-9 feature that enables employees and employers to complete Form I-9 during employee onboarding and verify employment eligibility. Upcoming new employee profile, team directory and organizational chart functionalities will further enhance the ability for QuickBooks Payroll to act as a single source of truth for up-to-date, complete employee records.

QuickBooks + Allstate Health Solutions Partnership = Enhanced Benefits

Also during QuickBooks Connect, a new partnership was announced with Allstate Health Solutions, which enables QuickBooks Online Payroll customers to provide their employees with enhanced insurance options. This includes greater access to a wider range of health insurance options, making it easier to purchase and manage health benefits through a single platform.

“Choosing the right employee health care plan is an important decision,” said Laurent Sellier, senior vice president, Intuit QuickBooks Payroll Solutions. “With our Allstate Health Solutions partnership, we’re helping employers access tools and expertise to find the right plans and then set up and run those plans with little to no work on their part, fully integrated with their QuickBooks account and payroll service.”

Businesses will be able to search and pay for insurance plans that best fit their needs, regardless of whether they have hundreds of employees or just a few. They’ll be able to choose tailored high-deductible plans, including options for health savings accounts and health reimbursement accounts.

Beyond basic health, dental, and vision plans, Allstate Health Solutions will offer QuickBooks Online Payroll customers access to supplemental and optional benefits such as short-term and long-term disability, long-term care, accident, hospital, and critical illness. With this new partnership, QuickBooks Online Payroll customers can connect with an Allstate Health Solutions benefits advisor to assist in creating the right plan for their business and employees.

Customers can also contact an Allstate Health Solutions call center where a team of more than 300 agents will be ready to offer guidance, recommendations, or additional insights they’ll need to help them best navigate the complexities of the different health insurance coverage options to find the best fit.

Finding Success with Smart Tools

Businesses want to get the most tailored and personalized experience that will help them simplify their day-to-day operations. In an ever-evolving business landscape, the need for efficient payroll and team management solutions is paramount.

QuickBooks has recognized the challenges and has responded with a suite of features that cater to businesses with a growing workforce. These new enhancements empower businesses with the tools they need to better manage their teams, demonstrating QuickBooks’ commitment to simplifying the challenges small businesses face when managing employees.

The post Intuit QuickBooks Online Payroll Simplifies Human Capital Management with the Introduction of New Capabilities appeared first on PaymentsJournal.

Small businesses are becoming more reliant on credit to manage cash flow problems, according to the newly released Intuit QuickBooks Small Business Insights report. In the U.S., the number of small business respondents with cash flow problems who turned to credit cards for financing needs increased from 51% to 68% between September 2022 and April 2023. Canada witnessed an even more dramatic rise, going from just 37% of respondents to 67% over the same time frame, while the UK experienced an increase from 32% to 51%.

Overall, a significant number of small businesses have relied on credit card debt over the past 12 months—30% in the U.S., 21% in Canada, and 14% in the UK. Those numbers outpace the percentage of respondents who have sought loans and lines of credit, with around 22% of U.S. respondents, 23% of Canadian respondents, and 12% of UK respondents having applied for these within the past year.

Payments Are Rising as Well

In addition to increasing usage, small businesses have also been making higher payments on their credit cards. The average monthly credit card repayment for small business owners in the U.S. reached $13,000 this year, up from just under $10,000 in 2018. Intuit says the increase is largely the result of rising interest rates and a high pass-through on credit cards.

By using QuickBooks customer data, Intuit found that prior to the COVID-19 crisis, credit card borrowing by small business owners had been stable for quite some time. Such borrowing declined significantly during the pandemic, but had rebounded to pre-pandemic levels by 2021, and has been on a continuous upward trajectory since. The accumulation of new credit card debt now stands at 20% above the levels from the pre-pandemic years.

Relying on Their Own Income

Up to two-thirds of respondents said they have relied on their own income to afford to start their own business. That breaks down as 53% who said they relied on income from another job and 21% who relied on income from their investments. Far fewer small business owners—roughly 1 in 10—use family inheritance as a source of funding.

The Intuit findings were drawn from 3.4 million small businesses: 2,795,000 in U.S.; 305,000 in Canada; and 313,000 in the UK using anonymized QuickBooks Online customer data from accounts with at least twelve months of regular transactions.

The post For Debts, Small Business Are Increasingly Turning to Credit Cards appeared first on PaymentsJournal.

As interest rates reach a 22-year peak and inflation remains persistently high, consumers and businesses alike are facing the brunt of unfavorable economic headwinds. But while technology companies have been rushing to provide consumers with more tools to navigate the high cost of living, small business owners have not been given the same amount of attention. 

In response to the financial pressures inflicted by the pandemic, millions of consumers were offered alternative financing options to pay for goods and services online with buy now, pay later (BNPL) plans. This allows consumers to pay for goods and services online over a period of time instead of having a one-time charge on their credit cards. According to Juniper Research, it is estimated that by 2027, consumer spending using BNPL services will reach $437 billion globally—a 290% increase from 2022.  

However, there are currently very few options for small businesses interested in leveraging the same schemes for their business expenses. Despite the fact that many small businesses do not have access to traditional loan sources and cannot afford high interest rates, many companies continue to focus on consumers instead of small businesses. It’s time to pay attention to the backbone of the U.S. economy—small businesses.  

Delving Further into BNPL

BNPL services have been around for decades, with the first recorded instance dating back to the 1840s. Today, companies specializing in consumer BNPL services—such as Affirm, Klarna and Afterpay—grant consumers payment flexibility for a range of purchases without the stringent requirements of traditional lending providers like banking institutions.  

However, alternative financing solutions built into the payment flow that allow businesses to pay their bills over longer periods of time while their vendors get paid in full and on time, have been slow to hit the market. In fact, pay-over-time solutions for businesses have only started materializing during the last year.  

While small business owners are expected to invest in their businesses, they should not be forced to dip into their savings to finance inventory or struggle to secure loans. According to the Federal Reserve’s most recent survey, “two-thirds of firms (66%) used the owner’s personal savings or funding from friends or family in the past five years.”  

What’s more, data from the Federal Reserve last year showed that only 31% of small business loan applicants received their desired funding—down from 51% in 2019. Additionally, small businesses owned by people of color and businesses with fewer employees were among the least likely to receive their requested loan amounts.  

Personalized Solutions

While those small businesses could benefit from alternative financing solutions, there are few options on the market today that are tailor-made for them.  

Many small businesses are subject to seasonal changes in demand or operate as freelancers with fluctuating income streams. Spreading out payments helps ensure that small businesses have enough cash on hand to weather months with lower revenue.  

Additionally, it can take small businesses one to three months to receive funding from traditional sources including Small Business Association loans. Small businesses are craving more flexibility and easier solutions to quickly access financing when they need it most.   

Conclusion

Today, it’s more critical than ever that financial institutions and technology companies come together to support small businesses through alternative financing solutions. Expanding pay-over-time financing capabilities to small businesses could be key to unlocking small businesses’ potential. 

I challenge us all to start thinking more about the 33,185,550 small businesses across the United States that ultimately make up the foundation of our economy.  

The post Small Businesses Should Also Reap the Benefits of BNPL  appeared first on PaymentsJournal.

Fiserv has teamed up with Melio to change the way financial institutions cater to small business payment needs.

Through the partnership, Fiserv has unveiled CashFlow Central, a digital payment and cash flow management solution that helps streamline small business operations and enhance their payment capabilities.

Empowering Small Businesses

What CashFlow Central aims to do is help financial institutions regain market share in the small business sector. According to both Fiserv and Melio, it’s designed to be a turnkey solution for small business payment and invoicing needs.

Through the solution, small businesses will be able to send electronic invoices, accept ACH transfer or credit card payments, and digitize supplier invoices.

Beyond payments, small businesses will also be able to use the solution for expense management, card issuing, and in-store and online merchant payments.

In general, the partnership is looking to better equip small businesses, who often don’t have all of the necessary tools and solutions at their fingertips—at least not when compared to larger organizations.

“Financial institutions are battling to regain market share from direct-to-business competitors, and small businesses are looking for solutions that combine commercial-level capabilities with the ease of use of a consumer payment solution,” said John Gibbons, Head of the Financial Institutions Group at Fiserv in a prepared statement. “Now financial institutions have an answer, a comprehensive, integrated experience that is just right for small businesses, enabling them to pay and get paid electronically and instantly. We believe this will be the first solution in the market to meet their needs.”

Matan Bar, CEO and Co-Founder at Melio also added:

“Cash Flow Central will help small businesses, who are the backbone of the U.S. economy, to minimize busywork and maximize their cash flow. The combination of innovative Fiserv payment capabilities and Melio’s accounts payable and receivable automation software will create significant value for banks and their small business customers.”

The post Fiserv Enhances Small Business Payments Via Partnership with Melio appeared first on PaymentsJournal.

Transformative technologies are shaping the future of finance for small businesses. While financial technology may not be anything new, it’s rapidly evolving to meet the needs of individuals and businesses. As the economy continues to evolve along with financial management, it’s important to understand the future of fintech and its impact on small businesses.

What Is Fintech for Small Businesses?

Fintech, simply put, is an amalgamation of the finance systems of the future. More accurately, they are the tech systems that are used to optimize financial processes and enhance security. In the past, fintech was used to describe more behind-the-scenes operations in which lenders and banking institutions used digital means to enact back-end transactions.

Now, fintech has extended to the consumer with technologies such as mobile applications and online platforms. This type of hands-on tech has allowed people to manage their daily finances without going through big banks in person—or even at all. Today’s customers have more freedom and control over their money. Examples include mobile apps such as Venmo and PayPal or automated stock platforms including Robinhood.

When it comes to the future of financial services, fintech is advancing to meet the needs of more savvy small businesses. By leveraging fintech, small business owners can enjoy more secure transactions on a smaller scale. This, in turn, provides a more enjoyable customer experience. Let’s take a look at the six overarching technologies that are poised to change the fintech future—for small businesses and beyond.

Artificial Intelligence

Artificial intelligence (AI) has long lived past its buzzword days. In fact, small businesses will soon see AI integrations in almost every part of their financial processes.

Similarly, robotic process automation (RPA)—the automation of financial processes and accounting reconciliation for financial institutions—will help small businesses in the following areas:

• Accounts receivable and payable
• Fund appropriation at shared service centers
• Employee timecard and pay adjustments
• Financial records
• Tax reporting and other treasury processes

Using RPA allows for the reduction of human error and faster processing times. For small businesses, this can free up valuable time and resources.

Blockchain

Blockchain has several practical applications for small business finance, as its decentralized nature and use of distributed ledger tech reduce the risk of a data breach. Small businesses rely on meeting their customers’ needs, and this includes keeping their information safe and secure. The cost of a data breach is often too high for small businesses to stay afloat, so tech such as blockchain is key. It offers transparent, tamper-proof transactions and will likely be implemented by small businesses more often for enhanced security.

Internet of Things

The Internet of Things (IoT) allows everyday objects and processes to be connected to the internet. IoT technology has several benefits for small businesses, including in fintech. For example, SMBs can install self-service kiosks that give customers access to streamlined checkout or even on-demand products.

Embedded finance is a similar concept. It takes financial processes—including loans, debit cards, and insurance—and integrates them into almost any non-financial product. For small businesses that utilize e-commerce, this is invaluable. It speeds up transactions and allows for easier and, by association, more frequent sales.

Behind the scenes, small businesses can use IoT to manage inventory. Supply chain disruptions can be detrimental to businesses of all sizes but especially smaller players. With the IoT, inventory payments and other calculations like reorder points can be automated. More small businesses may choose to adopt IoT tech as it becomes more affordable and widely available, including perception and smart sensor systems, wireless communication networks, and application and operations support.

Software as a Service

Cloud-based software from third-party vendors is likely to continue thriving. More small businesses will be able to afford software as a service (SaaS), keeping their financial information safer and more easily accessed. The financial overview that SaaS gives small businesses will offer greater insights into how to scale—and when to scale back.

SaaS platforms can automate and centralize many financial operations for small businesses, such as accounting, payroll, and customer relationship management. Many larger businesses use this type of fintech, but we’ll see smaller organizations adopt it more frequently to reduce costs and optimize operations.

Open-Source and Serverless Platforms

Open-source and serverless platforms are driving collaborative innovation in the fintech space. These free-to-use, decentralized platforms allow developers to access and modify the source code of financial software, fostering a community-driven ecosystem. Serverless platforms provide a scalable infrastructure where smaller businesses can develop and deploy applications without the need to manage server infrastructure. These platforms encourage collaboration, accelerate innovation, and empower small businesses to create customized fintech solutions for less investment.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending platforms are disrupting traditional lending models by connecting borrowers directly with lenders, which are often individuals rather than large corporations. These platforms match borrowers and lenders based on their specific needs, eliminating the intermediaries involved in traditional banking processes. P2P lending offers increased access to capital for small businesses and provides alternative investment opportunities.

Moving Forward

The future of fintech is rapidly approaching. AI, blockchain, IoT, cloud-based solutions, SaaS, open-source platforms, serverless architecture, and P2P lending are just some of the key technologies driving innovation in the financial industry. As small businesses embrace these technologies, they can unlock new opportunities, enhance operational efficiency, and stay competitive with their larger counterparts in the rapidly evolving fintech landscape.

The post 6 Technologies Shaping the Future of Fintech for Small Businesses appeared first on PaymentsJournal.

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One of the challenges small businesses in the supply chain face is ensuring they’re able to make inventory payments on time. This isn’t just vital for the continued solvency of the company, but responsible actions here bolster trusting relationships between supply partners, which can underpin effective growth strategies.

Therefore, it’s important to establish techniques and tools that support effective business operations. One of the most prevalent at the moment is the internet of things (IoT). This refers to a connected ecosystem of devices and software that can improve efficiency, boost efficacy, and empower companies to make informed decisions.

We’re going to take a look at how IoT can help small businesses manage their inventory payments.

Mitigating Wastage

Managing inventory payments effectively as a small business often comes down to minimizing overstock. That’s why so many young and smaller enterprises take a just-in-time approach. While this can sometimes prevent companies from being more agile in responding to demand, it can help to keep inventory payments more closely connected to the company’s revenue.

In some instances, it’s helpful to redistribute inventory to ensure the business is operating at peak efficiency. Segmenting stock into relevant spaces in a way designed to reduce overstocking potential requires significant organization and planning. Your company must commit to space assessments and inventory examinations, among others. This is where IoT can make a significant impact on your small business’ ability to stay operationally and financially on track.

Sensors in warehouses can provide real-time information on the current volume and condition of inventory items. Not to mention that scanning devices throughout the warehouse can track the journey across the premises. When combined with analytic software, the data can provide your business with suggestions on space usage optimization. It can also contribute to accurate predictions for inventory needs. This means that managers make more responsible decisions about storage and ordering. They can also identify prevalent sources of inventory losses and ultimately enable more efficient payments to suppliers.

Enabling Automation

One of the most important ways IoT is currently aiding inventory payments is through enabling automation. After all, small supply chain businesses are often subject to tight time and staff resources. There are a lot of tasks that need to be completed and, in some cases, this can lead to delays in payments and processing. A range of smart automated processes reduces the need for staff to attend to repeatable tasks.

Particularly for businesses dealing with fast-moving consumer goods (FMCGs), smart radio-frequency identification (RFID) tags are an invaluable component of automation. When affixed to each item in the warehouse, software can automatically and accurately track incoming and outgoing items. This then allows the software to independently adjust spreadsheets, update bookkeeping, and reorder items. This ensures consistent administration that maximizes revenue for paying invoices while requiring minimal human intervention.

Increasingly, supply chain IoT is being combined with fintech to automate the accounting process for small businesses, too. Accounting software can be linked to devices in the business’ inventory ecosystem to automate data entry and reconciliation procedures. Algorithms can utilize data analytics processes to produce invoices to clients, produce reports for accountants, and even directly pay suppliers.

Acting Practically

There are clear advantages to utilizing IoT for making inventory payments on time and with greater accuracy. However, the logic of use is not what tends to hold back many small businesses. Often, the primary challenge is preparing or obtaining financing to fund the upgrades required.

One option is to structure part of your business as a holding company. This can be a practical way to reduce some tax obligations that you can redistribute to investing in IoT devices. It’s also a good way to utilize this equipment as an asset kept by the holding company and rented out to various supply chain businesses, which reduces the operating costs for each enterprise.

It’s worth promoting your intentions for IoT to both potential investors and supply partners. By demonstrating that you’re using tools that improve efficiency and, therefore, profitability you may be more successful in gaining funding. Indeed, showing how your plans for utilizing IoT to ensure inventory suppliers get paid can be instrumental in their being open to expanding lines of credit so you can grow your business.

Conclusion

IoT can play a key role in helping small businesses navigate their inventory payment obligations. This includes tools that help to optimize inventory management in ways that enable your company to keep on top of good payment practices. IoT’s ability to power greater automation also maximizes the efficiency and accuracy of inventory holding and accounting tasks. While IoT may require some investment, practical steps like adjusting company structure and usage presentations can help your business and your suppliers can make the most of this technology.

The post How IoT Can Help Small Businesses Manage Inventory Payments appeared first on PaymentsJournal.

Cash flow has never been more critical for small businesses as economic factors such as inflation and supply chain challenges have quickly become an emerging pain point. In light of these challenges, small businesses are increasingly turning to fintech solutions to help, and the industry has an incredible opportunity to deliver money movement innovations to fuel their success amid these headwinds. 

The adoption of technology was accelerated by the pandemic, with reports from McKinsey in early 2020 noting that in a matter of weeks we catapulted forward five years in both consumer and digital adoption. As technology continues to play a pivotal role, here are three areas fintech will continue to redefine as the industry looks to drive greater small business outcomes.

Truly Integrated Money Management

During the pandemic, we saw increased demand for mobile payment offerings as consumers changed the way they wanted to pay. The ability to get paid quickly became even more critical and according to a QuickBooks survey, during the pandemic, 46% of businesses began processing contactless payments and nearly a third (30%) began processing payments using mobile payment apps. With these new payment methods taking hold came an increased need for greater access to integrated money management and cash flow forecasting abilities. And that landscape has not changed with current macroeconomic pressures continuing to test the resilience of small businesses and reinforce how essential it is for them to remain nimble and have the right cash flow tools at their disposal. 

Together, these shifts have created an even greater demand for financial services that are truly integrated and deliver comprehensive visibility of a small business’s financial health. This includes faster money movement services like instant deposit, forecasting capabilities like a cash flow planner, and on-demand capital. Individually, these are all incredible innovations that can save business owners time and give them greater financial clarity, but the true power lies in how platforms can connect these services to create a truly cohesive money experience that spans payments, banking, and lending.

As fintechs look to the next phase of addressing money movement challenges, advancements and offerings that enable faster money movement in an integrated and embedded way will truly allow small businesses to be agile in a rapidly changing world.

Accessing Capital

As entrepreneurs face today’s macroeconomic hurdles, access to capital is often a vital tool in helping support a business’s survival. Unfortunately, many small businesses can face challenges when looking to secure a loan from a traditional financial institution, creating a gap in access to capital. This can be a major roadblock on the path to healthy cash flow when a business is looking to buy additional inventory, purchase new equipment, or hire additional employees. 

Fintech platforms have led the charge in rethinking how small businesses can access capital, and providing greater availability to businesses who have struggled to get a traditional loan, utilizing data and insights to better understand the financial health of a business to introduce loan offers more quickly and at the most critical points in their business journey. Innovative products are helping to bridge the cash flow gap by allowing businesses to tap into invoiced funds faster with an advance. Continued advancements in this space have the potential to unlock even greater access to and efficiency in securing capital, delivering funding at key financial moments business owner’s face every day and eliminating cash flow hurdles.

Waiting to Get Paid

Waiting to receive cash that’s been earned can be one of the greatest struggles for a small business owner. And it’s an issue that spans B2B and B2C payments, with business payment terms for invoices at net 30 days or more, and 38% of small businesses reporting being paid late regularly by their customers. Today, businesses can help mitigate these challenges by diversifying their payment offerings with solutions like mobile and online options. But in the future, advancements in technology will continue to eliminate manual aspects of payments and paper checks, and the unnecessary payment lags that can lead to cash flow headaches. 

Today’s small businesses have faced no shortage of challenges, but fintech innovation has undoubtedly helped give many the confidence and optimism that fuels their resilience.  At this inflection point, fintech is perhaps better positioned now more than ever to deliver offerings that reimagine how finance works so that it works best for small businesses and allows them to effectively manage their cash flow with ease. If we do, we’ll power not only small business success, but fuel the growth of our economy. 

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12 October 2022 – Mastercard and Grab, Southeast Asia’s leading superapp, today announced the “Small Business, Big Dreams” regional program to digitally upskill gig economy workers and small businesses in Indonesia, the Philippines, and Vietnam. The collaboration is part of Strive Community, a global philanthropic initiative developed by the Mastercard Center for Inclusive Growth and Caribou Digital. Strive Community aims to support the resilience and growth of five million small businesses around the world.

The “Small Business, Big Dreams” regional program includes the launch of two online business courses for Grab’s driver and delivery-partners aspiring to start new businesses, and small business owners seeking to grow in a competitive digital economy. It aims to enable small businesses to reach their full potential by supporting them to digitize their operations, unlock their access to financial services and more effectively participate in the digital economy.

“Many Southeast Asians working in the informal sector aspire for more, but the reality is that a lot of them do not have the means or the opportunity to access quality training programs. Through our partnership with the Mastercard Center for Inclusive Growth, we hope to give gig workers and small businesses a boost to get started. Our “Small Business, Big Dreams” program will equip them with business knowledge and practical skills through a structured learning journey tailored to their needs and interest areas,” said Cheryl Goh, Group Head of Marketing and Sustainability, Grab.

“The digital economy offers a range of possibilities and opportunities that can help businesses of all sizes be more resilient and grow. Mastercard is delighted to work with Grab on this initiative that will boost digital capacity and inclusion among aspiring entrepreneurs and small businesses post-pandemic,” said Payal Dalal, Senior Vice President of Social Impact, International Markets, Mastercard Center for Inclusive Growth. “Mastercard has globally committed to bring a total of 1 billion people and 50 million micro and small businesses into the digital economy by 2025. Today’s announcement follows on the success of Mastercard Academy 2.0 in Indonesia, Business Cell in Philippines, and BSR’s HER Project Digital Wage in Cambodia, and Care Ignite in Vietnam, which have empowered millions of small businesses to access technology, training, mentorship, and financial services,” she added.

Small businesses play a vital role in Indonesia, the Philippines, and Vietnam, contributing up to 60% of the GDP of these economies. Despite 80-90% of small- and medium-sized enterprises in Southeast Asia losing income due to COVID-19 lockdowns1, many were able to skirt this hit by going digital, with online businesses’ profits rebounding more quickly. This resilience is what this micro-learning program seeks to bring to an abundance of small businesses and aspiring entrepreneurs across the region.

Bespoke courses to boost entrepreneurship in Southeast Asia

The two new online courses, namely the Driver Entrepreneurship Toolkit and the Small Business Toolkit, were created based on survey insights from over 34,000 driver-partners and 600 small businesses in the region. Although almost all small businesses surveyed use smartphones for their businesses, 42% still rely solely on paper and pen to manage their businesses.

“I want to learn about pricing and expense management – it seems complicated. Commodity prices fluctuate over time. As an entrepreneur, we should have training on how to price correctly so that you don’t lose money or go over budget,” said a café owner from the Philippines.

“I was introduced to some financial tools such as a POS but I do not use it yet because I am not sure it is appropriate for my business. For financial records, I do this manually,” said a food seller from Vietnam.

As for driver-partners, the three most sought-after training topics were 1) how to grow the business and increase profits (62%), 2) how to start a new business (58%); and 3) how to market the business online (30%).

“I’m interested to know how to start a business with just a small amount of capital. Today, many people don’t have the budget due to the pandemic. I also want to know how to expand a business without having to shell out huge capital,” said a driver-partner from the Philippines.

“I haven’t had a chance to attend any business training. If training teaches us how to develop a business from scratch, I’m interested,” said a driver-partner from Indonesia.

To meet these aspirations, Mastercard and Grab have engaged leading local small business experts, such as Tumbu, WISE, and Bayan Academy, to jointly develop the online courses. The courses, which comprise 20 short video lessons each, provide practical steps to address the challenges frequently faced by small businesses and first-time entrepreneurs. It also features powerful and relevant insights from local industry experts and peer business owners, a preferred learning format by surveyed driver-partners and small business owners.

“Research has found that during the pandemic, digital commerce adoption among micro-small businesses increased by only about 5%, while 44% of medium and large businesses reported selling online. There is an urgent need for scalable training programs to help millions of micro businesses in Southeast Asia to build their digital entrepreneurship skills and boost their readiness to grow,” said Dewi Meisari, CEO of Tumbu Accelerator. “Grab and Mastercard’s digital upskilling initiative enables us to provide relevant, flexible yet structured training modules at scale.”

The training videos are available free of charge to all Grab Partners on GrabAcademy, via the Grab Driver and Merchant superapps . Driver-partners will receive certificates of completion when they finish each module.

[ENDS]

Notes to the Editor

For media information contact:
strive@bbpartners.co.uk

Available for interview and commentary are:

1. Payal Dalal, Senior Vice President of Social Impact, International Markets, Mastercard Center for Inclusive Growth
2. Cheryl Goh, Group Head of Marketing and Sustainability, Grab

About Strive Community
Strive Community is a global philanthropic initiative – developed by the Mastercard Center for Inclusive Growth and Caribou Digital – that aims to support the resilience and growth of five million small businesses around the world. The initiative will enable these small businesses – many of which have been disproportionately impacted by the pandemic – to reach their full potential as catalysts of inclusive growth by supporting them to digitalize their operations, unlock their access to financial services and more effectively participate in digital markets. By partnering with the private sector, civic, and government organizations from all over the world, Strive Community will employ a digital and data first approach, helping small businesses increase their use of digital technology and boost their economic potential. Strive Community is funded by the Mastercard Impact Fund. The Fund is administered by the Center for Inclusive Growth which advances equitable and sustainable economic growth and financial inclusion around the world.
https://twitter.com/StriveBusiness
https://www.linkedin.com/company/strivecommunity/

About Grab
Grab is Southeast Asia’s leading superapp based on GMV in 2021 in each of food deliveries, mobility and the e-wallets segment of financial services, according to Euromonitor. Grab operates across the deliveries, mobility and digital financial services sectors in 488 cities in eight countries in the Southeast Asia region – Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Grab enables millions of people each day to access its driver- and merchant-partners to order food or groceries, send packages, hail a ride or taxi, pay for online purchases or access services such as lending, insurance, wealth management and telemedicine, all through a single “everyday everything” app. Grab was founded in 2012 with the mission to drive Southeast Asia forward by creating economic empowerment for everyone, and since then, the Grab app has been downloaded onto millions of mobile devices. Grab strives to serve a triple bottom line: to simultaneously deliver financial performance for its shareholders and have a positive social and environmental impact in Southeast Asia.
https://twitter.com/GrabNewsroom
https://www.linkedin.com/company/grabapp/

About the Mastercard Center for Inclusive Growth
The Mastercard Center for Inclusive Growth advances equitable and sustainable economic growth and financial inclusion around the world. The Center leverages the company’s core assets and competencies, including data insights, expertise and technology, while administering the philanthropic Mastercard Impact Fund, to produce independent research, scale global programs and empower a community of thinkers, leaders and doers on the front lines of inclusive growth. For more information and to receive its latest insights, follow the Center on Twitter and LinkedIn, and subscribe to its newsletter.

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On-time payments are an absolute must for service businesses to remain operational. Timely payments from clients make it easier to maintain cash reserves for unpredictable times such as economic downturns or the COVID pandemic. What’s more, predictable cash flow makes it possible to plan ahead for business growth initiatives.

However, there are many factors that all too often lead to late payments, such as:

• The customer doesn’t receive your invoice because you forgot to send it, or it got lost.
• Payment-related business relationship conflicts due to customer dissatisfaction.
• You don’t accept payments in the methods that your customer is accustomed to.
• The customer claims that they have already paid.

Of course, some of those reasons are not under your control, but there are certain steps you can take as a service-based business to ensure that the possibility of delayed payment is minimized.

In this article, we share five ways to ensure timely payments from your clients.

1. Generate invoices on time and send follow-ups

Invoices are legally binding commercial documents that let the client know how much they owe you for the services they commissioned. An invoice contains the following details:

• Name of the customer
• Itemized list of services 
• Details of your business
• Accepted payment methods
• Steps they can follow if they have questions

As a business owner, you must make it a top priority to generate invoices as soon as a client receives your services or books an appointment for your services. In some cases, if you’re performing multiple services in a given billing period, it might make sense to invoice at the end of a month.

Using vcita’s business management app, you can accept service appointment bookings on your website and require that your clients prepay upon scheduling. You can also set the platform to send out invoices automatically according to whatever cadence makes sense to you – immediately after each appointment, or on a given day of each month. 

Furthermore, vcita can send automated reminders with included payment links via email and SMS to ensure timely payment. You can charge clients’ credit cards through the secure processing gateway of your choice, and integrate upselling and cross-selling features in your digital invoices, thus making it an all-in-one payment solution for service businesses.

2. Create and be transparent about your payment policies

Terms and conditions, terms of service, or payment policies contain legally enforceable rules of engagement that the buyer and seller should agree on before making a transaction.

As a business owner, it is your responsibility to frame those and be transparent with your clients about them because:

• You will attract and do business with the right audience
• Your clients will have the right expectations from your services
• You can easily avoid any conflicts stemming from disagreements

This will increase the degree of trust your client has in your brand, and you will be on the same page while doing business with them.

DocuSign makes it easy for you to create payment policies and related documents and send them over to your prospects to get their signatures before they do business with you. Trusted by users in over 180 countries, DocuSign also helps you with contract lifecycle management and analysis.

3. Forge and nurture personal client relationships

If you manage to consistently deliver high standards of service, your clients will be satisfied and are more likely to pay you promptly. But sometimes, due to circumstances beyond your control, you fall short of the expectations of your valued clients, which may lead to delayed payments or worse, churn.

This is the reason you need to invest in building personalized relationships with your clients. 

When you have a personal relationship with your clients, they are more likely to be understanding of the occasional one-off instance where their expectations weren’t met, so that they’ll still pay you promptly.

You can forge such a relationship with your client through one-on-one conversations. ActiveCampaign, a marketing automation platform, enables you to segment your clients based on their preferences and previous interactions with your business and put them through unique drip campaigns. 

By cementing your position through warm and helpful conversations, you can ensure timely payments from long-term clients.

4. Accept multiple payment options

In a world where customers expect personalization, it’s important to offer payment methods that fit what they’re familiar with.

If the customer is not comfortable with the payment options you provide, you risk:

• Losing their business if they haven’t availed of your services yet
• Making their experience suboptimal
• Spending more time (and therefore money) to make an alternative work

All the above reasons have a direct impact on how much and how quickly you get paid.

Accepting multiple payment methods have the following advantages:

• Reduce hesitation from your clients during a purchase
• Reach a wider audience
• Place yourself as a forward-thinking, credible brand

There are multiple solutions such as PayPal, Stripe Connect, and PaySimple that you can choose to give your clients the freedom to go with the method of payment they are most comfortable with.

5. Consider a retainer-based payment model

A retainer payment model can be put to effect when the client avails of your services consistently.

When you put a client on a retainer, you bill them periodically and the amount will be similar each time provided their requirements remain the same. This helps to ensure on-time payment for a few reasons:

• The client will clear the invoice without taking much time to go through its contents, as they have already availed of the same services previously.
• You can set up subscription billing to be fully automated.
• You can get bulk payments for a long period of time, like a quarter or more.

Below are the steps you can follow to set up a retainer pricing model for your valued clients:

• Create a customized offer: Keep in mind that this is a client that will continue to purchase from you. You can include discounts, additional services for free, and goodies to sweeten the deal.
• Discuss with your client: Approach your client with the intention of saving them money. Show them how a retainer pricing model will help them and consider their suggestions as well.
• Build an adaptive process: The retainer model should be able to incorporate the temporary requirements of your clients.

Wrapping up

Timely payments are necessary to keep a service business alive and kicking. However, roadblocks such as dissatisfied clients and failing to send follow-ups can result in delayed payments.

As a business owner, you can rely on the following methods to increase the chances of getting paid on time:

1. Create invoices on time and send follow-ups with a payment link.
2. Frame clear documents highlighting the terms of service.
3. Invest time and resources in building personal relationships with clients.
4. Let the clients pay in the method they are most comfortable with.
5. Adopt a retainer-based payment model for loyal clients.

The post 5 Ways for Service Businesses to Ensure Timely Payments from Their Clients appeared first on PaymentsJournal.

There is a common misconception that business credit cards are only for midsize to large businesses, as small business owners commonly use personal credit cards for their businesses. Furthermore, marketing for business cards has not traditionally been targeted at small business owners.

However, banks are starting to rethink that strategy. They see small businesses as essential for business card portfolio growth and are using innovative expense management tools to help attract small business customers.

To find out more about how business credit card management plays a role in driving business card portfolio growth, PaymentsJournal sat down with Surender Chuahan, VP Product Management at Fiserv and Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group.

Businesses’ Credit Cards as a Revenue Driver

Offering business credit cards represents an attractive revenue opportunity for financial institutions. The average ticket size of a business transaction is 2.4 times that of a consumer ticket.

Historically, financial institutions have focused on midsize to large businesses. Recently, the landscape has changed a lot with the gig economy in the picture, and we are seeing a huge growth of small businesses. As Chuahan noted, “there are 32.5 million small businesses in the US alone.”

Most of these small businesses need cash, liquidity, and lending. Arguably, the credit card is the best way to do that. Among other benefits, credit cards provide a grace period to make payments.

Research shows that many small business owners just use a personal Visa or Mastercard. This practice is convenient, but it also has drawbacks.

If you go through an IRS audit, you’re going to have to reveal all your [personal] purchasing habits to the IRS if they’re on your card. Having a separate business credit card for expenses keeps personal and business activities separate.

There are other drawbacks to using a personal credit card for business purposes. Chuahan described how it can be frustrating for employees who use their own credit cards for company purchases and then have to file for reimbursement through a cumbersome process.

“You don’t want to get stuck because there is somebody who’s waiting to get some approval because they have to, they need to go and get reimbursed back,” Chuahan said.

Business Challenges Around Credit Card Use and Expense Management

Small businesses face many challenges today when it comes to credit card use and expense management. These challenges include proper expense tracking, controlling those cards for employees, and risks with file sharing.

Chuahan outlined the tools needed for a business credit card to work well for a small business. Small businesses need clear visibility of how much they have spent so far, and how much credit and cash is available. Also, the management system must be mobile.

An ideal business credit card system would provide flexibility around payments and transparency of what has already been purchased, but it might also allow the bank to give small business customers different options for different products.

Chuahan said, “If my bank knows how much I spend [and] where I spend, the bank might be able to leverage this information to provide competitive offers to customers.”

For example, say that a bank sees that a small business customer buys supplies from XYZ company at a particular price. The bank may have many other businesses that buy similar kinds of stuff elsewhere at a lower price. The bank could then provide this information to this small business, which could then adjust its buying patterns.

AI’s Effect on Small Businesses With Expense Management and Small Business Cards

Artificial intelligence (AI) is revolutionizing many different sectors of the economy, enabling the optimization and automation of various types of systems. Expense management will be no different. AI will help small businesses with business credit cards spend less time on expense management, freeing up time for other tasks.

In the case of business credit cards, AI will most likely be applied to expense management. An AI tool could be programmed to learn about a business owner’s spending habits and use this information to create a categorization system that will help with accounting later on. Chuahan explained, “The tool can automatically put different expenses into the right tax category so that at the end of the year, when you’re filing your expenses, you’re just clicking a button and sending the data to your accounting system.”

Fiserv has built a tool that can help small businesses manage all their expenses automatically. The tool learns the pattern of what small businesses are doing, eventually do it for them, and let small business owners focus on other tasks.

The future is bright for business credit cards. New features will make it easier to run a business, and the benefits will make those cards a no-brainer for small business owners. For more information on all of these topics, listen to the podcast in which Chuahan talks about these issues in more detail.

The post Nimble and Intuitive Card and Expense Management Tools Are Essential for Business Card Portfolio Growth  appeared first on PaymentsJournal.

American Express is reigniting their small business credit card with an update on the Marriott Bonvoy Business card.

For small business owners, a credit card can be a valuable tool. Not only does it provide a line of credit that can be used for unexpected expenses, but it can also help to build a strong credit history. However, not all credit cards are created equal. When choosing a small business credit card, it’s important to look for one with features that will meet your needs. For example, some cards offer rewards programs that can earn you cash back or points that can be redeemed for travel or merchandise. Others come with special financing options that can help you manage your cash flow. And some cards even offer extended warranties on purchases or purchase protection against theft or damage.

American Express continues to have a strong play in the small business space.  As we await their 2Q update on July 22, we note that Q1 small business receivables at American Express account for 34% of their cardmember receivables mix, substantially higher than international consumer (14%), U.S. Consumer (25%), and Corporate Card (25%).

American Express has a wide range of co-brand partners, as we illustrated in a recent Mercator report, and has kept them current as the market changed with COVID’s shift in payment habits and consumer desire to stay back home.

Their timing is right with their announcement to enhance the Small Business Marriott Bonvoy card.  New features include:

• 7% Marriott Bonvoy® Room Rate Discount off standard rates for reservations of standard guest rooms at hotels participating in Marriott Bonvoy³ when booked directly.  Terms apply
• 4X Marriott Bonvoy points at restaurants worldwide
• Complimentary Gold Elite status
• Continue to Enjoy Existing Card Benefits

According to the press release: eligible new Card Members who apply and are approved for the Marriott Bonvoy Business American Express Card can earn 125,000 Marriott Bonvoy points after they spend $5,000 in eligible purchases on the Card in the first three months. The offer is available through August 31, 2022.

As we all get back into the business travel mode again, the card will likely keep American Express’ small business effort at the forefront of business travel.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Getting Back to Business With American Express appeared first on PaymentsJournal.

This posting is found in Finextra and discusses a new expanded partnership between Capital One and Melio, the payments automation fintech based in New York City. Many readers will know that one of the major issues emanating from the pandemic is the disproportional negative impact on small businesses of the lockdown policies. This is a continuing problem in terms of managing adequate cash flow given the workforce and supply chain issues. As such, this particular partnership provides additional tools for small businesses to pay and get paid in a more efficient manner. 

‘This strategic partnership will enable Capital One small business cardholders to pay their vendors and suppliers with a card  – even if they do not accept credit cards – directly from their Capital One Business account…

Small businesses across the country continue to use time-consuming and costly methods to pay their vendors, with many still manually writing and mailing checks. Melio’s payments technology for small businesses enables credit cards to be accepted everywhere, saving businesses valuable time and money that would otherwise be spent mailing checks or managing wire transfers.’

One of the best ways to improve working capital effectiveness is to digitize financial operations, either in certain disciplines or across the organization. Small businesses have been generally mired in manual processes and they can benefit greatly by utilizing better tools for payables and receivables. In this case, one of those flexible tools is to use their small business card as a credit source to make a payment to a supplier, even if the supplier does not accept cards. This flipping of payment tools happens in the background and satisfies the needs of both parties. The buyer gets the additional working capital via better DPD and the supplier does not need to adjust their back office, at least for now. 

‘“At Capital One, we recognize the power that adoption of payments technology can generate for businesses. In fact, a recent Capital One survey found that more than a third of small and mid-sized business leaders cite investing in automated, real-time, or fully integrated payables as a top priority over the next year,” said Rebecca Silver, vice president, small business card at Capital One. “Through our partnership with the innovative team at Melio, we are proud to deliver this capability to our customers and continue to help transform how they do business.”

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Capital One and Melio Team Up on AP Tool for Small Businesses appeared first on PaymentsJournal.

The worsening state of inflation is the top concern of many small businesses across the United States. With no signs of letting up any time soon, inflationary pressures are starting to set in, and business and banking leaders are taking notice.

In an Economic News Release by the U.S. Bureau of Labor Statistics, the Consumer Price Index rose 8.5% for the 12 months ending in March—the highest 12-month increase since the period ending in December of 1981. Paired with Federal Reserve Chair Jerome Powell’s comments on interest rate hikes coming in as soon as this month, concerns around inflation and supply chains have only intensified.

What Does Inflation Mean for Small Businesses?

Small business owners today are looking closely at their expenses as they navigate higher inflation, supply chain shortages, and labor issues—a triple threat for even the most profitable of businesses. These issues pose a massive threat to the security of their companies in the US economy. The prices of both materials and labor are rising rapidly because of shortages and strong demand, causing businesses and organizations to raise prices and pad their bottom lines. Suppose a company refrains from raising prices; then it will see its profitability suffer compared to others in its industry, even if it gains sales.

Bottom line: small business owners can either see their margins shrink and start losing money, or they can raise prices to offset those higher costs.

But will hiking their own prices result in consumers looking elsewhere for their goods and services? Maybe initially. Front-loading rate hikes will have an impact on consumer sentiment, but across macroeconomic cycles, people continue to rely on small businesses for essential goods and services.

So, will raising prices solve the issue? No. It is only part of the solution. While raising prices is a necessary reaction to inflation, businesses will still need more capital upfront in order to cover business expenses and operational costs as they make these price adjustments to manage inflation hikes. This is partially because wages will need to increase in tandem with cost of living, and partially because the inflation spikes that affect businesses also affect the goods and materials those businesses need to purchase in order to create or cultivate their product lines. Inflation is sending the age-old dynamic of needing to spend money to make money into extremes.

The amount that needs to be spent in order to make money is raising along with inflation, making it harder and harder for business owners to keep up with their business expenses. Now more than ever, businesses must have access to stable and ongoing financing to stay afloat and on an upward trajectory.

The History of Inflation Hikes and How Not to Repeat It

This is not the first time massive hikes in inflation have caused businesses to struggle. In the early 1980s, this country saw 4 million Americans lose their jobs as businesses crumbled during back-to-back recessions that happened in tandem with massive inflation hikes. Inflation—and the challenges it causes—is not new, but the few safeguards that have been put in place to circumvent the dire outcomes of inflation are not enough.

We live in an economy that is dependent on small businesses and entrepreneurs, and it is vital that our 60 million freelancers, small businesses, and up-and-coming entrepreneurs have access to capital. As noted, one has to spend money to make money, and as inflation rises, we need to move quickly to democratize banking and ensure that everyone has access to the upfront funds that they need to grow. Otherwise, we risk repeating history.

The good news is that financial experts indicate that inflation will slow during the latter half of 2022 as the Federal Reserve raises interest rates and takes other steps to fight it. Although these fiscal policy changes are made to impact broader macroeconomic trends, these changes do ultimately affect small businesses. It is our hope that as inflation rates reduce, those small businesses and entrepreneurs that we help survive through these challenging times will thrive moving into 2023.

The post As Inflation Spikes, We Need to Help Small Businesses Survive appeared first on PaymentsJournal.

This release at the Mastercard newsroom announces a partnership between Mastercard and Verizon Business to issue a business card through FNBO. The product will be called the Verizon Business Mastercard and will be available to select existing Verizon Business wireless customers. We recently released member research on the small business card market space in the U.S., where we saw continued growth during the pandemic. These credit products are made available in a multitude of ways through all the major card issuing institutions and are a popular channel for small businesses to expand credit availability and augment cash flow needs.

“Mastercard has been a key partner to us on our journey to help our customers of all sizes transform their businesses and ensure they are truly future-ready,” said Tami Erwin, CEO of Verizon Business. “We are pleased to expand this partnership to include FNBO and bring this small business credit card to our customers at a time when we know they are seeking new avenues to expand their business, manage costs and maximize their use of new technologies to solve challenges to drive growth.”

Small business cards are typically feature-rich as well, and in this case there are rewards options, with no annual fee or foreign transaction fees. The release goes into more of these features. Although a large number of businesses in the U.S. do utilize this type of credit product set, there is still substantial room for growth, especially through exiting business relationships. 

“Today’s small business owner is looking for smarter, relevant, and customized digital financial products that accelerate their operations and make their lives easier,” said Chiro Aikat, Executive Vice President, Products & Engineering, North America at Mastercard. “We’re proud to extend our relationship with Verizon and FNBO to connect the small business segment through meaningful technology and benefits.”…

“FNBO has a rich history of helping small businesses grow and succeed, so we are excited to partner with such a respected brand as Verizon on the launch of their first program for small business,” said Jerry J. O’Flanagan, Executive Vice President, Partner Segment at FNBO.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Mastercard Partners with Verizon Business for New Card Through FNBO appeared first on PaymentsJournal.

As a small business, finding the right financial support can be difficult and time-consuming. From applying for loans to finding the right type of credit, navigating the financial landscape can be both challenging and confusing for many entrepreneurs. Luckily, embedded finance is making it easier than ever for small businesses to get the support they need.

In recent years, we’ve seen a significant increase in Banking-as-a-Service (BaaS) offerings that enable fintechs to make financial services more accessible to their end-users. BaaS platforms operate like API-first wholesale banks. They offer a wide range of financial services, like cash management, debit cards, and credit lines that can be integrated into SaaS products. This makes it possible for software platforms to offer new and innovative embedded financial service experiences.

By partnering with technology providers that offer embedded finance, small businesses can improve critical financial metrics, access debt more easily, and can streamline key finance operations like payroll and vendor payments.

Here are four ways SMBs are utilising embedded finance to help them grow:

Embedded Lending

Innovative technology providers are utilising their customers’ sales data to assess their ability to pay back a loan. This data is a better predictor of creditworthiness than traditional measures. It is also on hand, so it enables embedded lenders to bypass traditional, time consuming, data collection processes. Platforms pre-qualify borrowers, offer efficient loans when they are most useful, and fund in real time. This is helping to make financing more accessible for entrepreneurs, giving them the capital they need to meet payroll, replace equipment, or launch a pop-up shop.

Let’s say you’re a restaurant owner and you need to invest in new kitchen equipment or replace something that broke during last night’s service. Rather than waiting weeks or months for the bank to process a loan, you can use embedded lending services offered by your existing technology providers and get the funds you need right away.

Embedded Payroll

Another great use case is embedded payroll. Payroll can be a major burden for SMBs, with complex tax regulations and compliance requirements making it difficult to get salaries processed on time.

By utilising platforms with embedded payroll, business owners can stop stressing about their bank’s weekly or monthly payroll cutoff. Platform driven events like clocking in and out and metadata like time of day, day of the week, and location, can automatically create a payroll file that can be reviewed, approved, and processed on time.

Recurring payroll data, just like sales data, can also be used to offer employees early wage access.

Embedded Accounts Payable

One of the biggest challenges for SMBs is managing cash flow, especially when businesses are operating on thin margins. Embedded AP enables purchase orders to be raised automatically when stock is low and enables vendor payments to be scheduled automatically when orders are received.

Business owners can skip the whole three-way match process because they can delegate payment authority to the receiver and put the PO and payment button in their hands (with limits & escalation workflow, of course).

This not only saves business owners time but also helps to improve supplier relations. When suppliers are paid on time and in full, they are more likely to offer discounts or extended terms in the future.

Embedded Insurance

Another way small businesses are using embedded finance is by offering insurance products to their customers. This can be a great way to diversify your product offerings, generate new revenue streams and also reduce risk.

For example, let’s say you run a small e-commerce business. You can find technology platforms that have pre-negotiated insurance plans for the kinds of products you sell and offer those plans at checkout. If a customer’s order is lost or damaged in transit, they can file a claim and get reimbursed for the cost of the order

Not only is the insurance purchase a revenue stream, the disputes process is outsourced when the insured event occurs.

Final Thoughts on Embedded Finance

Embedded finance is quickly becoming an essential tool for small businesses, enabling them with access to faster, more timely, tailored financial products. These platforms close the resource gap between SMBs and Corporates, helping entrepreneurs weather hard times more confidently and invest in growth more opportunistically.

As Embedded Finance successes chart the course, four key trends are likely to shape the future of banking for SMBs:

• Business management platforms like Point of Sale, Accounting and CRM will partner with BaaS to launch faster, more diverse, more scalable financial services.

• Neo-banks will acquire and build their own business management tools to make their Digital Business Banking offerings more attractive.

• Traditional banks will begin to embrace a role as a wholesaler, grow their R&D budgets, and build out APIs & SDKs to better compete with Banking-as-a-Service disruptors.

• Blockchain-based Decentralised Financial Services (DeFi) offerings will emerge that are targeted at B2B use cases.

The good news for small businesses is that all of these trends should result in more diverse, seamlessly integrated, faster and cheaper financial services to choose from.

The post How Are Small Businesses Using Embedded Finance? appeared first on PaymentsJournal.

Many countries are facing tax shortfalls because of the COVID-19 pandemic. These massive budgetary restraints appeared at the global, federal, state, and local levels. Governments have many creative tools for making up for these losses, such as sales tax, VAT, fuel tax, and other indirect taxes.

For companies, calculating and collecting indirect taxes and ensuring compliance can become a major headache. This is especially true for small-to-medium-sized businesses (SMBs). 

But utilizing automation, businesses can combine their in-house knowledge and resources with the power of technology. When you automate tax reporting, indirect tax reporting becomes far easier. This article will walk through the benefits of tax automation and how it can save you time and money.

Why you should automate tax reporting

Manually calculating your taxes is not only slow, but it can be a big problem because it can also lead to errors. Unless they’re an accounting firm, most small businesses are probably not run by tax experts. Automating your tax processing will enable you to improve accuracy and better assess your tax liabilities.

Work smarter and improve productivity

When a small company is charged with keeping track of forever-changing tax regulations, it can destroy productivity. Tax automation can help companies work smarter, not harder.

Stay on top of tax changes

Today, more than 11,000 jurisdictions in the U.S. create tax rules that can potentially impact your small business. On top of this, tax codes are constantly changing. For example, the regulations regarding reporting cryptocurrencies seem to change every year.

Keeping up can seem like an impossible task. When your small business is already faced with ensuring continuous cash flows, automating how your taxes are tracked can help you keep up with regulations as they change and prevent you from missing out on any new information.

Keep an eye on tax compliance

One area of particular importance is compliance returns. Compliance returns can potentially be fraught with errors, leading to audits. Automation minimizes errors and improves your filing accuracy. Some experts believe that government auditors will scrutinize filings for errors more closely to maximize revenue this year. 

Online fraud prevention tips often include monitoring your expenses, but monitoring your tax compliance can also mitigate fraud.

Compliance is also important when it comes to reporting sales tax returns. Recently, many states have been considering accelerating the collection of sales taxes. As a business, remitting sales tax can quickly become an overwhelming task without automation.

Manage myriad tax requirements

Automation isn’t just about extra scrutiny; it is also about tracking all of the different requirements that are out there. This can be from changing requirements to different regulations. For example, you may be taxed on income, property, and capital gains. Taxes vary across jurisdictions, too, so keeping track of these differences can be especially difficult. Automation can help keep track of all of these requirements without having an in-house specialist for the job.

Eliminate errors to save money and improve your filing accuracy

Besides being more productive, utilizing automated tax technology can save you a lot of money by minimizing and eliminating errors.

Keep track of global tax requirements in real-time

The digital economy means that many businesses don’t just do business in one place. Companies can manage freelance writers, fulfillment centers, and data centers across the globe. As a result, all of these employees, assets, and business ventures can accrue various tax liabilities.

For example, you may be subject to local taxes, foreign taxes, and even municipal taxes depending on where you do business. Failing to pay municipal taxes on time can lead to foreclosure on properties you own, and missing out on foreign taxes can lead to your business losing its ability to operate in other countries.

Error reduction with automation saves time and money

One of the most important things you can do as a business leader is to minimize your expenses. Tax errors can be costly, so it’s best to avoid them when and if you can. They can also be fatal to your business if they don’t get remediated. One way errors can crop up is when transposing figures from sales data to tax data. Automating compliance avoids these issues and helps reduce your possible points of error.

Consider local taxes with shipping automatically

If you manage an e-commerce platform, chances are you’ve had to calculate taxes for where your products are being shipped to. Shipping addresses are frequently used to calculate indirect taxes on a given transaction. When you get a bad address, it can be more than just a shipping problem – it can also make it difficult to calculate what taxes are owed.

When utilizing technology-backed solutions, you can use the cloud to validate and update addresses. These types of database solutions enable you to make corrections on the fly and help ensure your small business collects all the right taxes and reports them just the same.

Improve tax policy consistency

Your audit risk increases exponentially when your taxes are inconsistent and inaccurate. 

Underreporting sales tax is one of the most common grounds small businesses get audited. Today, the main reason why companies aren’t audited as often is simply because of the cost involved. Some businesses save additional funds to mitigate audit risk. 

Either way, underreporting or saving in case of an audit, your business is using its assets inconsistently when they could be put to better use.

Automation helps avoid this by ensuring that taxes are accurate and consistent, regardless of the regulations involved.

Build a better business using technology

Automation isn’t just about how you report your taxes; it can also help you generate reports and plan for future tax obligations.

Tax Report Generation

When you get audited, having information to back up your filed taxes is key. Audits are costly, time-consuming, and can result in criminal penalties. Not only that, but tax audits can also damage the reputation of your company. 

Rather than waste your time battling the tax authorities, consider using automation to build reports that allow you to respond to an audit with just the click of a mouse. Automated reports allow you to accurately reflect how you collected taxes and how they were paid.

Plan for future tax obligations

As your business evolves, technology and tax automation can give you the right toolkit to help you plan your future tax obligations. Bringing on specialized staff or acquiring new physical infrastructure can eat up time and decrease your flexibility. Cloud-based tools can automate planning, minimize capital expenditures and give you direct access to changing regulations. This type of planning can be a huge plus because it will allow you to respond to changes and better allocate your resources.

Wrap up

As the tax environment gets more complex, small and medium-sized businesses face a double challenge – they need to ensure they are accurately calculating, collecting, and reporting taxes while also staying compliant with all relevant regulations and laws. Automating tax processes can be useful for managing business taxes, reducing errors, improving reporting, and ensuring compliance.

The post Why Is Tax Automation Important for Small Businesses? appeared first on PaymentsJournal.

Similar to what has been happening in the consumer realm over the past decade, traditional financial institutions have seen a growing number of small-to-medium sized businesses (SMBs) flock to fintechs and digital neobanks to meet many of their financial needs. One major reason for this exodus is that the legacy technology infrastructure inherent in many banks and other traditional financial providers does not allow for quick and easy development of new digital products and services.

How this problem can be overcome was part of a broader discussion about what kind of technology SMBs want when it comes to managing their finances in a recent PaymentsJournal webinar titled “SMB Banking Disruption and Innovation: What SMBs want, how their needs shift and how to win using a customer first approach.” The webinar featured a lively discussion between Brian Riley, Director of Credit Advisory Services at Mercator Advisory Group, and Scott Johnson, the Head of Strategic Expansion at Galileo Financial Technologies, an API-based card issuing and payments platform.

SMBs Look Beyond Traditional Providers

A major part of the discussion was around how SMBs are looking beyond the traditional financial providers to meet their banking and payments needs. One sobering statistic that was shared, which came from a survey of small businesses done by consulting firm 11:FS, is that only 18% of small businesses say they “completely agree” that banks are providing the services they need to effectively run the financial side of their business.

“Overall, SMBs are not happy with the services that banks provide,” said Johnson, adding that with about 33 million small businesses in the U.S., this is a very large and potentially lucrative market.

SMBs are increasingly looking for one single platform to manage their entire financial lives; currently many small businesses use multiple different providers for different financial products and services.

“Businesses want to be able to manage their cash flows and make day-to-day business decisions based upon their entire financial health,” said Johnson. “And then they want that lending component, or a credit component as needed to help them build their businesses.”

Both panelists noted that this trend mirrors what is happening in consumer banking, where many are turning to digital-first upstarts for services like BNPL, budgeting, and embedded finance that banks do not offer. In one poll shared during the webinar, nearly 50% of consumers reported they would use an internet or wireless provider, or a streaming service, for financial needs. About as many said they would use a national retailer or even their employer for financial services.

 “Small business owners are consumers too, and they want those same types of experiences they’ve come to expect from challenger neobanks,” said Johnson. Small businesses also want flexible access to credit when they need it, mirroring the rising popularity of BNPL platforms among consumers.

The Rise of Embedded Finance

One area of particular interest for small businesses is embedded finance and embedded payments. Nearly half of small businesses even said they would be willing to pay a price premium to a digital provider for such services.

Riley noted how the embedded payments experience in a service such as Uber is seamless and intuitive for the user, who doesn’t even have to think about the payment.

“Embedded payments are somewhat of an elusive word, and you probably already experienced them without even knowing it, whether you’re arranging a car service, [or] really [doing] anything in the gig economy,” said Riley.

Small businesses want to be able to offer these embedded experiences to their customers but are often unable to since their banking provider may not offer these digital capabilities.

Johnson mentioned Toast – a point-of-sale hardware provider mostly serving the restaurant industry – as an example of a company doing a good job providing embedded finance to its business clientele.

“They do an amazing job of not only providing an incredible experience for the restaurant to be able to manage everything they need to at the restaurant, but they’re able to now integrate payments holistically into that experience,” he added. “They are able to get so close to their customer that they can even offer a lending product to a restaurant owner because they’re seeing how many sandwiches were sold.”

Johnson continued: “That’s why now they’ve embedded everything within their platform and their product offering. And that’s where we’re seeing these types of really cool embedded finance solutions start to grow, because, again, these solutions are so tied in you don’t even think about it.”

Ultimately, small business owners want to manage the whole continuum of their financial lives – from lending and savings needs, to asset protection to running the business and embedded finance – all from one provider.

How Banks can Overcome Legacy Systems

Banks are well positioned to be that sole provider, since they have a long history with their business customers and are generally seen as more trusted when compared to digital startups. But banks can struggle to offer the embedded digital services their small business clients want due to legacy infrastructure.

“A lot of the infrastructure and plumbing has been around for nearly 40 years,” said Riley, adding that the different data silos internally at banks make it difficult to innovate.

“I think of the days when I was at [a Big Four Bank] a couple of decades ago, and it was easier to get information from a credit bureau about what other relationships the customer had than to look at one internal system that passed through all those silos,” he said.

Ripping and replacing entire core systems is a risky and cost prohibitive solution to this problem for the vast majority of banks. But they can innovate despite legacy infrastructure by adopting an open API infrastructure, according to Johnson. APIs can be layered on top of legacy systems and be used to integrate with various third parties to quickly deploy new products and services. This is especially important considering the pace of digital innovation.

“What’s sexy 3-4 years ago is just OK now,” said Johnson. “But with an open API approach, when the next great feature comes along you can respond quickly without needing a massive tech rebuild or a massive reengineering effort.”

Johnson noted that digital habits that were beginning to be adopted by consumers and small businesses in recent years were accelerated during the Covid-19 pandemic. It is now table stakes for banks to offer the digital products their customers want.

Ultimately, banks don’t have to transform overnight, but can use an open API architecture to begin to meet the digital needs of their SMB clients.

“It doesn’t mean that you have to be all things to all people on day one,” said Johnson. “But I think you need to have this vision of how you grow your product over time.”

Learn More About the Future of Banking for SMBs

In the recent webinar hosted by PaymentsJournal, Johnson and Riley discuss several other key details of SMB banking, including:

• Data on trending interest in banking services from non-financial companies
• Insights into the growth of the embedded finance market
• Specific small business banking use cases

The post On-demand Webinar: What SMBs Want From Digital Financial Experience appeared first on PaymentsJournal.

There are many different card processors out there, each competing for merchants’ business. While it’s important to consider things like fees and transaction rates, it’s also important to choose a provider that offers excellent customer service. After all, if something goes wrong with a transaction, you’ll want to be able to talk to someone who can help you resolve the issue quickly and efficiently. And if you ever have any questions about how to use the system, you’ll want a customer service representative who is patient and knowledgeable.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance

Reasons U.S. Small Businesses Choose Primary Card Processors

• 39% of companies chose a primary card processing provider because of lower total cost.
• 31% of companies chose a primary card processing provider because of superior customer service.
• 30% of companies chose a primary card processing provider because of better reporting systems.
• 28% of companies chose a primary card processing provider because of the ease of setting up the processing service.
• 27% of companies chose a primary card processing provider because of the speed of setting up the processing service.

About Report

Mercator Advisory Group’s most recent report, Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance provides insight into this exciting new technology, and what every merchant needs to know about it.

‘Smart terminals’ is a relatively new term in the payments lexicon, but one that is becoming more widely discussed among merchants of all sizes, types, and categories. The strategy that drives orchestration is nothing less than a paradigm shift in the way that merchants view payment service providers. Rather than conduct due diligence to select a “best-of-breed” service provider for each functional area within payments, orchestration allows merchants of all sizes and scales to offer their customers a smooth shopping experience, be it digital, in-person, or other channels. The growing diversity in payment methods, including contactless and e-wallets, creates an environment where having the right partner is paramount towards achieving your payments and overall business goals. The right payments partner will equip a merchant with the necessary capabilities to operate in this rapidly digitizing business environment, where automation and frictionless experiences are vital in ensuring customer satisfaction and loyalty. Similarly, in order to help merchants provide these services, processors and other payments stakeholders must update their own services and products to keep up with the latest demands of the consumer market and regulatory requirements.

“This is a highly relevant and impactful report,” stated the author of the report, Shreyas Shaktikumar, Senior Analyst in the Merchant Services and Acquiring practice at Mercator Advisory Group. “We are following this trend among a number of similar technology trends that are making payments a frictionless and invisible part of our everyday activities.”

The post Reasons U.S. Small Businesses Choose Primary Card Processors: appeared first on PaymentsJournal.

Sales channels are the various ways that small businesses can reach their customers and make a sale. The most common sales channels include brick-and-mortar stores, online stores, catalogs, and direct sales. Each sales channel has its own benefits and drawbacks, and small businesses should carefully consider which channels will work best for them. Brick-and-mortar stores offer the benefit of allowing customers to see, touch, and try out products before they purchase them. However, they also require a significant investment in terms of rent and staff costs. Online stores have lower overhead costs, but they may have difficulty building customer trust. Catalogs provide a middle ground between online and brick-and-mortar stores, offering customers the convenience of shopping from home while still being able to see physical product samples. Direct sales are a great option for businesses that sell unique or high-end products, as they allow small businesses to build personal relationships with their customers.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance

Sales Channels Used by U.S. Small Businesses

• 60% of U.S. small businesses use online/web sales.
• 45% of U.S. small businesses use telephone order.
• 45% of U.S. small businesses use physical store locations.
• 42% of U.S. small businesses use mobile apps.
• 22% of U.S. small businesses use mail order.
• 20% of U.S. small businesses use third-party platforms such as GrubHub and Amazon.

About Report

Mercator Advisory Group’s most recent report, Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance provides insight into this exciting new technology, and what every merchant needs to know about it.

‘Smart terminals’ is a relatively new term in the payments lexicon, but one that is becoming more widely discussed among merchants of all sizes, types, and categories. The strategy that drives orchestration is nothing less than a paradigm shift in the way that merchants view payment service providers. Rather than conduct due diligence to select a “best-of-breed” service provider for each functional area within payments, orchestration allows merchants of all sizes and scales to offer their customers a smooth shopping experience, be it digital, in-person, or other channels. The growing diversity in payment methods, including contactless and e-wallets, creates an environment where having the right partner is paramount towards achieving your payments and overall business goals. The right payments partner will equip a merchant with the necessary capabilities to operate in this rapidly digitizing business environment, where automation and frictionless experiences are vital in ensuring customer satisfaction and loyalty. Similarly, in order to help merchants provide these services, processors and other payments stakeholders must update their own services and products to keep up with the latest demands of the consumer market and regulatory requirements.

“This is a highly relevant and impactful report,” stated the author of the report, Shreyas Shaktikumar, Senior Analyst in the Merchant Services and Acquiring practice at Mercator Advisory Group. “We are following this trend among a number of similar technology trends that are making payments a frictionless and invisible part of our everyday activities.”

The post Sales Channels Used by U.S. Small Businesses: appeared first on PaymentsJournal.

This piece appears in Crunchbase News and covers the growth of digitalization in SMBs around Latin America and how fintechs have become catalysts in that process. Once again, the term SMB has a number of different interpretations, and that would hold true in LATAM. The author points to several studies of SMBs but there is no exact definition, so most readers will tend to think small business only; however, SMB includes medium-sized enterprises, which in the U.S. is generally accepted to mean firms with up to $1 billion in annual sales turnover. That is a far cry from a truly small business. Nonetheless, the point of the article likely holds across some level of medium-sized business in addition to the small business segment.

‘At QED Investors, we have witnessed tremendous growth in the LatAm fintech market since our first investment in Nubank more than seven years ago. The market continues to introduce interesting solutions across verticals, but one subset that should expect continued focus is small businesses. Startups are innovating for the more than 10 million SMBs in Latin America…

Fintechs have established themselves at the forefront of providing the more than 10 million SMBs in Latin America with implementation of digital strategies and processes that accelerate growth. Given the importance of SMBs to the region, this previously unexperienced efficiency in this helps uplift hyper-local and nationwide economies.’

So the well-known story of SMBs running on analog solutions remains true in LATAM as well, and the ensuing turn of events with ongoing VC investments in fintechs that support B2B models and the tailwinds created by the pandemic have combined to result in what the author (an investor) describes as robust growth. This is not really too different from other regions and something we have been tracking for quite awhile, as developers have adjusted their efforts to the more complicated and lucrative B2B space over time.

‘With VC support for fintechs that are paving the way for how small businesses operate effectively and strategically, startups can make lasting impressions on local economies, which serve as the basis of the LatAm economy…

It is why the VC community is hyper-focused on this sector and continues to recognize the role fintech plays in creating more systematic approaches to everyday processes for SMBs in the region. I expect the next wave of fintech to enable more and more SMBs to thrive in the coming years.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fintechs Are Catalyzing Small Business Digitalization in Latin America appeared first on PaymentsJournal.

This piece was dropped in The Scotsman by a senior at Mambu, the Berlin-based fintech delivering a BaaS platform to various industry participants. Although SMEs are in the title, the article’s focus is more directly on small businesses. For readers who try to keep pace with this very diverse segment, SME represents ‘small and medium enterprises’, which has various definitions, some of which we recently described in member research on the U.S. middle market. Small businesses themselves have various definitions as well, so these two segments combined (SME) have in the range of six business-size breakouts, with further segmentation by vertical. The piece is supported by a downloadable global survey summary which does not delineate business sizes, but in reading through the summary findings, it would seem that small business the main focal point (generally businesses with <$10M in annual revenues). 

‘The money moves of Silicon Valley giants may grab headlines but it’s small and medium enterprises (SMEs) that are the foundation of the global economy. SMEs represent 90% of businesses…around the world and, in emerging economies, formal SMEs contribute up to 40 per cent of national income. They also employ the majority of the world’s workforce – according to ILO, representing more than 65 per cent of employment worldwide.’

In any event we don’t disagree with the author’s points and conclusions as they apply to small businesses, where lots of bank funding shortcomings have been exposed over the past several years, hence the growth in non-traditional lending, most recently the frenzy around BNPL. Other than being more precise as to the specific target of the survey, which would further underline the point (once you get up into the real middle market, funding issues are very different), there are some worthwhile points for banks to absorb.

‘SMEs present a huge opportunity for traditional banks and other lenders but many aren’t addressing their specific and modern needs. Outdated lending processes and rigid criteria are getting in the way of growth and entrepreneurs and lenders are losing out…

The future for both lies in transforming SME lending with digital tools that make loan management easy, streamlining loan applications and offering flexible terms that take SME characteristics into account. If lenders can serve small businesses like this, they can create new revenue streams and compete with emerging challengers.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post SMEs or Small Businesses? Both Need Support, In Different Ways appeared first on PaymentsJournal.

Even though unemployment soared while pandemic mitigation measures took hold in the United States, 2021 saw the most significant increase in new business applications in recorded history. And that wasn’t the only large shift in the U.S. workforce. In November 2021, a record 4.5 million workers left their jobs, according to the Labor Department’s latest Job Openings and Labor Turnover report. During that same period, an unprecedented 5.4 million new business applications were filed, according to the latest data of the U.S. Census Bureau, surpassing the previous record set in 2020 of 4.4 million. This seismic increase of newfound entrepreneurship entering the global economy may be attributed, to some extent, to the millions of workers who left their jobs during the pandemic.

However, the numbers don’t fully reflect the psychological change that US workers have been experiencing—a psychological shift that some say began in the early 2000s with the dot-com era, which has peaked amidst this global workforce shake-up. This shift includes an increase in value being placed on autonomy, independence, and flexibility, especially among newer generations of workers.

Over the past two years, obviously, a lot has changed. First, it was the push for adaptability and adjusting to the new normal—but what does that even mean? Initially, it meant moving from in-office work to remote work, but as the pandemic progressed, so did the conversation around our workforce. Anthony Klotz, a professor at Texas A&M, coined the term “The Great Resignation” in response to the 4.5 million that left their jobs. In an interview with CNBC, Klotz stated, “This is a moment of empowerment for workers, one that will continue well into the new year.”

But one could argue that the Great Resignation had been gearing up long before the pandemic—it certainly didn’t develop overnight. According to a recent study from Upwork, today’s economy holds up to an estimated 60 million entrepreneurs, including microbusinesses, contractors, freelancers, and other “gigsters”— all with their unique set of needs and requirements, and many of whom had been in business prior to the wide-scale pandemic shutdowns. 

This new surge in entrepreneurs and work-for-yourself professionals is only a result of the pandemic in the sense that the pandemic continues to motivate rapid developments in technology—specifically software that empowers individuals to work for themselves. From gig work (Uber and Thumbtack) to selling products (eBay, Etsy, and Instagram) to creating content (YouTube and TikTok), we’ve already been operating in a boom of autonomous work, and the pandemic merely accelerated people’s need to take control of their livelihoods. And now, with so much new talent filling the markets—especially ones hit hardest by the pandemic, we’ll continue to see more innovative and disruptive resources to support this growing demand for self-employed business owners.

One of these key resources, funding, has thus far been one of the biggest hurdles for these new-wave entrepreneurs. This has been the case for a few reasons. First, the entrepreneurs of today aren’t looking to start the same types of businesses that legacy banks are used to. They aren’t starting major corporations or large operations—and in many cases, they aren’t even starting the traditional small business. While, of course, there are still mom-and-pop shops, privately owned restaurants, and neighborhood plumbers who need funding to start their small businesses, entrepreneurs of today are also Etsy-shop owners, influencers with brand partnerships, and gig-workers making DoorDash runs, driving Ubers and more.

Another issue is that they don’t look like the entrepreneurs of decades past. They belong to one or more minority groups, they aren’t independently wealthy (or don’t come from a family that is), and/or they are first-time entrepreneurs starting out on their own rather than serial entrepreneurs with backlogs of businesses sold or acquired. When you or your business aren’t the status quo according to legacy banks, then legacy banks don’t cater to your needs. 

Traditional financial institutions do not provide adequate resources for the new entrepreneurs rising in our markets. Their premier financing solutions are exclusive to big, well-known companies, leaving newer, smaller businesses to fend for themselves. Many banking options also make it difficult for entrepreneurs to access business credit and make them jump through endless, unnecessary hoops.

As with the shifts in our workforce—from in-office to remote, from worker bee to entrepreneur, and so on—the banking industry needs to shift. Banking options should be more accessible for small businesses and modern-day entrepreneurs.

As the son of two Vietnamese immigrants who came to America after the Vietnam war, I grew up watching them deal with being underserved by banks that didn’t recognize their entrepreneurial value. They scraped together what they could to build a better life for our family—moving to a new country with no friends, relatives, or support system and starting over—a true act of independence and autonomy. But it was incredibly daunting for them. My parents’ entrepreneurial endeavors helped them succeed, but it wasn’t an easy road. They didn’t have financial resources, and the struggle it caused was enormous. I believe that struggle is enough to dissuade talented innovators from bothering to pursue their own entrepreneurial dreams, and that’s a problem.

It’s time to value the next generation of innovators and business founders, and the first step is to start with the fundamentals. New entrepreneurs are often part of underserved communities within the banking industry, and they are especially vulnerable in our rapidly changing economic environment. Banks need to acknowledge this valuable population and start providing options and financial education. Learning what options are out there, figuring out how to make the most of them, and finding new ways to incubate a dream will help new entrepreneurs ride the tumultuous economic wave and set themselves up for success. To support our economy and the entrepreneurial spirit so valued in our culture, innovative financial resources should be there to support and grow the emerging businesses that have already taken over the market. From one founder to another, stay focused on making sound financial decisions at every step in your journey, and you are sure to get there.

The post Pandemic Entrepreneurship Is Skyrocketing: How Neobanks Are Helping New Microbusinesses Succeed appeared first on PaymentsJournal.

This piece appears in Cision PR Newswire and discusses a new approach to card spend management, this one coming from an India-based fintech named Fyle, which specializes in intelligent expense management. Many of the card spend management solutions in use today are more closely associated with mid-to-large market companies that have commercial credit card programs in place covering T&E as well as general indirect office expenses. The spend management programs in place will often be coupled with the issuing bank’s overall card offering. In this case, Fyle is targeting more of the small business use case (small business cards) by embedding the software within whatever the issuer’s network happens to be. Fyle is utilizing integration with the Visa network for starters. Another firm mentioned in the piece is Aprio LLP, an accounting services firm out of Atlanta, GA. that will collaborate with Fyle.

‘Focusing on tech-savvy and funded startups is a great acquisition strategy, but it addresses a tiny market. Card-led fintech accounts for less than 10% of the overall $1.5 trillion commercial card spend in the US, while more than 90% of this spend happens on cards issued by leading banks…

This is where Fyle differs. Instead of asking customers to switch to another business card, Fyle integrates with their existing business credit cards to give them a real-time spend management experience. The instantaneous data from card feeds and receipts are combined and made ready for accounting, vastly reducing manual work for spenders, Finance teams and accounting firms.’

We recently released survey-based member research on the card spend management space and findings indicate that these solutions require modernization in line with the generally accelerated digitization advancements. These capabilities include the desire for easier integration and reconciliation, use of AI to enhance end-to-end automation (including real-time data exchange), and the continuing movement towards mobile applications across the end user spectrum. The Fyle solution is starting in the small business apace, but these types of innovations are also welcome in the medium-sized business sector that represents large portions of developed markets’ economies.

‘The real-time feed reduces manual effort for employees and accountants alike. Employees can turn in receipts from everyday apps like text messages, Gmail, Outlook, MS Teams, and Slack, and on the go via Fyle’s iOS and Android mobile apps. Fyle’s AI-enabled engine instantly codes spend information, assigns it to the right projects & cost centers, and pushes the data to cloud-first ERP and accounting software like NetSuite, Sage Intacct, QuickBooks Online, or Xero…

“With this launch, we can offer all customers who have Visa business credit cards access to powerful, AI-driven software to track & manage their card spending. It also gives us the opportunity to collaborate with card issuers who are losing business to new-age corporate card products,” said Yashwanth Madhusudhan, CEO and Founder of Fyle. “For the first time ever, customers won’t have to switch their credit cards to get the best spend management experience.”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Fyle Brings New Approach to Card Spend Management appeared first on PaymentsJournal.

This posting in Fintech Finance News provides a brief overview of the problem in collecting money as a small business in the UK, along with a new potential solution to help change the status quo. We have written about this cash flow issue in these pages and have also tracked progress in specific markets like the UK where it is a particularly vexing problem. The pandemic has of course exacerbated the situation, causing severe cash flow challenges in this vulnerable business segment, which has seen a predictable uptick in business failures during the past two years.

‘Two in five invoices in the UK are paid late, and it’s getting worse. Late payments have been an ongoing issue in B2B trade. With 25 million companies in Europe and 86% of them counting less than 10 employees, the lack of cashflow can be disastrous…

Although late payments – and lack of capital as a result – are recognised to be one of the major causes of SMEs failure, especially after the recent shortage of lending to Britain’s small businesses, a permanent and effective solution is yet to be implemented.’

The indicated solution is from a UK startup named StonePay, which on its website advises us that ‘It’s Not a Payment App, it’s a Business Community of Trust offering a Reputation Rating and a Risk Assessment Tool with Limitless Opportunities.’ So while it would at first glance seem like another alternative credit decisioning vehicle utilizing non-state, non-credit bureau data, it is essentially driven by a social media type of commentary and established community standards.  We have not had a briefing so we are not exactly sure how it works, but it certainly has some merit on the face of it, since lack of knowledge has always been a trade exchange risk, therefore some information sharing on actual transactional behavior should be welcome, especially for small business.

‘Companies can build their reputation rating and their trust profile. Each business’ reputation report can be shared to guarantee the company’s trustworthiness, or to obtain better credit conditions and improved business terms, resulting in a smoother process and improved workflow of the finance department. A precious tool for SMEs looking to maintain steady cashflow and avoid unreliable payers…

The pandemic weighed heavily on SMEs finances, with 80% of them saying their revenues have declined in the last two years, putting even more pressure on the importance of efficient cashflow. StonePay promises to give the power back to businesses and trading community, shifting from an “external control approach” to an “internal reputational approach” with trust at the core of each transaction…

In just two weeks StonePay reached 100% of their crowd-funding target, a next round of funding is planned for December, followed by the official launch of the app…

Filippo Mazzei CEO and Founder of StonePay says “There is a huge need for B2B businesses across the globe to be able to trust each other and to control their business reputation without having to rely on traditional methods that cost money and cause delays in operations. Our aim is to eradicate late payments, limit risk, and offer the good payers the benefits they deserve!”’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Data-Sharing as a Solution to Cash Flow Issues appeared first on PaymentsJournal.

While the U.S. economy was projected to expand at its fastest pace since the 1980s, the nation is entering a period of increased uncertainty as supply chain bottlenecks and inflationary pressures threaten the financial well-being of businesses. For smaller companies in particular, confidence is slipping month after month as employers navigate unfilled positions and inventory shortages. 

This drop in confidence is not surprising. After experiencing pandemic-related losses, approximately 44 percent of U.S. small businesses are operating on less than three months of cash reserves. Facing financial challenge after challenge, small businesses cannot catch a break – with no sign of relief in sight. 

But as experts warn that supply chain issues are “here to stay” and inflation reaching a four-decade high in January, there are steps mom and pop shops can take to ensure that they survive this period of financial uncertainty. And the first step is to abandon antiquated payment systems. 

Unlike larger companies, the majority of small business owners still rely on bank bill pay and physical checks, which are both drastically inefficient and costly. As of 2019, checks still accounted for 42 percent of all transactions between businesses. And, while paper checks continue to remain the dominant form of payments, they are on average ten times more costly to businesses than digital payments – a price tag that quickly adds up for smaller companies. 

Delayed and late payments also continue to pose a threat to small business growth, with the smallest of companies often being hit the hardest and forced to essentially subsidize their customers’ activities until they get paid. 70 percent of microbusinesses – companies with fewer than 10 employees – report waiting between one to six months to get paid, a barrier to budding entrepreneurs around the country. 

And these numbers have only gotten worse during the pandemic, and supply chain shortages. As a direct result of late payments, 40 percent of small business owners have had to delay hiring new employees, while others have halted the purchase of new inventory and drastically reduced employee hours. 

Fortunately, smart digital payment tools provide easier, safer, and faster payment delivery choices so businesses and their employees no longer need to hear the dreaded words “the check is in the mail.” Going digital can also help improve cash flow by keeping businesses on top of their finances with better tracking options and payment scheduling capabilities. 

Some tools also offer the ability to pay business bills with a credit card, even if the vendor does not typically accept that form of payment. This way, the vendor gets paid immediately – in whatever form they prefer – while the business can delay payment until the card’s next billing cycle. 

As a result of COVID-19 induced state lockdowns and restrictions, the adoption of digital payments systems accelerated tremendously, with data showing that in the last two years, a majority of small businesses increased their technology spend. Research also suggests that not only is adoption becoming more widespread, but these payment platforms have proven to be effective. Digital payment platforms have improved cash flow for an overwhelming 73 percent of organizations and reduced manual administration work by 68 percent. 

Additionally, for small businesses like New York-based Martin’s Handmade Pretzels, digital payment solutions have proven instrumental to streamlining operations and saving valuable time. In fact, owner and manager Josiah Martin estimates that Melio has reduced the amount of time he spends on administrative work by half, allowing him to spend more energy on growing the business. After the bakery and headquarters burned to the ground last year, he needed to devote most of his time to getting the company back on its feet – and Melio gave him one less item to worry about. 

Just like the transition to email and social media, some businesses may be hesitant at first to adopt an unfamiliar technology, especially if paper checks are all that they know. But now more than ever, mom and pop shops must adopt the lessons learned of the pandemic and embrace digital payment solutions. With the help of digital payment platforms, small businesses can spend more time serving customers and less time invoicing – allowing their business to thrive even in the face of unprecedented challenges. 

The post Fintech Can Help Address Supply Chain Shortages – And Keep Mom And Pop Shops In Business  appeared first on PaymentsJournal.

Two in five (40.0 per cent) small and medium-sized businesses in the UK plan to hire, on average, six new employees before the end of March, following a promising start to the year, according to the latest quarterly Barclaycard Payments SME Barometer*.

The news comes as 56.2 per cent of SMEs report a rise in earnings in the last quarter of 2021 against the same period in 2020. Data from Barclaycard Payments, which processes £1 in every £3 spent in the UK and services over 350,000 SMEs, supports this trend – with transaction volumes up 42.3 per cent for in the last three months of 2021, compared to the same period in 2020**.

2022 has started positively for many SMEs despite concerns around economic uncertainties, with almost three fifths (58.1 per cent) predicting an increase in revenue this quarter compared to the same period last year when the UK was in the third COVID-19 lockdown.

On average, businesses forecast a year-on-year increase in Q1 turnover by 13.5 per cent. Perhaps unsurprisingly, hospitality and leisure operators – whose physical premises were closed this time last year – expect the largest turnover increase (33.6 per cent), followed by retail (16.5 per cent), transport and distribution (14.6 per cent) and financial services firms (11.2 per cent). This is likely due to the impact of coronavirus settling and SMEs feeling more confident to invest or seek investment – evidenced by 32.7 per cent of UK SMEs who plan a ‘high level’ of investment in their business over the next 12 months.

Year-on-year payments volumes also demonstrate a feeling of confidence amongst SMEs across the UK, with leisure and entertainment, food and drink and retail SMEs seeing an increase by 471.0 per cent, 110.8 per cent and 54.1 per cent respectively***.

Overall, there is a quiet confidence among small and medium-sized company leaders, that they are on track to have a positive finish the financial year, despite a broader atmosphere of uncertainty among rising inflation, the cost of living on consumers and the lingering impact of the Omicron variant.

The research, which polled 577 senior staff working in UK SMEs, found that overall business optimism is beginning to build, scoring 55 out of a possible 100, up from a low of just 40 points in Q2 2020. This quarter equals the highest levels recorded (with Q1 2020, Q2 2021 and Q3 2021 recording 55 each), since the Barclaycard Payments SME Barometer started in February 2020, before the first lockdown****.

Yet, while almost half (48.7 per cent) are optimistic about the outlook for their firms, confidence in the broader economy is less pronounced, with those reporting a neutral sentiment (33.6 per cent) outweighing those who are optimistic (23.8 per cent).

Just under two thirds of SMEs (64.6 per cent) are worried about a rise in the cost of living and inflation and a similar proportion (66.6 per cent) highlight a feeling of nervousness about increases in their energy bills, with four in ten (39.4 per cent) stating that it will impact their ability to remain competitive, while 9.5 per cent will reconsider the need for a physical retail outlet as a result.

When asked to select the number one challenge for this year, SME leaders now view the rising cost of living as a bigger headwind than the ongoing uncertainty around the pandemic. Over a tenth (10.6 per cent) of the respondents to the Barclaycard Payments study selected a rise in inflation as the issue causing them the greatest concern, this was followed by the stability of the domestic economy (10.2 per cent) and the difficulties associated with COVID-19 (6.6 per cent). In contrast, SME leaders ranked the pandemic (22.0 per cent) as the biggest challenge of 2021, followed by the domestic economy (8.2 per cent) and the cost of materials (7.8 per cent).

As a result of the challenging economic backdrop, SMEs have a mixed view on how this will impact consumer spending throughout the year. While four in 10 (41.7 per cent) SMEs expect it to fall, a further 29.2 per cent believe that, although shoppers will spend cautiously, they are likely to spend more on loved ones to help lift their spirits.

Colin O’Flaherty, Head of Small Business at Barclaycard Payments, said: “Small and medium-sized businesses have had a positive start to the year and it’s encouraging to see so many seeking to add to their workforce. SMEs are also remaining resilient by continuing to focus on areas within their control, such as by improving their operating models to overcome the hangover to supply chain disruption which peaked at the end of last year.

“The coming months will no doubt present continued challenges for British SMEs and the impact of rising costs will remain front of mind. Businesses will need to call on the same spirit for innovation and specialised support that has propelled them through the last two years.”

Jo Fairley, Co-Founder of Green & Blacks and SME Investor said: “The strong start to the year for British small and medium-sized businesses, who are looking forward to an average anticipated uplift of 13.5% in earnings over Q1, is really great news. But it comes at a time where two thirds of SMEs are also acutely aware of the challenges posed by the rising cost of living, inflation and energy bills – potentially a perfect storm.

 “From my own experience running multiple ventures, I know all too well that trying to weather economic turbulence while growing a business can be daunting on top of the day-to-day fire-fighting. Nevertheless, the last couple of years have shown that the British consumer is keener than ever before to support smaller and local businesses, and this should prove really positive for SMEs, helping them not just to cope but go grow in the months ahead.”

Earlier this month, Barclays launched a package of support aimed at boosting small businesses, with the bank set to host 50 masterclasses a month this year, which will focus on managing cash flow, business growth and support for wellbeing. The classes are open to all small business owners, with national events focused on the hospitality and care home sectors. Find out more at https://labs.barclays/business-health-hub

About Barclaycard
Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit. In the UK we process nearly £1 in every £3 spent using credit and debit cards, and in 2020 we processed over £267bn in transactions globally. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

The post UK SMEs to Bolster Employee Numbers Following Promising Start to 2022 appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Consumer Purchasing Options

Top Methods Small Businesses Use to Prevent Chargebacks:

• 41% of small businesses require customers to enter their card security code.
• 39% of small businesses use an address verification service.
• 34% of small businesses use Visa Account Updater.
• 28% of businesses use chargeback alerts.
• 27% of small businesses blacklist suspicious customers. 
• 22% of small businesses use a Network Automated Response Program.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Consumer Purchasing Options, from its annual Small Business PaymentsInsights series, examines not only specific sales channels that consumers use to access small business products and services, but also types of payments accepted and various types of short-term financing options offered to consumers.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into the perspectives from small businesses on various consumer purchasing options that include BNPL, Cryptocurrency, and essential items such as chargeback prevention tools that help small businesses prosper.

“It’s encouraging and exciting to see that most small businesses have such a positive perspective on alternative payment options, such as Cryptocurrency acceptance. As the payment industry continues to change with the growth of new technologies that impact the industry, it will be very interesting to see how consumer purchasing options evolve over time.” – Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Top Methods Small Businesses Use to Prevent Chargebacks: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Consumer Purchasing Options

Top Reasons Businesses Don’t Accept Payment Cards:

• 31% of businesses that do not accept payment cards say it is too complicated to do so.
• 30% of businesses that do not accept payment cards say fraud costs are too expensive.
• 28% of businesses that do not accept payment cards say terminal costs are too expensive.
• 25% of businesses that do not accept payment cards say their application for card acceptance was declined.
• 24% of businesses that do not accept payment cards say there is a lack of customer demand for card payments.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Consumer Purchasing Options, from its annual Small Business PaymentsInsights series, examines not only specific sales channels that consumers use to access small business products and services, but also types of payments accepted and various types of short-term financing options offered to consumers.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into the perspectives from small businesses on various consumer purchasing options that include BNPL, Cryptocurrency, and essential items such as chargeback prevention tools that help small businesses prosper.

“It’s encouraging and exciting to see that most small businesses have such a positive perspective on alternative payment options, such as Cryptocurrency acceptance. As the payment industry continues to change with the growth of new technologies that impact the industry, it will be very interesting to see how consumer purchasing options evolve over time.” – Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Top Reasons Businesses Don’t Accept Payment Cards: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Consumer Purchasing Options

Percentage of Total Small Business Sales by Payment Method:

• Card payments accounted for the largest share of revenue among businesses surveyed by Mercator Advisory Group.
• Card payments accounted for an average of 50% of small business total sales.
• Cash accounted for an average of 36.4% of small business total sales.
• Checks accounted for an average of 30.1% of small business total sales.
• Other payment methods accounted for an average of 10.3% of small business total sales.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Consumer Purchasing Options, from its annual Small Business PaymentsInsights series, examines not only specific sales channels that consumers use to access small business products and services, but also types of payments accepted and various types of short-term financing options offered to consumers.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into the perspectives from small businesses on various consumer purchasing options that include BNPL, Cryptocurrency, and essential items such as chargeback prevention tools that help small businesses prosper.

“It’s encouraging and exciting to see that most small businesses have such a positive perspective on alternative payment options, such as Cryptocurrency acceptance. As the payment industry continues to change with the growth of new technologies that impact the industry, it will be very interesting to see how consumer purchasing options evolve over time.” – Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Percentage of Total Small Business Sales by Payment Method: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Consumer Purchasing Options

Top Sales Channels Used by Small Businesses: 

• Online/web sales are currently in use by 60% of small businesses.
• Physical store locations are currently in use by 45% of small businesses. 
• Telephone orders are currently in use by 45% of small businesses.
• Mobile apps are currently in use by 42% of small businesses.
• Mail orders are currently in use by 22% of small businesses. 
• Third-party platforms (Grubhub, Amazon, etc.) are currently in use by 20% of small businesses.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Consumer Purchasing Options, from its annual Small Business PaymentsInsights series, examines not only specific sales channels that consumers use to access small business products and services, but also types of payments accepted and various types of short-term financing options offered to consumers.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into the perspectives from small businesses on various consumer purchasing options that include BNPL, Cryptocurrency, and essential items such as chargeback prevention tools that help small businesses prosper.

“It’s encouraging and exciting to see that most small businesses have such a positive perspective on alternative payment options, such as Cryptocurrency acceptance. As the payment industry continues to change with the growth of new technologies that impact the industry, it will be very interesting to see how consumer purchasing options evolve over time.” – Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Top Sales Channels Used by Small Businesses: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Small Business Credit Cards: Growth Opportunities in a Post-COVID World

How Small Businesses Prefer to Meet Their Business Credit Needs:

• 53% of small businesses prefer to use a business credit card to meet their business credit needs.
• But while small business cards answer to many small business needs, other channels also come into play.
• 16% of small businesses prefer to use closed-end loans paid in installments to meet their business credit needs.
• 11% of small businesses prefer to use a revolving line of credit from a bank to meet their business credit needs.
• 5% of small businesses prefer to borrow from personal assets to meet their business credit needs.
• 4% of small businesses prefer other sources of credit to meet their business credit needs.

About Report

Mercator Advisory Group released a report covering the credit cards issued for small businesses titled Small Business Credit Cards: Growth Opportunities in a Post-COVID World. The research explains current markets, reviews programs offered by top issuers, and suggests that issuers look at four current fintech models to revitalize their view of this rich market. With two thirds of the U.S. GDP driven by small businesses, there is a large audience to harvest. Program designs need to do more than just generate reward points; they need to provide the small business owner with tools to reduce costs, understand their spend, and prepare the small business for growth.

The research explains how fintechs are redefining the small business card space and what traditional issuers need to think about over the next three years.

“Fintech Buy Now, Pay Later should be a learning experience for all credit card issuers,” comments Brian Riley, Director, Credit Advisory Service, at Mercator Advisory Group, and the author of the research note. Riley continues, “You cannot keep doing the ‘same old thing’ or new players will disrupt your model. Small business credit cards are more than just reward generators. Issuers need to keep the product engaging with tools and value-added features.”

The post How Small Businesses Prefer to Meet Their Business Credit Needs: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report:Small Business Credit Cards: Growth Opportunities in a Post-COVID World

Most Small Businesses Use More Than One Credit Card:

• 34% of small businesses surveyed by Mercator Advisory Group in 2021 had three or more small business cards in use.
• Breaking that down, 15% of small businesses had more than three small business cards in use.
• 19% of small businesses had three small business cards in use.
• 43% of small businesses had two small business cards in use.
• 23% of small businesses had just one small business card in use.

About Report

Mercator Advisory Group released a report covering the credit cards issued for small businesses titled Small Business Credit Cards: Growth Opportunities in a Post-COVID World. The research explains current markets, reviews programs offered by top issuers, and suggests that issuers look at four current fintech models to revitalize their view of this rich market. With two thirds of the U.S. GDP driven by small businesses, there is a large audience to harvest. Program designs need to do more than just generate reward points; they need to provide the small business owner with tools to reduce costs, understand their spend, and prepare the small business for growth.

The research explains how fintechs are redefining the small business card space and what traditional issuers need to think about over the next three years.

“Fintech Buy Now, Pay Later should be a learning experience for all credit card issuers,” comments Brian Riley, Director, Credit Advisory Service, at Mercator Advisory Group, and the author of the research note. Riley continues, “You cannot keep doing the ‘same old thing’ or new players will disrupt your model. Small business credit cards are more than just reward generators. Issuers need to keep the product engaging with tools and value-added features.”

The post Most Small Businesses Use More Than One Credit Card: appeared first on PaymentsJournal.

Let’s be clear and point out that this posting from This is Money is highlighting an issue being faced by small businesses in the U.K., as suggested by the FSB (Federation of Small Businesses), a leading British business organization. The point is that in the neighborhood of 440,000 small businesses face closure due to unpaid invoices. We recall that late payment and invoice defaults were an issue in the U.K. pre-pandemic, although we don’t recall the specific depth of the issues, so it is not surprising that the issue has seemingly worsened, given intermittent lockdowns, cash flow issues, and supply chain disruptions. Now a rise in energy costs is also contributing to the bad news.

‘The problem of late payments had been worsened by the coronavirus pandemic and was ‘the issue that keeps thousands of entrepreneurs up at night,’ the Federation of Small Businesses said… Three in ten firms surveyed by the group for its quarterly small business index admitted this problem had grown over the last three months, while only 6 per cent said new payment terms had been agreed during this period… The index additionally found that 78 per cent of small companies had seen their costs increase – the highest figure in seven years – with outgoings, fuel and utilities being the three main drivers of this growth.’

There also seems to be some new rules and regulations that have affected those UK small businesses doing business across the EU, as additional requirements around rules of origin have been implemented, for which apparently a good percentage of businesses were not prepared, with more administrative burdens to be added this year as well. So, the FSB is calling for help, although it is unclear that things like a ‘prompt payment code’ will help under such circumstances.

‘The small business community diminished in size over the past year and, unless action is taken now to tackle the challenges it faces, history is set to repeat itself,’ urged Mike Cherry, the FSB’s national chairman… Cherry added that the new financial year beginning in April would see businesses beset with rises in the national living wage, dividend taxes, business rates and national insurance contributions… ‘On top of that,’ he remarked, ‘operating costs are surging – many will soon be trying to strike energy deals without the clout of big corporates or the protections afforded to consumers. Small business confidence dropped in every quarter of 2021.’

‘Cherry recommended the UK Government boost the small businesses rates relief ceiling to £25,000, raising the Employment Allowance and introducing a more enhanced version of the SME Brexit Support Fund to help benefit the sector… The Government has yet to make an announcement on its response to a consultation on new powers for the Small Business Commissioner, an office set up to tackle late and unfavourable payment practices in the private sector.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post FSB Warns Nearly Half a Million SMBs Could Close due to Invoice Issues appeared first on PaymentsJournal.

Plenty of credit card issuers offer small business cards. Many businesses use them, but some prefer to use their consumer credit cards because the protections are better. For instance, a consumer credit card can not dynamically change your pricing, thanks to the CARD Act of 2009. The same protection does not hold if the card is in the name of your business. Go a day late on a small business credit card, and the issuer has the right to invoke; it is not as easy with the consumer card.

American Express is using their recent acquisition of Kabbage to differentiate their small business offering. What is interesting about the strategy is that it takes American Express beyond the focus of a small business credit card. Amex certainly has a strong play when it comes to the daily business needs of a small business, and numerous card options.

But what American Express is doing broadens the net, and will make their card even more attractive when the firm manages the full relationship.

Similar to how fintechs address the SME market – such as Amazon’s small business lending marketplace which includes Goldman Sachs, or PayPal’s working capital – merchants will have access to credit lines between $1,000 and $150,000. Merchants can also open a Kabbage Checking account. Says CNBC:

“We have great cards, we’re an industry leader for small business cards,” AmEx president of global commercial services Anna Marrs said last month at a conference. “It’s when you try to go beyond that that we don’t always have the skills in-house, we don’t always have the products on the shelf.”

Competitors, in particular the Silicon Valley firm Brex, have seen surging growth by providing more credit to start-ups than traditional competitors dared and quickly rolling out new products beyond its corporate charge card. 

What makes sense about American Express’ strategy is that it ties together a wide array of small business needs that go beyond the transactional needs that credit cards provide.

The program is a few steps beyond American Express’ legendary “Shop Small” Small Business Saturday, and is certain to fill a void in the market. Shop Small is a well-received program intended to spark sales and typically comes the day after Black Friday.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Kabbage & American Express: Going beyond Small Business Credit Cards appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Small Business Usage of the SBA PPP Loan Program:

• The Small Business Administration’s Paycheck Protection Program (SBA PPP) allowed businesses to apply for loans to pay employee payroll and cover certain other costs during COVID-19.
• SBA PPP ended on May 31, 2021. 
• 46% of small businesses applied for and received an SBA PPP loan.
• 25% of small businesses did not apply for a PPP loan.
• 26% of small businesses applied, qualified, but did not receive a PPP loan.
• 8% of small businesses applied but did not qualify for a PPP loan.  

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Small Business Usage of the SBA PPP Loan Program: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Key Aspects Small Businesses Consider When Choosing a Financial Institution:

• 41% of small businesses consider checking account features very important when choosing a financial institution to bank with.
• 37% of small businesses consider business credit card offerings very important when choosing a financial institution to bank with. 
• 36% of small businesses consider business line of credit (amount and features) very important when choosing a financial institution to bank with. 
• 36% of small businesses consider business loans very important when choosing a financial institution to bank with. 
• 35% of small businesses consider financial advisory services very important when choosing a financial institution to bank with. 

About Viewpoint

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Key Aspects Small Businesses Consider When Choosing a Financial Institution: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Top Payment Methods Small Businesses Use for Purchasing Products and Services:

• 53% of small businesses use a business credit card with a monthly revolving balance to purchase products and services.
• 41% of small businesses use a business debit card to purchase products and services.
• 31% of small businesses use business checks to purchase products and services.
• 29% of small businesses use business charge cards to purchase products and services.
• 29% of small businesses use personal credit or charge cards to purchase products and services.
• 25% of small businesses use a personal debit card to purchase products and services.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Top Payment Methods Small Businesses Use for Purchasing Products and Services: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Six Topics that Concern Small Businesses:

• 40% of small businesses are concerned or very concerned by security and fraud. 
• 40% of small businesses are concerned or very concerned about cash flow.
• 39% of small businesses are concerned or very concerned about employee acquisition.
• 38% of small businesses are concerned or very concerned about employee retention.
• 38% of small businesses are concerned or very concerned about customer retention.
• 37% of small businesses are concerned or very concerned about government regulation.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Six Topics that Concern Small Businesses: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Reasons Why Businesses Make Use of Personal Credit Cards:

• 45% of businesses that use personal credit cards do so because they have better rewards.
• 42% of businesses that use personal cards do so because they have better cardholder protections.
• 40% of businesses that use personal cards do so because it is easier.
• 30% of businesses that use personal cards do so because their company was not willing to underwrite cards for employees.
• 26% of businesses that use personal cards do so because of an insufficient credit line.
• 20% of businesses that use personal cards do so because they were not able to be approved for a business credit or charge card. 

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Reasons Why Businesses Make Use of Personal Credit Cards: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Mobile Point-of-Sale Features Small Businesses Rank as Most Important:

• 27% of small businesses say that the initial cost of hardware is the most important feature within their mobile POS solution.
• 22% of small businesses say that no monthly fee or contract is the most important feature within their mobile POS solution.
• 12% of businesses say that a fee structure that is easy to understand and plan for is the most important feature within their mobile POS solution.
• 11% of small businesses say low processing/settlement fees are the most important feature within their mobile POS solution.
• 8% of small businesses say that Bluetooth enabled (wireless hardware) is the most important feature within their mobile POS solution.
• 6% of businesses say a small/portable hardware device is the most important feature within their mobile POS solution.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Mobile Point-of-Sale Features Small Businesses Rank as Most Important: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

The Preferred Online Bill Payment Methods for Small Businesses: 

• 44% of small businesses prefer to make online bill payments through their bank’s online bill-pay site.
• 29% of small businesses prefer to make online bill payments through the billing company’s site. 
• 13% of small businesses prefer to make online bill payments through a billing aggregator like Bill.com.
• 9% of small businesses prefer to make online bill payments through accounts payable/financial software like Quickbooks.
• Just 1% of small businesses report not using online bill payments.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post The Preferred Online Bill Payment Methods for Small Businesses:  appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

The Frequency of Payroll Payments at U.S. Small Businesses: 

• Among over 2,000 surveyed U.S. small businesses, just 5% pay their employees daily. 
• 14% of small businesses pay their employees a few times a week.
• 17% of small businesses pay their employees once a week.
• 42% of small businesses pay their employees bi-weekly.
• This makes bi-weekly the most popular payroll frequency for small businesses.
• 19% of businesses pay their employees monthly. 

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post The Frequency of Payroll Payments at U.S. Small Businesses:  appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Types of Credit Lines Used by Small Businesses to Finance Business Needs:

• 81% of small businesses have used a credit line from a bank, non-bank lender, or credit card to offset a lack of cash flow.
• 44% of businesses have used a credit line from a bank.
• 37% of businesses have used a credit line from a business credit card. 
• 23% of businesses have used a credit line from a personal credit card. 
• 17% of businesses have used a credit line from a non-bank lender. 
• 15% of businesses have used a credit line from a professional credit card. 

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Types of Credit Lines Used by Small Businesses to Finance Business Needs: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

How COVID-19 Impacted Small Businesses: 

• 67% of over 2,000 surveyed small businesses experienced a year-over-year increase in revenue in the past 12 months.
• 22% of businesses moved some or all of their staff to remote work in the past 12 months.
• 19% of businesses saw no change in the past 12 months. 
• 18% of businesses had to hire staff in the past 12 months and now have more workers than prior to the pandemic.
• 17% of businesses were forced to lay off staff in the past 12 months.
• 14% of businesses had to close at least one location in the past 12 months. 

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post How COVID-19 Impacted Small Businesses:  appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic

Most Small Businesses Have Experienced Cash Flow Concerns Since the Emergence of COVID-19:

• Cash flow concerns have increased for most companies since the beginning of the pandemic. 
• 18% of small businesses said their cash flow concerns increased significantly since COVID-19 emerged. 
• 36% of small businesses said their cash flow concerns increased since COVID-19 emerged.
• 36% of small businesses said their cash flow concerns remained the same since COVID-19 emerged.
• Just 8% of small businesses said their cash flow concerns decreased since COVID-19 emerged.
• 2% of small businesses said their cash flow concerns decreased significantly since COVID-19 emerged.

About Report

Mercator Advisory Group’s most recent Small Business survey report, 2021 Small Business PaymentsInsights: Business Operations – In the Midst of a Pandemic, from its annual Small Business PaymentsInsights series, examines all aspects of the small business experience, including the management of business operations, tapping into critical resources as channels of support, and building relationships with financial institutions.

The report is based on an online small business survey administered between June 9th and July 16, 2021, across 2,007 U.S. Small Businesses with 2020 annual revenue between $100K and $10 million. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, view of technology, and their top business concerns.

“Although small businesses have been hit hard by the pandemic, they continue to demonstrate resilience in the face of what at times seems to be impossible odds. Concerns about cash flow continue to exist. Many, who lack personal financing to help run their businesses, take advantage of small business loan programs and other credit options to survive yet keep an optimistic outlook as they align their business operations with their support team of banks and financial advisors.”- Amy Dunckelmann, Vice President, Research Operations, Mercator Advisory Group.

The post Most Small Businesses Have Experienced Cash Flow Concerns Since the Emergence of COVID-19: appeared first on PaymentsJournal.

Nuula, a fintech company focused on small businesses, today announced $120 million in new funding. The total is made up of $20 million in equity funding led byEdison Partners that will accelerate the brand’s launch and drive adoption of the Nuula mobile app, and a $100 million credit facility provided by funds managed by the Credit Group of Ares Management Corporation (“Ares”) that will provide scale to the app’s integrated credit product.

Nuula’s vision is to provide small business owners with access to a blend of insightful content, critical business metrics and innovative financial products that can help power their businesses, anytime and anywhere. The initial launch of the company’s mobile application in June 2021 delivers real-time monitoring of cash flow, personal and business credit activity, and social ratings and reviews. With Nuula, small business owners will know immediately if there’s an issue with their cash, credit, or reputation that requires action. 

“Significant innovations have transformed consumer financial services in the past decade. Small business financial services, however, has lagged this revolution, and a new generation of small business owners are frustrated with that gap,” said Mark Ruddock, CEO at Nuula. “Today marks the beginning of Nuula’s journey to reinvent small business financial services, by providing entrepreneurs with instant access to the content, the tools and the capital to power their business from the palms of their hands.”  

“We are excited to be working with Nuula as they build a unique financial services resource for small businesses and entrepreneurs,” said Jeffrey Kramer, Partner and Head of ABS in the Alternative Credit strategy of the Ares Credit Group. “The evolution of financial technology continues to open opportunities for innovation and the emergence of new industry participants. We look forward to seeing Nuula’s experienced team of technologists, data scientists and financial service veterans bring a new generation of small business financial services solutions to market.”  

“Innovations in financial technology have largely democratized who can become the next big player in small business finance,” said Gary Golding, General Partner, Edison Partners. “By combining critical financial performance tools and insights into a single interface, Nuula represents a new class of financial services technology for small business, and we are excited by the potential of the firm.”   

Beyond the tools included at launch – cash flow forecasting, personal and business credit score monitoring, and customer sentiment tracking – Nuula will shortly be adding the capability for small business owners to monitor other critical metrics including financial, payments and eCommerce data, all from the convenience of the Nuula app.

Nuula will also soon unveil its plans to provide access to a range of innovative financial products within its ecosystem, including a revolutionary on-demand line of credit that will enable small businesses to access the capital they need to thrive.

About Nuula  

Nuula is building the future of small business performance. Launched in 2021, Nuula is a financial services and technology company focused on serving the small to medium-sized business community. Nuula provides real-time data and analytics, allowing businesses to manage their cash-flow, monitor their credit ratings and user reviews, and more. Nuula is an advocate of financial inclusivity and a proud partner to Kiva to create economic and social good. To learn more about Nuula, visit www.nuula.com 

About Edison Partners

For 35 years, Edison Partners has been helping CEOs and their executive teams grow and scale successful companies. The firm’s investment team brings extensive investing and operating experience to each investment. Through a unique combination of growth capital and the Edison Edge platform, consisting of operating centers of excellence, the Edison Director Network, and executive education programs, Edison employs a truly integrated approach to accelerating growth and creating value for businesses. A team of experts in enterprise solutions, financial technology, and healthcare IT sectors, Edison targets high-growth companies located outside Silicon Valley with $10 to $30 million in revenue; investments also include buyouts, recapitalizations, spinouts and secondary stock purchases. Edison’s active portfolio has created aggregated market value exceeding $10 billion. Edison Partners is based in Princeton, NJ and manages more than $1.4 billion in assets.

About Ares Management Corporation

Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, private equity, real estate and infrastructure asset classes. We seek to provide flexible capital to support businesses and create value for our stakeholders and within our communities. By collaborating across our investment groups, we aim to generate consistent and attractive investment returns throughout market cycles. As of June 30, 2021, including the acquisition of Black Creek Group which closed July 1, 2021, Ares Management Corporation’s global platform had approximately $262 billion of assets under management, with approximately 2,000 employees operating across North America, Europe, Asia Pacific and the Middle East. For more information, please visit www.aresmgmt.com. Follow Ares on Twitter @Ares_Management. 

About Ares Alternative Credit

Ares’ Alternative Credit strategy focuses on direct lending and investing in assets that generate contractual cash flows and fills gaps in the capital markets between credit, private equity and real estate. Ares Alternative Credit targets investments across the capital structure in specialty finance, lender finance, loan portfolios, equipment leasing, structured products, net lease, cash flow streams (royalties, licensing, management fees), and other asset-focused investments. Co-Headed by Keith Ashton and Joel Holsinger, Ares Alternative Credit leverages a broadly skilled and cohesive team of approximately 35 investment professionals as of June 30, 2021.

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The innovation train just keeps rolling as another startup emerges in the B2B payments space. Centime is based in Massachusetts and is led by founder and CEO BC Krishna, who some readers may recall was the founder of payables fintech Mineral Tree. Through its platform, the Centime startup is providing better cash flow options to companies in the SMB segment, which can be broken down into many sub-segments, but shares a common general issue of maintaining adequate levels of liquidity. 

This has been especially punishing during the pandemic, so new entries like Centime are creating ways to improve cash visibility, provide speedier execution in financial operations, and easier access to credit where needed. We covered the importance of more advanced cash cycle automation in a recent member report. 

The release at PRNewswire indicates that the company has joined the Visa Fast Track program for fintechs, which provides some advantages to innovative startups, including faster onboarding to the Visa network and easier access to its partners across the globe, as well as support from payment experts where required.  

There is a link in the release for those interested to learn more about the program. The release also states that Centime will be working with bank partner FNBO for easier access to commercial credit card lines.

‘Centime’s Cash Flow Control solution empowers small and mid-sized businesses to control and manage cash flow. The relationship with Visa will help Centime power the solution, which allows clients to monitor cash, improve decision-making with real-time cash flow forecasting, nudge late-paying customers and instantly access cost-effective credit to bridge liquidity gaps.’

We managed to chat with CEO Krishna for a few minutes, who indicated that the firm has a strong funding base, great partners, and a unique approach to the glaring cash flow issues faced by SMBs. He advised that there will be much more information available about how the Centime platform solves this common business problem in the coming weeks. 

“We’re delighted to be part of Visa’s Fast Track program,” Centime founder and CEO BC Krishna said. “Small and mid-sized businesses can plan better and grow faster by using Centime to gain control over cash flow. Working with bank partners and empowered by Visa’s network, our clients can now easily access cost-effective credit to meet their working capital needs.”…“By joining Visa’s Fast Track program, exciting fintechs like Centime gain unprecedented access to Visa experts, technology and resources,” said Terry Angelos, SVP and Global Head of Fintech, Visa. “Fast Track lets us provide new resources that rapidly growing companies need to scale with efficiency.” 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Centime Links Up With Visa’s Fast Track Program appeared first on PaymentsJournal.

• Colin O’Flaherty joins Barclaycard Payments from American Express as Managing Director, Head of Small Business
• O’Flaherty brings almost 20 years’ experience in payments, card services, business development and customer rewards to the role
• Appointment comes at an integral moment for the UK’s largest payments provider as it focuses on making it easier, faster and more rewarding for its small business customers to pay and get paid
• Reporting to CEO, Rob Cameron, O’Flaherty will be key to delivering Barclaycard’s Unified Payments strategy to small businesses

Barclaycard Payments has announced the appointment of Colin O’Flaherty to head up its growing small business customer offering. He will take up the newly created position of Managing Director, Head of Small Business, and will play an integral part in scaling the businesses and accelerating the alignment of Payments across the wider Bank.

O’Flaherty joins in September from American Express, where since 2004, he has held a number of senior leadership roles, most recently as General Manager for Commercial Services covering the UK, Russia and Central Eastern Europe.

With almost 20 years’ experience in payments, card services, loyalty and business development, O’Flaherty brings a truly global outlook of the payments landscape, having conducted business in more than 50 countries.

Reporting to CEO, Rob Cameron, O’Flaherty will take a seat on the business’ leadership team and will assume overall responsibility for Barclaycard Payments’ growing portfolio of 350k Small Business customers. He will ensure these clients receive maximum value from Barclaycard’s investment in its Unified Payments offering; from accepting payments in-store, online or on the go and making payments with its award-winning credit cards, in addition to providing access to comprehensive banking and lending services from Barclays UK, being a partner of growth to our business customers.

Small businesses are looking for simplicity and faster and easier ways to pay and get paid. Barclaycard Small Business offers flexible products and services alongside new business tools, for example through software vendors such as Big Commerce, and better rewards such as its new market-leading, 1% cashback card launched in April. The team has also been named Best Business Card Provider by Business Moneyfacts for eight years running*.

Rob Cameron, CEO of Barclaycard Payments, said: “Small businesses underpin the UK economy and it’s critical Barclaycard provides them with payment solutions to support their needs and those of their customers. As their payment requirements evolve so too have our products and services, which now include partner solutions like Big Commerce, to help them sell online, and rewarding commercial card offerings like our new 1% cashback credit card.  

“Colin’s expertise and global leadership capabilities will be invaluable to ensure we continue to make it easier, faster and more rewarding for small businesses to pay and get paid.”  

Colin O’Flaherty added: “Barclaycard Payments is uniquely positioned to offer end-to-end payments and banking services to help small businesses achieve their ambitions. I’m delighted to be joining the company at this pivotal time for small businesses and the opportunity for continued growth and innovation presents an exciting challenge.”

O’Flaherty studied at Trinity College Dublin where he gained a First Class honours degree in Economics in addition to completing several executive education programmes at Harvard Business School and The University of Oxford.

Earlier in his career, O’Flaherty also worked as a Business Analyst for McKinsey & Company for a number of years.

The post Barclaycard Payments Appoints Colin O’Flaherty as Head of Small Business to Drive Commercial Growth appeared first on PaymentsJournal.

Early Warning reported second-quarter growth numbers for person-to-person app Zelle, revealing continued upward movement in transaction activity as they add more business from community banks and smaller credit unions. They now have over 1,100 financial institutions live on their network. This growth comes on top of a blockbuster year in 2020 which saw significant pandemic fueled growth. 

The recent growth has caused me to restate my forecast for 2021 as shown below:

The continued rollout of the small business solution will be one to watch.  Recent announcements from PayPal regarding new, higher pricing for Venmo business activity can make Zelle an attractive alternative if competitively priced.

Here’s more from today’s press release on Zelle’s recent growth: 

• Nearly 1700 financial institutions (FIs) signed on to the Zelle Network®, representing 74% (577 million) of all U.S. DDA accounts
• Credit unions and banks under $10 billion in assets are driving growth, representing 40% of FIs in the Zelle Network®
• Small businesses and consumers sent 436 million payments worth $120 billion with Zelle® in Q2 2021

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post P2P App Zelle Adds to Growth from Smaller FIs and Small Business Product appeared first on PaymentsJournal.

• New service enables businesses and consumers to send payments in seconds with full transparency and strong security
• SWIFT Go is a key building block in the co-operative’s strategy to enable instant and frictionless cross-border transactions
• Seven leading global banks already live with the service

Brussels, 27 July 2021 – SWIFT today announces the launch of SWIFT Go, a transformative new service that enables small businesses and consumers to send fast, predictable, highly secure, and competitively priced low-value cross-border payments anywhere in the world, direct from their bank accounts. Seven global banks, which collectively handle 33 million low-value cross-border payments per year, are already live with the service.

SWIFT Go enables financial institutions to offer a seamless payments experience for low-value transactions often initiated by small- and medium-sized enterprises (SMEs) to pay suppliers overseas and by consumers sending money to friends and family internationally. Using tighter service level agreements between institutions and pre-validation of data, SWIFT Go enables banks to provide their end customers a fast and predictable payments experience with upfront visibility on processing times and costs.

The SWIFT Go service builds on the high-speed rails of SWIFT gpi, which have transformed the speed and predictability of high-value payments. The service marks another milestone in SWIFT’s strategy to enable instant and frictionless transactions from one account to another, across SWIFT’s network that connects more than 11,000 institutions, and 4 billion accounts across 200 countries worldwide. It will further strengthen the capabilities of banks to serve their customers in the high-growth small business and consumer payments segments.

Stephen Gilderdale, Chief Product Officer, at SWIFT said: “SWIFT Go is a further step towards achieving our vision of enabling anybody, anywhere, to send money instantly and securely around the world. The new service is a direct response to the needs of small businesses and consumers for fast, easy, predictable, secure and competitively priced cross-border payments. Our new service will allow banks to compete effectively in one of the fastest growing segments of the payments market, delivering a seamless experience for their customers.”

SWIFT Go was developed in close collaboration with the global SWIFT community and is underpinned by several key pillars:

• Speed: Tighter service levels between banks increase speed. A single payment format increases straight-through processing, while services such as pre-validation remove frictions that cause delays.
• Predictability: The amount, time, fees and FX rate of a payment are known in advance. The sender and receiver of a payment can track the status in real-time.
• Easy to use: The user experience is simple and streamlined, with data requirements known upfront. Strict network validation provides for easy initiation and processing of SWIFT Go payments
• Competitive prices: Processing fees are agreed between financial institutions upfront so they can provide their customers with full transparency; increased straight-through processing further reduces processing costs.
• Security: Senders and receivers have peace of mind that payments are underpinned by the strong security of the SWIFT network.

Seven leading global banks are now using SWIFT Go live: BBVA; Bank of New York Mellon; DNB; MYBank; Sberbank; Société Générale, and UniCredit.

Raouf Soussi, Head of Enterprise Payments Strategy of Client Solutions, BBVA said: “BBVA is very excited to be one of the first banks to sign up to SWIFT Go and we recognise the potential of this solution to revolutionise the way SMEs and consumers move money around the world. We have listened closely to our customers and we know how much they value a secure service that ensures payments reach their destination quickly and seamlessly.”

Isabel Schmidt, Head of Direct Clearing and Asset Account Services Products, Bank of New York Mellon said:  “It’s no secret that for many years consumers and small businesses have been running into varying pain points when transacting international payments. These challenges have included opaque costs and lack of certainty on how quickly funds are delivered to the final beneficiary. This is why BNY Mellon is pleased to be the first US bank to go live with SWIFT Go, a new service that overcomes all of these challenges and assists financial institutions in delivering a competitive, seamless, fast and predictable payments experience to their customers.”

Feng Liang, Deputy CEO, MYBank said: “SWIFT gpi has become the benchmark for high-value cross-border transactions and we are confident that SWIFT Go will be equally as transformative for SME payments. By providing for instant, seamless transactions within one of the highest growth areas of our industry, we expect that adoption of SWIFT Go will be widespread and that it will quickly be established as the industry standard for lower value transactions.”

Jean-François Mazure, Head of Cash Clearing and Correspondent Banking, Société Générale said: “As customer expectations for faster payments evolve, the correspondent banking industry requires a solution to more competitively process SME and consumer payments. SWIFT Go fits perfectly with it, allowing us to provide an outstanding experience to our customers with predictable, seamless, and frictionless low-value cross-border transactions reaching beneficiaries accounts quicker than ever.”

Raphael Barisaac, Global Head of Cash Management, Global Co-Head of Trade, UniCredit said: “UniCredit has long been a keen supporter of innovations within payments that deliver excellent outcomes for end-customers, and as such we are very proud of our involvement in SWIFT Go. This is a service that will lead to real benefits for SMEs and consumers, allowing them to enjoy the speed, predictability and transparency that SWIFT gpi has brought to high-value transactions.”

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Working capital is a financial necessity for small and medium businesses (SMBs). Often, many business owners use credit cards or other high-interest loans to pay for needed goods and services. Behalf, an alternative lending source, just received additional venture financing as well as an expansion of its in-purchase financing to merchants and their SMB customers.

Most SMBs were hit hard during the pandemic and those that survived will benefit from more attractive lending options that can be integrated within online checkout pages.

The following excerpt from a Yahoo Finance article reports more on the topic:

Behalf, a provider of In-Purchase Financing solutions for B2B sellers and buyers, today announced $19 million in new venture financing. The round was led by existing investors MissionOG, Viola Growth, Viola Credit and Vintage Investment Partners. New investors Migdal Insurance and La Maison Partners are also participating in the round.

In addition, Behalf announced the creation of a new debt facility totaling up to $100 million, provided by funds managed by Ares Management Corporation (“Ares”). The capital raised will enable Behalf to expand the availability of In-Purchase Financing to a broader array of B2B merchants and their SMB customers, while continuing to extend the capabilities of its industry-leading platform.

“The B2B eCommerce market is ripe for transformation. Merchants are recognizing the opportunity to drive new revenue by deploying In-Purchase Financing,” said Rob Rosenblatt, CEO of Behalf. “At the same time, small and mid-sized businesses (SMBs) need access to affordable financing options — an evergreen challenge exacerbated during COVID. Even as the U.S. economy is improving, SMBs continue to seek financial assistance to purchase critical supplies, inventory and equipment. Oftentimes they lack the requisite spend capacity on their personal or business credit cards. By offering In-Purchase Financing with flexible terms, B2B merchants can increase average order size by as much as 50-80 percent while reducing their risk, improving cash flow and driving operational efficiencies.”

Overview by Raymond Pucci, Director, Merchant Services, at Mercator Advisory Group

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For small businesses, the owner is often also the person greeting customers at the door, tending to clients, taking payments and scheduling the next appointment. While juggling an incredible number of responsibilities, it can be a challenge for business owners to stay visionary, creative and entrepreneurial while dealing with clunky tools of the past like cash registers and siloed credit card processors.

Small businesses that are ahead of the curve are investing in modern payment processing systems that communicate with all other critical software their businesses use in order to keep up. Bringing a fintech mindset to the business—whether the business is a bank or a pet groomer—is central to streamlining transactions and eliminating inefficiencies like manual errors, time consuming processes and costly fees.

In this article, I’ll discuss why I advocate for integrated payments, and share some of the benefits I’ve seen for small businesses over the years.

Why integrated payments?

That’s easy—it simplifies and speeds up checkout, reduces human error, improves customer experience, lowers rates and increases profits.

It’s clear that businesses still using cash registers are losing time and money. They are also increasing the likelihood of human error by manually tallying up services and add-ons. As credit card processing options evolve, such as portable POS systems, small businesses can start to feel like their payment options are modern enough to keep up—but they won’t be as effective if they aren’t integrating their payments into their broader business management systems. 

Often strapped for resources, small businesses need to get the most out of their customer’s payments, and an integrated payment processor is the way to do it. Integrated payment processing link programs and update automatically, saving employees time spent tallying up transactions between the POS systems. Really, small business owners are the people balancing their own books at the end of the day, so an integrated system that operates seamlessly while the doors are open, should also be able to store all of their financial information in one place to easily access payroll, bill payments and financial reports.

Modernizing operations has become essential for today’s small businesses that are confronted with more and varied operational challenges than they were even five years ago. Businesses have had to change the way they run because of the effects of the pandemic (contactless is a must), evolving consumer expectations (cash, who?) and technological advancements. Implementing a modernized payments system that syncs with all aspects of the business—from the scheduling and customer profiles, to the payroll and membership billing—means the owner and employees are freed up to focus on important things, like customer service and growth pathways.

Benefits for the front desk and back-office

More business typically translates to more money, and an integrated payment processing solution can simplify solutions both in front of and behind the desktop to ensure that money turns into profit.

Today’s customers want convenience and speed, so the faster a checkout is, the happier customers are. Using an integrated payment system can facilitate quicker, touch-free transactions by securely storing card information for future visits, providing more convenience to loyal customers. It also allows small businesses to easily charge for no-shows or cancellation fees and use the checkout time to ask clients about their experience, suggest rebooking times or upsell products. Rather than copying data from one system to another, double checking the amounts and asking the client to authorize the purchase on another machine, employees should be able to make checkout a value-add experience.

Aside from customer interactions, an integrated system also makes back-office operations easier and more efficient. Receptionists, or business owners depending on the size of the small business, no longer have to manually enter charges or reconcile bank statements with closed tickets. Without integrated payments, employees are forced to multitask checking out customers, answering questions and more. A $112.70 charge might become $11.27, and after the transaction closes, no one notices the error until days or weeks later, and now there is no card to run for the correct amount due. Removing opportunities for mistakes helps to reduce financial loss.

Payments can no longer be a passive part of a small business’s operation or the customer experience. In a Mastercard study of small businesses across North America, 76% say the pandemic prompted them to become more digital, with 82% changing how their business sends and receives payments. Integrated payment processing provides an opportunity to add value to the business and to customers by taking advantage of the increase in digital payments, leading to the profit a small business needs.

The post Simplifying Small Business Payments appeared first on PaymentsJournal.

The much-anticipated announcement from Square came yesterday (July 20) with details of a suite of new products for small businesses.  Here’s an overview of their announcement:

Today, Square launches Square Banking, a suite of financial products purpose-built to help small business owners easily manage their cash flow and get more out of their hard-earned money.

Square Banking consists of three core products designed to help small business owners confidently manage cash flow stress: two new deposit accounts, Square Savings and Square Checking, join Square’s existing lending capability, now called Square Loans. By offering essential banking tools that work seamlessly with Square’s ecosystem of solutions like payments and Square Payroll, sellers now have a single home for their entire business, gaining a unified view of their payments, account balances, expenditures, and financing options.

With Square Checking, Sellers can immediately spend their funds with their Square Debit Card, send and receive money via ACH with new account and routing numbers, or use their balance to pay their teams with Square Payroll. Square Checking has no account minimums, overdraft fees, or recurring fees, and sellers are able to instantly move funds between their Square Savings and Square Checking accounts whenever they need to, at no cost. Soon, sellers will also be able to deposit checks via the Square Point of Sale app, helping them further consolidate business funds into one place.

This part is all pretty standard product fare for traditional banks and credit unions, but there are some key differences:

Price: The accounts do not charge maintenance or transactions fees, minimum deposits and balance are not required either.

Savings Rate: The current savings rate is .5%, much higher than average.

Instant Receipts:  Merchants can receive instant access to their card sales processed through Square.  Only a few traditional banks have begun to offer this option.

The loan is offered through Square’s Industrial Loan Company (ILC) charter it was granted recently and the checking account with debit card access is offered through a relationship with Sutton Bank.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Square Competes Directly with Traditional Banks for Small Business Banking appeared first on PaymentsJournal.

Interesting opinion piece posted at TechCrunch and something that we have been increasingly covering in member research as well, although there are many aspects of the subject and approaches to understanding the implications of open banking. The author is experienced as a project manager at several fintechs and provides a perspective around the impact that open banking fintech initiatives are already having and likely to increasingly impact the SME space globally going forward. 

Readers will likely know that there has been a record number of early-stage funding rounds for startup fintechs across NA and Europe, even during the pandemic. Part of this can be attributed to legislation such as PSD2 but an even more propelling factor is likely market pressure through the advancement of API usage, driven by client demands.

“The fintech sector has been hugely successful (and hugely profitable) for much of the last decade, and even more so during the pandemic. But it might come as a surprise to learn that many in the industry believe that the story is just beginning and the sector is poised to achieve much more, with fintech’s next decade expected to be radically different from the last 10 years….Long before the pandemic, the way in which banks were regulated was changing. Initiatives like Open Banking and the Revised Payment Services Directive (PSD2) were being proposed as a way to promote competition in the banking industry — allowing smaller challenger firms to break into a market that has long been dominated by corporate titans….Now that these initiatives are in place, however, we’re seeing that their effect goes way beyond opening up a gap for challenger banks. Since open banking requires that banks make valuable data available via APIs, it is leading to a revolution in the way that small and mid-size enterprises (SMEs) are funded — one in which data, and not hard capital, is the most important factor driving fintech success.“

The gist of the piece is hard to argue with because SMEs (especially the <$50 million annualized revenue groupings) have always found themselves at the short end of the stick when it comes to compelling and customized products for their use since traditionally bank product development and profitability models skew towards lower risk and higher transaction volume clients. So the author goes on to discuss the legacy of open banking and the opportunities created by data.  As that legacy model moves from consumers (who seemingly trust their data to most anyone) into the corporate world, most significantly those businesses that have been historically underserved.  Makes some good points and is worth the 5 minutes to review for those interested.

“If the U.S. banking industry can be convinced of the utility of open banking, or if it is forced to do so via legislation, several groups are likely to benefit:

• Consumers will be offered novel banking and investment products based on far more detailed data analysis than exists at present.
• The fintech companies who design and build these products will also see the use of their products increase, and their profit margins alongside this.
• Arguably, even banks will benefit, because even in the most open models it is banks who still act as the gatekeepers, deciding which third parties have access to consumer data, and what they need to do to access.“

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post With Open Banking On the Horizon, The Fintech-SME Love Story Is Just Beginning appeared first on PaymentsJournal.

Payments players are tripping over themselves going after small business accounts, especially to handle in-store POS transactions. PayPal just introduced Zettle as a POS card reader aimed at small merchants. Many of PayPal’s over 25 million merchant customers also have an in-store presence. This expands PayPal’s suite of services that it offers and rounds out its acceptance of payments across all sales channels.

Not surprisingly, other firms are targeting POS transactions as well. Shopify also took this step by introducing POS terminals since many merchants on its marketplace platform had physical stores as well. Another example is GoDaddy just launching a POS solution through its Poynt acquisition. The POS space will become more competitive than ever as Zettle goes up against leading market players Clover and Square. Small merchants will benefit as more payments vendors will aggressively fight for their business.

The following excerpt from a Wall St. Journal article reports more on the topic:

Digital payments players are going to be competing hard for small businesses as they emerge from the hardships of the pandemic with new ways of selling. It just isn’t clear what game they will be playing.

On Wednesday, PayPal Holdings said it was bringing its Zettle product to the U.S. It will offer point-of-sale hardware and related services such as invoicing to the likes of U.S. coffee shops and other small to medium-size physical merchants and likely will compete with what Square, Fiserv’s Clover and others have been offering. And it isn’t a small market: Bernstein analyst Harshita Rawat estimates that sales by merchants under $100 million in annualized sales are a $4 trillion market with hundreds of legacy payments providers.

But in the same way that PayPal is aiming to take a bigger chunk in-store, rival Square has been pushing hard to do even more out-of-store via its own online payments and web-building products. It also is more heavily deploying its popular Cash App into the business and payments realm.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Battle For Small Merchant POS Transactions Heats Up appeared first on PaymentsJournal.

The human body isn’t just one limb, one muscle, or one organ. Our coordination is relative to how all these limbs, muscles, and organs work together. The knee bone connects to the leg bone, which connects to the hip bone, which keeps the body upright and walking.

A business operates in the same manner. It’s the sum of many parts and their efficient cooperation that creates overall well-being, with a company’s finances carrying significant sway over the rest of the organization’s functions. In fact, a CB Insights study predicts that 29% of small businesses close shop due to poor business spend management. Financial health paints a clear picture of how well managed a company is, which is why it is advantageous for stakeholders in every department to realize and respect the role they play.

When they do — and effective communication systems and financial management software are put in place — leadership gains visibility into every element affecting the company’s financial health so no surprises materialize. By bringing effective communication around financials into focus, a company is investing in its long-term health so that it can stay upright and moving.

Financial analysis deficiencies

How does your company keep financial health in perspective? Out of necessity, a vast majority of companies look to a part-time bookkeeper to act as their budget’s gatekeeper.

But your company is one of many on your bookkeeper’s roster, meaning they spend just a handful of days each month with your numbers and cannot commit only to your business! With that setup, financial data is being delivered through the rearview mirror—days or even weeks after it’s been requested. This means your decisions are constantly being made based on old data.

That workflow has been further disrupted by an influx of nontraditional decision-makers affecting the bottom line. There was a time when financial decisions were made by a handful of people at the top, but SaaS products and remote work have resulted in leadership empowering the average employee to make more calls on spending.

Decision-making is creeping closer and closer to the edges of a company, but communication is lagging. Just as well-being is assessed via regular checkups, a business’s bottom line won’t survive with sporadic monitoring. Real-time information sharing, financial data, and communication have to be at the core of your company’s financial health.

Otherwise, misinformation can lead to misguided actions that aren’t in your company’s best interest.

Don’t let spending sap your business

Unnecessary spending gnaws at your business, taking valuable income that could be reinvested and flushing it down the drain. To prevent frivolous spending and curb extraneous expenses, consider these three steps.

1. Keep employees in the know.

Financial literacy is essential at all levels of a company. Unfortunately, it’s one that 39% of employees and leaders are still learning, according to an Oracle study.

You might understand your financials well enough, but your team also needs to learn to speak the same language. Everyone doesn’t necessarily need to speak finance fluently, but anyone authorized to spend a dime needs to know enough to get by in the land of numbers.

Financial education is not an overnight process, so commit to consistent, ongoing, small doses of the conversation with your people. A companywide educational session will help get everyone on the same page. Then, company leadership — or a charismatic presenter who is comfortable with the information — can lead short, monthly financial meetings that go over the most important facts and figures about how money moves through your business to generate profit.

This tactic gives your team an understanding of the metrics that matter most to your bottom line and showcases how their own actions, decisions, and behaviors contribute to the whole.

2. Let data lead the way.

According to a Forrester study, 53% of respondents said they will give up on a purchase if they can’t quickly find answers to their questions. If your sales team lets inquiries go hours without a response, the data has shown that by the time they do respond, the prospect has already moved on or bought from the first company that replied to them.

These small inefficiencies — that work against the data — add up to a big impact on your finances. It’s worth taking the time to collect the data your business generates and examine how you could be leveraging your limited budget more effectively.

3. Put spending into perspective.

I mentioned that the financial wellness of your business is like your own health. Although a doctor can diagnose a broken bone using inferences and context clues, it’s a whole lot quicker and more accurate with an x-ray machine.

When making decisions that impact the financial health of your business, you want to be able to see inside the body of your business to gather solid and concrete information rather than working by assumption. Rely on financial management software that tracks expenses in real time so you can work with your accountants, bookkeepers, and employees to curb unnecessary spending and make informed financial changes.

The financial health of your business underpins much of your success. Even large, well-established companies operate on a finite budget. Taking stock of your own organization’s financial situation will help you maximize the growth potential of every last dollar.

The post 3 Ways to Mend Your Broken Business Spend Management appeared first on PaymentsJournal.

P2P apps have had a meteoric rise that hasn’t yet slowed.  The pandemic created more and new scenarios where paying another person quickly if not instantly creates real convenience for senders and recipients.  Splitting the cost of a pizza was replaced with paying someone back for doing grocery shopping or sending money to help an individual facing financial hardship. Not only are more P2P transactions occurring, there are now more users which begets more opportunities. 

As an example, just yesterday I was getting a haircut and the one-location, small business posted a notification requesting all patrons tip their stylist through a P2P app to reduce their merchant processing costs.  My stylist had a Venmo QR code taped to her mirror.  I suspect we will see more and more inventive uses like this.

The Financial Brand had this article reflecting on the growth of P2P:

“I think if you had any financial institutions or consumers sitting on the fence about embracing the technology, that went by the wayside as many found it a necessary component to managing their finances during the pandemic,” says Matt Wilcox, President of Digital Payments and Data Aggregation at Fiserv. The company’s research indicates that nearly four out of five (79%) of consumers reported that they used P2P in some form through their financial institution or through a nonfinancial company in 2020.

Fiserv works closely with Zelle — it has connected over 500 financial institutions to the provider and expects that to rise past 1,000 in 2021 — and he says the channel has seen new types of usage, from tipping service providers to making fantasy football payouts, as consumers grow more used to P2P. In 2020 Fiserv saw Zelle transactions increase by 113% among institutions it processes for, with triple digit growth expected for some time ahead. Zelle on the whole saw a record $307 billion sent via 1.2 billion transactions in 2020.

While the usage figure cited earlier is stunning, Fiserv research suggests that further growth will be assisted by increased marketing by P2P providers and by financial institutions. Fiserv found that while use is high, nearly half of consumers surveyed still don’t know if their financial institution provides P2P via email address or phone number and 20% are certain their bank or credit unions does not offer the capability. Younger consumers are clearer on who provides P2P payment channels that they have used.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post The Pandemic has Been Rocket Fuel for the Growth of P2P Payments appeared first on PaymentsJournal.

Small businesses using GoDaddy’s e-commerce platform will have a new payment processing solution. Leveraging its December 2020 acquisition of payment platform, Poynt, GoDaddy will now have a home-grown payments option for over 20 million businesses that sell on its platform.

GoDaddy has been partnering with other payment processors to handle online sales transactions. Future plans include in-store payments enablement to accommodate the increasingly multi-channel shopper.

The following excerpt from a Finextra article reports more on the topic:

GoDaddy Inc. announced the launch of GoDaddy Payments, a new payments solution that enables GoDaddy Websites + Marketing and Managed WordPress WooCommerce customers to handle all of their commerce transactions directly through GoDaddy.

GoDaddy Payments is built using the technology and teams acquired from Poynt in December 2020. This payments feature complements its suite of website commerce and online marketing tools. GoDaddy Payments provides a fast and secure way for GoDaddy’s ecommerce customers to get paid. The setup process is simple and quick, enabling customers to begin using GoDaddy Payments for processing their customers’ transactions in minutes. Payments are processed securely and efficiently, with funds deposited into users’ bank accounts the very next business day.

“GoDaddy is hyper focused on empowering our customers to sell everywhere with a single solution in a seamlessly intuitive experience,” said GoDaddy President of Commerce Osama Bedier. “GoDaddy Payments represents a major step towards centralizing every tool and service a business needs to successfully sell online. Customer feedback has been overwhelmingly positive, and we look forward to accelerating our efforts.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post GoDaddy Launches Own Payments Solution For Small Businesses appeared first on PaymentsJournal.

American Express’s acquisition of Kabbage came at an exciting time. As the world toiled with the threat of COVID-19, the firm plowed ahead to buy “a leading financial technology company providing cash flow management solutions to small businesses in the U.S.”  American Express’ expectation for Kabbage as a vehicle to address small business needs was summarized in the following fashion:

• Kabbage’s products include access to flexible lines of credit, online bill payment, cash flow visualization tools, e-gift certificates, and the ability to centralize funds through the company’s recently launched business checking account.

Less than a year after closure, American Express is ready to bring the first new facet to market, as the firm announced in a press release today.  According to the release,

• Kabbage, an American Express Company, today launched Kabbage Checking, the first business checking account offered by American Express and built for U.S. small businesses. With an annual percentage yield (APY) of 1.10 percent on balances up to $100,000, Kabbage Checking is designed to help small businesses grow, with no monthly maintenance fees, no set-up fees, and convenient on-the-go features—all backed by American Express.
• Now available to eligible U.S. small businesses, Kabbage Checking marks the first of several new digital cash flow management solutions from American Express. American Express has also begun offering Kabbage Funding™ to millions of existing customers with plans to make it more broadly available later this year. Kabbage Funding offers small businesses the opportunity to apply for flexible lines of credit between $1,000 and $150,000. Together, these products are a part of an integrated platform from Kabbage, combining data-driven products, including payment processing and business insights, to help U.S. small businesses manage their cash flow.

It is not likely that Kabbage will compete with American Express’s long-standing small business credit card offerings.  American Express offers 12 variations of its small business card today, ranging from its core offerings of The Business Platinum Card, the Business Gold Card, the Plum Card, and the Business Green Rewards Card. In addition, business Card co-brands include the Business Blue Cash and Business Plus Credit card, Marriott, Hilton, Lowes, and three variations of Delta Airlines.  The American Express Blue Business Cash Card and the Blue Business Plus Card also complement the offerings.

The downfield play on the Kabbage small business checking account, which resides in an FDIC insured account through Green Dot Bank, creates a pathway into small business lending.  CNBC reported:

• The card company has begun offering credit lines of $1,000 to $150,000 for small businesses, leaning on Kabbage’s automated underwriting software.
• As part of its cash management platform, the company will be able to deliver insights to users including when to pay vendors and borrow money, Petralia said.

The Kabbage acquisition took confidence in the small business market during an unsteady climate; it appears that American Express is ready to lever their investment, which will likely ignite the small business borrowing and lending market.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post American Express: Getting Back to Business appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Report: Businesses Need Receivables Automation to Keep Cash Flow Positive During the Pandemic Recovery

Small Businesses are More Worried About Financial Process Inefficiencies and Cash Flow:

• More small businesses were worried about financial process inefficiencies in 2020 than in 2019.
• In 2020, 45% of small businesses agreed they rely too much on non-automated processes for payables, receivables, inventory, and payments, compared to 43% in 2019.
• In 2020, 49% of small businesses agreed that keeping track of payables, receivables, inventory, and payments is a worry that limited their growth, compared to 42% in 2019.
• In 2020, 48% of small businesses were worried about cash flow, compared to 40% in 2019.
• Despite the increased worry, many companies have plans to grow their business. 
• In 2020, 60% of small businesses reported having plans to actively grow their business in the future.

About Report

Automating the systems and processes that encompass corporate accounts receivable has been climbing the priority list in the pandemic era as financial executives increasingly see how end-to-end digitalization can have a positive effect on the cash cycle. In a new research report, Businesses Need Receivables Automation to Keep Cash Flow Positive During the Pandemic Recovery, Mercator Advisory Group reviews the impact of the pandemic on corporate cash flow and the key pieces of integrated receivables that have been gaining intense focus for modernization projects. The growth in digital payments over the past several years has been steady, but since the early months of the pandemic, there has been a pivot towards longer term payments digitization across the spectrum of effort that encompasses the cash cycle and can provide better working capital effectiveness.

“The early-on impact of lockdowns and travel restrictions placed a heavy emphasis on getting payments out electronically, which then set off light bulbs on the receivables side as financial operations had to adjust and consider the longer term implications of manual process elimination,” commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, and author of the report. “Reviewing payments as an end-to-end continuum provides benefits to buyers and suppliers, by leading to a convergence of the systems and processes that make up financial operations. Forward-thinking banks and their clients are now taking a closer look at supporting receivables modernization as part of overall digitization projects,” added Murphy.

The post Small Businesses are More Worried About Financial Process Inefficiencies and Cash Flow: appeared first on PaymentsJournal.

The Post-Pandemic Rebirth of Small Businesses Offers Banks Huge Opportunity

NEW YORK, May 19, 2021 — CI&T, a leader in driving digital transformation for global brands, today published (Re)open for Business, a new report examining how banks can better serve small businesses in a post-pandemic world.The research revealed that while the pandemic caused accelerated digital change in financial services, small businesses still want, and need, banking relationships. 

“Small businesses are considered the lifeblood of the American economy, and banking relationships are the lifeblood of small businesses,” said Robin Borelli, Business Director, Financial Services at CI&T. “The post-pandemic rebirth of small businesses in the U.S. will create enormous opportunities for the banking industry. The primary research that formed the foundation of this study revealed significant insights into the possibilities – and risks – for small business-banking relationships of the future.”

This report analyzed survey responses, focus groups and interviews from 500+ U.S. based small and medium-sized businesses with an annual revenue up to $25M. Two key themes emerged from the research for small business-banking relationships in the future, including: 

Redefining value:  

• 84% of small businesses reported having “very much” or some degree of trust in their bank, but focus groups and interviews revealed that while there is trust in banks, expectations are rising along with frustration and confusion over complex and opaque fee structures. 
• Banks are uniquely positioned as the key partner for small businesses seeking efficient, day-to-day operations management such as payroll services, expense management, and tax advice. Banks may not want to provide these as direct offerings, but being a connector can create a deeper customer relationship. The winners will be those banks that can help the needs of these small businesses beyond that of the traditional deposit and credit model.

Digital as the primary way of doing business:

• Small business customers understand the convenience and cost-saving benefits of automation, but still want personal interaction and relationships due to the complexity of their work. 
• Small businesses have options when it comes to technology and platforms designed to make their lives easier. This presents an excellent opportunity for trusted, reliable partners like banks to help with the technical and operational demands of making these systems work cohesively. 

According to a 2020 report from the U.S. Small Business Administration, small businesses account for 44% of economic activity in the United States, employ 60.6 million people, which equates to over 47% of the private workforce. The impact of the pandemic was hard on small businesses, but as the country begins recovering, CI&T’s research shows the rebirth of small businesses presents an opportunity for banks to reform those partnerships.

View the full report here.

About CI&T

CI&T is a digital solutions partner for some of the world’s biggest companies, helping them drive growth and continuous innovation across business, people and technology. With operations across North America, Latin America, Europe, and the Asia-Pacific region, CI&T has a proven track record of delivering complex end-to-end solutions for the digital enterprise. For more information, visit www.ciandt.com.

The post Small Business-Banking Relationships Are Challenged by Rising Expectations, New CI&T Report Finds appeared first on PaymentsJournal.

Now that Square has its own banking charter announced here, it appears that they will put that to use by offering account services to small businesses. This hasn’t been launched yet or even announced, but evidence in lines of code discovered by an app developer suggests they will offer checking and savings accounts and an associated debit card. 

The Washington Post article on the topic believes that the accounts will be free of monthly maintenance fees and overdraft fees as many small business accounts are with traditional financial institutions based on the relationship of the business.

Square Inc., whose technology has already upended the way small businesses take card payments, is quietly preparing to offer checking and savings accounts to those customers, taking direct aim at behemoths such as JPMorgan Chase & Co. Square’s shares jumped on the news.

With the checking-account offering, Square is taking even more direct aim at a business dominated by the likes of JPMorgan, Wells Fargo & Co. and Bank of America Corp. Financial institutions and their trade groups have grown increasingly vocal that Square and other financial-technology companies are being allowed to compete with banks without being subject to the same level of regulatory supervision.

The new business hasn’t been publicly unveiled. Steve Moser, an iOS developer, discovered the code and shared the details with Bloomberg News. The company calls the new products “Square Checking” and “Square Savings,” according to the code.

“Our bank, Square Financial Services, began operations in March,” Square said in a statement. “We’ve long said its purpose will be to offer business loan and deposit products.”

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post App Code Suggests Square Will Launch Business Accounts Soon appeared first on PaymentsJournal.

As credit metrics for loss and delinquency continue at record low rates, bankruptcy attorneys await a storm of filings by small businesses. Even though just about anyone who wants a vaccine can get one, many small businesses are slow to recover.

Inc. reports, “As the Pandemic Recedes, Small Businesses Face a New Plague: Debt Collectors.”

• As relief efforts like the Paycheck Protection Program (PPP) wind down and state and federal protections such as eviction moratoriums begin to lapse, companies that may have been limping along or on edge could soon topple.
• Or, as Bob Keach, head of Bernstein Shur’s business restructuring and insolvency practice, puts it: “Expect a total avalanche of bankruptcies soon.”
• It sounds counterintuitive, but “filings tend to be at their highest during the early stage of the recovery,” says Keach.

Recent changes in the code streamline the bankruptcy process.

• Early signs are pointing toward the surge that Keach predicts. Namely, the number of Subchapter V bankruptcy filings is rising.
• Subchapter V–so named for the section of the U.S. Bankruptcy Code it inhabits–marks a serendipitous bankruptcy reform for small businesses that became law in February 2020, just ahead of the pandemic.
• Authorized by the Small Business Reorganization Act of 2019 (SBRA), Subchapter V makes reorganizing or liquidating less costly and less time-intensive for small companies than filing for the traditional Chapter 11 reorg.
• The number of these filings increased by 55 percent in February, 59 percent in March, and 112 percent in April 2021, over the same months in 2020, respectively. 

And, the Federal Reserve sees the same trend.

• The central bank added that, as such, “insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”

PPP Loans: they may have been created equally, but they do not all resolve consistently.

• While some debts–like PPP loans that end up receiving forgiveness–won’t need to be repaid, forgiveness itself remains a big open question for millions of borrowers.
• The SBA has helped underwrite more than 10 million PPP loans worth north of $780 billion since last April.
• It’s likely that some of these loans won’t get forgiven, says Melissa Peña, chair of the bankruptcy and creditors’ rights group at Norris McLaughlin in Bridgewater, New Jersey. In that case, she adds, “to the extent that the PPP might not be forgiven, a company might need to discharge that debt.”

Once a consumer or business puts itself into bankruptcy, all collection efforts must cease.  Creditors must prepare for the financial impact, which will lead to near-immediate charge-off.

With the year almost half-way over, and many firms honing their forecasts for 2022, we suggest building in deterioration for both bankrupt and contractual credit losses.  And, take a look at the full text of the Consumer Bankruptcy Reform Act of 2020 is here.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Small Business Credit, Covid, and Bankruptcy appeared first on PaymentsJournal.

Tax season 2021 is messy. The coronavirus pandemic has created additional complications in an already stress-filled time for small business owners as they deal with coronavirus-related staffing issues, stimulus relief ramifications as well as often outdated IT systems.

What could be the ultimate complication? A cybersecurity attack on their business. But there is a solution: the best defense is a good offense, and there are many preventive steps to take.

Small business owners have had more on their plate than ever this last year; foremost, they are just trying to keep the doors open. Filing very complicated 2020 taxes will not only be a challenge but also open them up to data breach harm. Employees and business owners have to work together to keep their businesses safe. At Progressive Tech we specialize in hands-on IT solutions for small businesses to ease that burden

A study by Accenture estimates that 43% of all cyber-attacks are on small businesses and additional estimates state that about sixty percent of small companies go out of business within six months of a data breach or cyberattack. Tax filings make companies particularly vulnerable to a data breach due to uncertainties over filing processes.

According to the IRS, “Business identity thieves file fraudulent business returns to receive refundable business credits or to perpetuate individual identity theft.” There has also been a sharp spike in data breaches and hacks from State and Federal databases including the unemployment hack where scammers siphoned $36B in fraudulent unemployment payments from US, as well as third party credit reporting services. 

If companies survive a data breach financially, they deal with other challenges like brand and reputation damage. Once a ransomware attack starts, it is already too late to stop it. The solution is to do preventative work ahead of time to keep your company safe.

First and foremost, IT security is everyone’s job. All employees need to be on the cybersecurity team.  Here’s what employees need to do:

• Create robust passwords and employ two-factor authentication. Passwords should be hard to guess and kept confidential. It’s also crucial to use different passwords for different accounts.
• Avoid phishing tactics. Don’t open mail attachments from an untrusted source.
• Don’t install unauthorized software. Always check with IT first.
• Remember that Wireless is inherently insecure. Using an unsecured public WIFI connection enables hackers to position themselves between you and the connection point, so use a private hotspot, or find a location with WIFI secured by a strong password.
• Be vigilant. Immediately report suspicious activity to your management.

What Small Business Owners need to do:

• Deploy a Firewall. Firewalls manage access to all incoming and outgoing data.
• Protect company email. This is an easy way for hackers to get into your system. Use a reputable provider you can trust.
• Have a maintenance plan. Keep all anti-virus and malware prevention software up-to-date.
• Create an incident response plan. Know who to contact and what to do if a cybersecurity threat occurs.
• Consider outsourcing. Many small to mid-size businesses fall victim because they lack sufficient security measures and trained personnel.

Security breaches can happen at any time, and cyber breaches related to taxes are incredibly devastating. By turning to a trusted provider of security solutions, businesses can equip themselves with a customized solution tailored to their specific security needs.

The post Cybersecurity and Taxes: What Small Businesses Need to Know to Stay Safe appeared first on PaymentsJournal.

In 2020, Covid-19 transformed the way people live and work. The report outlines Ant’s efforts to support Small and Micro Enterprises (SMEs) in their pandemic recovery, strengthen financial inclusion, bridge digital inequality, and promote sustainability.

“Ant Group remains committed to its mission of using technology to provide ordinary people and small businesses with more equal access to financial and daily life services,” said Ant Group’s Chairman and Chief Executive Officer Eric Jing. “As we face the challenges of today, we feel an even greater sense of responsibility and will strive to explore better solutions to serve the development of society.”

Working with its partners, Ant Group is continuing to build a future that is more inclusive, green, and sustainable, by reducing financing costs for SMEs and micro businesses and developing rural economies, investing in green technologies, and working to further protect the interests of consumers.

Key highlights from the 2020 Sustainability Report are enclosed below.

Supporting Small and Micro Enterprises

In 2020, MYbank, a leading online private commercial bank and an associate of Ant Group, served 35 million SMEs and individually-owned businesses, of which 80% were first-time borrowers of any business loans, while keeping the default rate at a low level.

MYbank’s initiatives to support SMEs’ pandemic recovery included:

• Providing low-interest and interest-free loans to 8.5 million digital shops and small stores in Hubei Province.
• Issuing RMB 10 billion in interest-free loan vouchers to businesses in 81 Chinese cities to support the recovery of small shops.
• Offering a free “zero-billing period” on advance payment services to e-commerce businesses, providing advance payments of more than RMB 200 billion

Adopting and Encouraging Green Initiatives

• In 2021, Ant announced its carbon neutrality goals and corresponding action plans, pledging to achieve carbon neutrality by 2030.
• The company also put forward a series of intermediary goals, including a 30% reduction in absolute emissions in Scope 1 and Scope 2 by 2025 (compared with 2020), a full assessment of its supply chain emissions, and a full transition to renewable energy for its leased data center services. Ant Forest, a tree-planting mini program in the Alipay app where users earn points for making low-carbon lifestyle choices, attracted over 550 million users to plant more than 220 million real trees, helping reduce carbon emissions by more than 12 million tons as of December 2020.

Creating Opportunities for Women

• Launched in late 2019, Ant’s A-Idol Initiative brought employment opportunities to women in less-developed areas, with women accounting for at least 60% of the employees of social enterprises incubated by the initiative.
• As part of its “Wind Rider” project, Ant funded 40 women’s football teams in rural schools to provide women with more opportunities for education and personal development through football.
• On July 15, 2020, Ant launched the “Cyber Mulan” program, which aims to assist 50 million women globally within five years, enhancing women’s participation and competitiveness in the digital economy.

Ant Group Sustainability Highlights 2020-2021

Access the full report here.

About Ant Group

Ant Group aims to create the infrastructure and platform to support the digital transformation of the service industry. Ant Group strives to enable all consumers and small and micro businesses to have equal access to financial and other services that are inclusive, green and sustainable.

The post Ant Group Publishes its 2020 Sustainability Report: Building a Better World Together appeared first on PaymentsJournal.

Small businesses took a heavy hit from the pandemic and many challenges remain for them to get back on their feet. Lightspeed is partnering with Google to assist small business operators in their recovery efforts. Google Tools will be available on Lightspeed’s commerce platform to provide businesses with local inventory ads, cross-sales channel campaigns, and current store information updates.

These solutions guide online shoppers to find and buy from merchants that may otherwise get lost in the crowded e-commerce sales channel dominated by Amazon and mega-retailers. Small businesses are new job creation engines, so these services will likely have a positive impact on many local economies.

The following excerpt from a Financial Post article reports more on the topic:

Montreal software firm Lightspeed POS Inc. has struck a global retail partnership with Alphabet Inc.’s Google to allow small businesses — many of which were devastated by pandemic closures — to advertise to local shoppers looking for alternatives to e-commerce giants.

After more than a year of pandemic lockdowns that forced retailers and small merchants to close their doors, Lightspeed — which provides cloud-based point-of-sale services for the retail, hospitality and golf industries — is betting that customers are shifting their buying habits online but still want to support local merchants.

“When you put those three things together, you put the independent retailer on a much more equal footing than much larger stores and brands, and it gives them a real ability to compete with Amazon,” said founder and chief executive Dax Dasilva in a phone interview.

Google has seen searches for local businesses spike 80 per cent year-over-year, and inquiries on product inventory at nearby small merchants — “who has gym equipment in stock,” for example — have surged by 8,000 per cent, the company said.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Lightspeed and Google Team Up To Boost Small Businesses appeared first on PaymentsJournal.

One of the re-learnings during the pandemic is the importance of getting paid on time, which is a key reason that those companies with paper-laden financial processes have been scrambling to find better electronic solutions. There is also the opportunity cost of reliance on paper, since companies then lose the ability to capitalize on digital information to even further improve cash flow. 

We have been pointing this out for many years in various forms of member research, but now that AI is more easily deployed and prevalent, it is not only becoming an obvious benefit, but also a competitive lever. This indicated posting is found in International Banker, penned by the CEO of a UK fintech startup named Previse, which specializes in software that optimizes the pay cycle through the use of AI. 

As one might easily imagine, the cash flow issue hits small businesses like a sledgehammer, and late payments become an existential threat.

‘As Open Banking continues to reshape the B2C payments landscape, now is the right time to take the premise of open data sharing and apply it to the B2B world. Open data sharing could go a long way to helping solve the slow payments problem and help bring B2B payments into the twenty first century….A problem looking for a solution….Many of the issues that have tipped small businesses over the brink in the past year are chronic pain points which pre-date the pandemic. Slow payment of suppliers is a major one, but it is also one that can be solved. Suppliers to a large buyer often have to wait and chase for weeks or months to get paid, which results in real financial strain….To put the scale of the issue into perspective, it is estimated that as of January this year, UK SMEs are chasing £50 billion in late payments, according to research from Tide. The Federation of Small Businesses estimates that this slow payment problem causes 50,000 SMEs go out of business every year, taking with them jobs and investment which are needed more than ever as the economy starts to rebuild….To add to this, recent research from the Institute of Directors shows that two in five businesses are now facing an increase in overdue commercial debts, with nearly one in ten stating that late payment problems had become significantly worse.’

So the increasing use of electronic payments and systems across the cash cycle feeds into the growing digital ecosystem, spurred on by open banking and customer demand, which in turn geometrically expands the availability of data that can be used for machine learning efficiencies. 

Matching up data for faster payment decisions, as well as earlier positive action on broken or problem payments, provides businesses with a vastly improved ability to control their working capital, thereby creating improved cash flow opportunities that can eliminate the need for costly short-term loans. Banks can of course be central to the solution as well.

‘Despite the immense promise technology can bring to solving slow payments, it is not useful on its own. FinTechs need access to the ERP data of large corporates so that their algorithms can assess payment patterns and unlock instant payment for suppliers.  

Banks have an important part to play in this cycle too and can change financial markets for the better. By helping SMEs to access cash locked in the working capital cycle as early as possible, businesses can trade from a stronger position. Data makes it possible for a business to access cash as soon as their invoice is issued, removing the wait for lengthy payment terms and the uncertainty of whether the payment will be made on time. …This route to approaching sustainable finance is also another way for banks to put their money where their mouth is when it comes to fulfilling ESG commitments. It’s a financing solution which is sustainable and beneficial for all parties. …Using a rigorous risk control framework to release capital from invoices can make businesses more resilient and strengthen supply chains. That isn’t just good for suppliers, it’s good for banks, businesses and the wider economy, too.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Powering a New Era of B2B Payments through Open Data Sharing appeared first on PaymentsJournal.

Brand new partnership will enable financial services to be embedded into Talenom’s emerging SME solution ‘Accounting Alex’ to modernise banking for SMEs

London, 28th, April 2021: PPS, formerly PrePay Solutions and an Edenred company, today announces a new partnership with leading Finnish accounting company, Talenom.

Listed on the Helsinki Stock Exchange since 2015, Talenom provides commercial accounting and bookkeeping solutions across the Finnish and Swedish markets. Its traditional customer base is weighted towards medium size companies, but a strategic focus to increase Talenom’s reach into the SME marketplace has seen the company develop a self-service solution, named ‘Accounting Alex’, which combines accounting software with banking services. The move to supporting smaller businesses highlights Talenom’s commitment to the SME business sector which forms an important part of the European economic landscape.

With the support of PPS, Talenom is filling a gap in the market for alternative business financial services. Through the partnership, Talenom will now be able to integrate financial services into Accounting Alex including both physical and virtual Mastercard payment cards, a Finnish IBAN provided by PPS for all accounts, SEPA payments, and electronic bank account statements.

With the strengthened services to the Talenom platform, users can perform bookkeeping and banking services within the same application, a service that other companies in this space have been unable to do before. As a result of working with PPS, small businesses will be able to set up an account in minutes and enable savings on fees by more than 50 percent. This joint solution truly expands and adds value to SME businesses across Finland’s commercial landscape.

Otto-Pekka Huhtala, CEO of Talenom, commented: “Legacy banks in Finland are unchallenged, so we are motivated to offer entrepreneurs and SMEs more flexible and affordable financial services. Given PPS’ commitment to modernise the infrastructures in place for SMEs we knew they would be a great fintech partner for us to work with to achieve our goals. After just one phone call, we knew they believed in our vision, and together with Talenom’s enhanced product portfolio, the future looks very promising.”

Ray Brash, CEO of PPS, added: “We’re delighted to support this next phase of Talenom’s journey by providing SMEs with embedded financial services – this is something very close to our heart. Through the partnership we have bolstered our IBAN offering, and very much support Talenom in its future expansion into other geographies.” To find out more about PPS visit: https://www.pps.edenred.com/ To find out more about Talenom visit: https://www.talenom.fi/en/

The post PPS and Talenom Combine Award-Winning financial and Accounting Solutions for Finland’s SME market appeared first on PaymentsJournal.

The “best” part of the NFT market craze is that it appeals to non-technical people who don’t understand what they are buying but desperately want it to work. The best part of this scam is that the NFT does deliver a certificate of ownership but it is about as valuable as those included with the beany babies.

So you acquired an NFT for that digital masterpiece you created and your certificate to prove it is in some immutable ledger. Maybe Binance, or Flow, or Tron, or any of the five or more others that offer NFTs. But wait, if your lucky you may discover that your masterpiece was already issued an NFT by a criminal that created a counterfeit. I say lucky because that criminal may have registered it in a service other than the one you use and you will never know about it unless you go searching for it.  Counterfeiting is just one of seven critical issues that we have identified in our blog “Non-Fungible Token (NFT) – Good Investment or Ripe for Fraud?” 

Did you know that there is no standard for what an NFT is, what it does, or what it doesn’t do?  Each NFT is unique to the service used. These services are not compatible and come with their own unique wallet services and marketplaces. The smart contracts that are supposed to protect your asset are also unique as is the mechanism for linking you NFT to the digital asset itself. Smart contracts are themselves iffy technology given they are written by software engineers, whom I am sure have never release code with a bug in it.

The concept of NFTs has been around for a long time and may evolve into a useful technology, we just aren’t there yet. One early solution proposed years ago was to create a blockchain that would tie together car manufactures, dealers, tax agents, motor vehicle departments, lenders, as well as the electronic key associated with the vehicle. A seamless nirvana of car ownership.  Wonder why it hasn’t happened? 

This article perpetuates the hype to an audience that doesn’t understand the technical issues involved. It offers no clarity regarding these issues and so may leave buyers and sellers holding a beany baby certificate for that million-dollar original digital artwork:

“Non-fungible tokens (NFTs) are all the rage right now and justifiably so since these digital tokens basically provide owners with certificates of authenticity relating to just about anything one can think of — from things like artwork, music, collectibles, to real estate, and even precious metals.

To put it another way, NFTs can be viewed as digital files that make use of a blockchain platform for their distribution and owing to the fact that they are totally unique — and stored on a decentralized ledger —  it is very easy to verify who their owner is.

Since the emergence of this technology, individual retailers, businesses, celebrities, artists have been able to sell their offerings directly without the need for any intermediaries who typically control all distribution and promotion related activities, in the process taking a huge cut of the total paycheck. But, non-fungible tokens could also have some very interesting applications in more mainstream commerce.”

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post All the Hype in the World Won’t Fix NFT’s Current Problems appeared first on PaymentsJournal.

You’d be forgiven for thinking that most cybercrime happens to big organizations. That’s because you rarely see SMBs making headlines when they become victims, compared to their larger counterparts. Albeit, larger organizations have access to more varied data, in abundance too, and in turn may seem more attractive to fraudsters. However, your local independent e-commerce company will still house valuable customer data and is certainly not safe from a cyberattack. In fact, a study from Verizon highlighted that 43 percent of all cyberattacks are directed at SMBs.

There are myriad reasons for this, one of which is that SMBs don’t always have the capital and informational resources to invest in stringent proactive security measures. Criminals know this, which makes them easy prey. Another is sometimes due to a lack of education and not fully understanding the ways that cyber criminals can attack their business and why they would even do so.

The best method for SMBs to feel secure with the tools they have in place is to ensure that they meet compliance standards, which can be achieved through good security practices. But a lack of understanding and no access to the correct tools can make achieving this much harder than it needs to be. And failing to meet that compliance could carry dire consequences.

A fatal economic impact to any SMB

The biggest impact that a cyberattack will have on an SMB is an economic one. Cyberattacks are costly for a multitude of reasons. There is the cost of paying potential ransomware. There is the amount of money required to fix the security issue that caused the attack. And there are the fines a company faces by failing to meet compliance and regulations such as GDPR. These all add up, making any kind of hacking attack a costly endeavour for the victim. For many SMB owners, a particularly aggressive attacks can mean the end for their business.

It’s a sad fact, but it has been found that some 60 percent of SMBs that are hacked go out of business within six months of the attack. Despite the shocking stats, a Bullguard SMB Survey from 2020 found that 43 percent of SMBs still have no cybersecurity tools in place, while 32 percent rely on free tools that aren’t up to industry standards. It’s clear they need support, and this is where their acquirers and payments industry partners need to step up and lend a hand.

How to help SMBs achieve security compliance

Experts say the channel is only as strong as its weakest link. All businesses that work collaboratively, no matter the relationship, should be supporting one another to ensure the best security practices are in place and compliance is being met. That means for SMBs, they need the support of their big partners and in the payments space this often means the acquirers and ISOs. These entities have a responsibility to lend a hand to their merchants and help them achieve compliance, and there are a number of ways this can be accomplished.

The first step is to supply merchants with the white-labelled security tools and compliance management software they need in order to remain compliant with the latest security standards such as Payment Card Industry (PCI) standards. These online security solutions provide the bare minimum for compliance, and for a new SMB who doesn’t have experience in cyber risk, it’s best to keep it simple from the start.

Engaging with SMB customers is also vital. Acquirers can help educate SMBs on best practices, teaching not just a dedicated security team (if they are fortunate to have one) but all staff, to empower them to identify when an action on the network might be presenting risk.

Lastly, good post-breach planning can minimize losses for SMBs. According to the Chubb Cyber Index, it costs an average of $400,000 to recover from a cyber incident, which is no small sum. However, this is an average and can be reduced with adequate preparation – such as implementing an incident response plan, introducing a wide range of cyber security tools (for example, good antivirus software and password management tools), and purchasing a comprehensive cyber insurance policy.

Why the best returns come through a managed service

When it comes to supporting their SMB customers’ security compliance, the best return on the acquirer’s investment is to introduce a managed service solution. This way, the merchant doesn’t even need to worry about the day-to-day security controls and assessment; all the tasks associated with security and compliance can instead be left up to professionals who can put 100 percent of their attention on ensuring that compliance is met. The organization will receive full visibility of its compliance status and if its team has any questions or concerns, they can quickly be raised with the experts, resting any doubts and fears. It takes the difficulty away from the SMB, so that they can focus on growing their business.

It is vital that SMBs keep themselves protected from cyberattacks, because any single, successful attack could be a death sentence for the organization. In the same way most people wouldn’t ignore practices that protect their own life, acquirers should remind merchant customers to protect their business and customers. Thankfully, there are many tools out there that can protect businesses from the threat of cybercrime; it’s just about getting these tools into the hands of those who need them. As the more experienced partner, it’s up to the acquirer or ISO to keep their SMB merchants safe so that they can grow into the success stories they want to become.

The post How Acquirers Can Save SMB Merchants from Cyber Pain appeared first on PaymentsJournal.

In this acquisition announcement at businesswire reviews details around the agreed Deluxe acquisition of First American Payment Systems.  Readers will recognize the 100-year-old Deluxe, the Minnesota-based Fortune 1000 that is traditionally known for check processing and receivables management but undergoing a transformative process as the world moves quickly towards digital payments. 

First American is a privately held fintech company out of Texas that does merchant acquiring and tech solutions. One might describe the 30 year old company as a large ISO/processor for small and medium merchants that has grown substantially in that timeframe. So this move seems logical as the consolidation trend that started a couple of years ago continues across many forms of payment processing companies.

‘Deluxe…today announced an agreement to acquire First American Payment Systems (“First American”) for $960 million in cash, subject to customary adjustments. This transaction is expected to accelerate the company’s transformation into a leading payments technology company as part of its One Deluxe strategy…. “This is a major, logical and responsible next step in our transformation. With electronic payments playing an increasingly important role across the economy, the addition of First American’s independent, leading payments platform will advance our One Deluxe strategy and our overall growth trajectory,” said Barry McCarthy, President and CEO of Deluxe. “Deluxe serves an integral part of the payments industry, with our software and services processing more than $2.8 trillion annually. First American’s end-to-end payments platform presents significant cross-sell opportunities as we continue to invest in our higher growth Payments segment, and this combination will create a multitude of opportunities to drive tremendous value for our shareholders”. ‘

The posting is worth a read since it has a lot more detail that these types of announcements usually carry.  The fit seems quite good since there is not much visible overlap across the business models, so some economies of scale can occur along with fresh combined revenue opportunities.  The SME space is a generally coveted target across the payments industry so that would be a clear play for the expanded Deluxe.

‘ “Today’s announcement is a testament to the accomplishments of the First American team over the last 30 years that have established our company as a deeply trusted payments partner with an unwavering focus on customer service,” said Neil Randel, Chief Executive Officer of First American. “In joining forces with a Fortune 1000 publicly traded company, we are advancing our mission to create innovative solutions as we continue to help our customers succeed and prosper. I look forward to working closely with Barry, Mike and the team to exponentially grow our combined company and deliver enhanced value to all of our stakeholders.”…Upon close of the transaction, the First American management team will join the Deluxe Payments team, and Randel will become Managing Director, Merchant Services.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Deluxe to Acquire First American Payment Systems appeared first on PaymentsJournal.

Citi has added the capability for its corporate clients to push credit transactions to consumers through the use of the debit push payment solution, Mastercard Send, delivering transactions typically within seconds. Send joins other payment types like ACH on the treasury platform providing clients with a choice of payments. 

What I find intriguing about this is that Citi has been an early adopter of The Clearing House’s RTP network.  This highlights the breadth of options and the rich, competitive market that has developed in the U.S. for payments that are faster and always available. 

These payment types will likely continue to develop side-by-side, serving specific markets and use cases. Here’s an excerpt from Mastercard’s and Citi’s announcement:

Citi^® Payment Exchange provides Citi commercial clients with the ability to send Business-to-Consumer (B2C) payments via their customers’ preferred method of payment. It also incorporates payee enrollment services, a payee database, online payment preference management, an administrative platform, dedicated support, bank-grade data security and storage all in one.

By leveraging various electronic payment options, including ACH and now near real-time payments to debit and prepaid card accounts, organizations can simplify and help reduce payment costs while providing an exceptional and brand building user experience for their clients. In the United States, Mastercard Send reaches virtually all consumer and small business debit cards, delivering a quick and enhanced consumer experience. Consumers won’t need to receive a check in the mail, deposit a check, or share sensitive bank routing information. In addition, they will benefit from near immediate access to funds.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Citi’s Treasury and Trade Solutions Adds Mastercard Send for B2C Transactions appeared first on PaymentsJournal.

Finastra adds RMA Dual Risk Rating scorecard capabilities to the Fusion CreditQuest commercial lending solution

Lake Mary, FL, US – April 21, 2021 – The Risk Management Association (RMA) and Finastra today announced a strategic initiative to advance commercial banking risk rating frameworks for US financial institutions. Through this partnership, RMA Dual Risk Rating scorecards will be available through – and fully integrated with – Finastra’s Fusion CreditQuest commercial lending platform.

“Given the role of small and mid-sized enterprises in upholding our economy, it is more critical than ever to ensure SMEs have access to lending – and that the commercial banks serving them implement RMA Dual Risk Rating scorecards to effectively assess their borrowing ability,” said RMA President and CEO Nancy Foster. “We are proud to provide the financial services industry with a cost-effective tool to improve commercial loan risk rating consistency and objectivity, and excited to offer Fusion CreditQuest clients access to our expert judgment-based risk rating scorecards.”

“Today many financial institutions use a single rating matrix to analyze the creditworthiness and ability of a borrower to repay a loan,” said Vonda George, Director, Lending Territory Head, Finastra. “Regulatory guidance suggests using both objective and subjective factors to assess the risk posed by a borrower’s expected performance as well as the transaction structure. By integrating RMA Dual Risk Rating scorecards into Fusion CreditQuest, we are bringing our clients a superior way to analyze risk and assure a favorable outcome.”

Fusion CreditQuest is an end-to-end commercial loan origination solution that streamlines portfolio management, underwriting, and reporting. Customers who use RMA’s flexible Dual Risk Rating software will enjoy full integration of RMA’s scorecards with the Fusion CreditQuest platform.

The post RMA and Finastra Improve Commercial Banking Risk Assessment through Dual Risk Rating appeared first on PaymentsJournal.

This partial summary of the U.S. Bancorp Q1 earnings call is posted in American Banker and focuses primarily on the outlook for a main driver of non-interest income, which is the payments business.  Although consumer payments are on the rebound, the corporate payments side of the business is lagging, which is likely not much of a surprise to most readers given the ongoing issues with travel & leisure industries, as well as small businesses in general. 

We have covered this in various forms and continue to closely track developments.

‘U.S. Bancorp’s payment services businesses struggled during the pandemic, but executives are counting on continued increases in consumer spending and corporate clients’ embrace of real-time payments to fuel a rebound in 2021….The company’s corporate payments and merchant processing fee income declined in the first quarter from a year earlier, while credit and debit card revenues grew, fueled by government stimulus and increased consumer spending….Though many corporate clients have seen their own revenues recover, thus translating into more transactions with their banks, U.S. Bancorp has seen corporate payments revenues decline because clients in certain industries, particularly travel and hospitality, are still struggling.’

In newly issued member research on receivables management, as well as other reports released during Q1, we have been discussing the importance of payments modernization and general cash cycle digitization efforts for proper management of financial operations.  During 2020 many businesses awoke from their inertia-driven slumber around analog processes and are actively pursuing some level of digital transformation. 

This requires some time for execution but will ultimately deliver greater process efficiency and flexible working capital strategic execution.  As we have consistently advised members, there is also a steep opportunity cost in failing to remove the paper, given the availability of latest gen tech such as AI and real-time payments, which can only be optimized with end-to-end digital approaches. This will eventually be a competitive issue for companies behind the curve.  U.S. Bancorp recognizes this and expect such efforts to improve results as we move further into 2021.

‘But executives also said they’ve been working on new use cases for real-time corporate payments and they expect demand for these services to pick up. On the company’s earnings conference call Thursday, Chairman, President and CEO Andy Cecere identified payroll services and accounts payable and receivable as areas where the bank expects to collect more fees from clients using real-time payments services….“It takes corporate America longer to adopt digital capabilities, but at some point in time that’s going to take off,” Chief Financial Officer Terry Dolan said. “COVID has helped to accelerate some of that.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post U.S. Bancorp Bets on Corporate Payments Rebound appeared first on PaymentsJournal.

Washington, DC, April 14, 2021 – With U.S. vaccination rates rising quickly and the end of the pandemic in sight, equipment and software investment growth is expected to be robust this year as businesses invest to adapt to a post-pandemic normal. Annual equipment and software investment growth of 11.2 percent is forecast for 2021. Annual U.S. GDP growth for 2021 is forecast at 5.7 percent, according to the Q2 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation.

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “Finally, we are beginning to see the light at the end of the tunnel. The widespread availability of vaccinations offers hope that economic activity will soon return to pre-pandemic levels, or beyond. The robust stimulus efforts, along with trillions of dollars in pent-up demand, point to a wave of spending this summer and fall. All indicators point to 2021 being a banner year for equipment and software investment, and the equipment finance industry is poised to benefit from that expected economic activity.” 

Highlights from the Q2 update to the 2021 Outlook include:

• The equipment and software investment growth forecast of 11.2 percent benefited from a 21 percent surge in Q4 2020, which provided a strong jumping-off point for 2021.  
• The U.S. economy expanded at 4.3 percent (revised) annualized rate in Q4 2020 as the nation struggled with surging COVID-19 cases and deaths. Although the labor market recovery is still far from complete and the K-shaped recovery has left millions of consumers in a precarious position, the overall balance of risks is on the upside.  
• The U.S. manufacturing sector continued to improve in early 2021 due to strong demand for both consumer and business goods. Underlying demand remains strong, although supply chain backlogs should be monitored and rising input prices could become an increasingly significant concern in the months ahead.
• Main Street managed to weather the winter months and the third wave of the pandemic, although not without significant difficulty. Further federal relief and stimulus efforts have played an outsized role in the survival and longer-term viability of many businesses. Warmer weather, rising vaccination rates, and the relaxation of pandemic-era operating restrictions offer hope that there are better days ahead.
• The Federal Reserve again confirmed its commitment to keeping interest rates at zero until at least 2023. The Fed also ended a pandemic-era capital requirement relief measure that could cause turmoil in bond markets.
• Headwinds to keep an eye on include the potential for higher inflation, the ongoing labor market recovery, and the emergence of new virus strains that could reduce the effectiveness of existing vaccines.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. Nine verticals are showing signs of accelerating investment after the pandemic-fueled collapse, and three other verticals are showing signs of peaking, although investment growth should remain healthy in the near term. Over the next three to six months, year over year:

• • should remain in positive territory.
  • All other industrial equipment investment growth should return to positive territory. 
  • Medical equipment investment growth should be strong.
  • Mining and oilfield machinery investment growth appears to have bottomed out and should improve despite this month’s decline.
  • Aircraft investment growth should continue to improve.
  • Ships and boats investment growth should be modest.
  • Railroad equipment investment growth should return to positive territory.
  • Trucks investment growth should return to positive territory.
  • Computers investment growth should remain strong.
  • Software investment growth should accelerate.

The full report of the Momentum Monitor is now available at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The Q2 report is the first update to the 2021 Economic Outlook and will be followed by two more quarterly updates before the publication of the 2022 Economic Outlook in December.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/. All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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ABOUT THE FOUNDATION

The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

The post Q2 Update to 2021 Economic Outlook Forecasts 11.2% Expansion in Equipment and Software Investment Growth and 5.7% GDP Growth as Pandemic Wanes appeared first on PaymentsJournal.

While issues between the global debit card networks (aka, signature networks) and the smaller, mostly domestic debit networks (aka PIN networks) rages on and merchants continue to do battle with large issuers over topics around debit routing, an article in PaymentsSource, U.S. debit is already more competitive than most nations, makes the point that there is no shortage of debit network options. 

There can always be more competition, (and new competition for debit transaction is in fact expanding), but the U.S. debit network market is still the world’s most competitive. Some excerpts from the article:

China UnionPay enjoys a debit card network monopoly. The U.K. debit-network market is a duopoly. Visa will have 65% share after NatWest’s portfolio is converted to Mastercard later this year.In Spain Sistemapay enjoys close to a domestic monopoly. Cartes Bancaires still has more than 90% of France’s domestic market, with Mastercard and Visa nibbling on the edges. Canada’s largest payment network by transactions Interac, owns debit at the physical point of sale.

There are more than a dozen U.S. debit networks including Visa, Mastercard, Discover, Fiserv’s Star and Accel, FIS’s NYCE, Culiance, Jeanie, Shazam, and Coop. Arguably PayPal transactions funded by ACH, balances, and debit cards, are debit, albeit priced like credit.

However, most small- to midsize businesses don’t accept traditional “PIN-debit” networks, notwithstanding their historically cheaper rates. They’ve made little headway online. Acculynk’s efforts to support PIN online burdened consumers and didn’t generate sales.

Advocates of debit-routing choice consequently thought routing competition would enable merchants to ratchet down interchange and bring network fees close to zero. Its impact has been more modest than hoped for.

Large merchants’ directing routing, however, has squeezed network fees, particularly for PIN-authenticated payments. Large retailers and national debit networks argue Visa and Mastercard use pricing and their breadth of services and technology to inhibit merchants’ debit-routing choices.

Each U.S. debit card has a global AID pointing to Mastercard, Visa, or Discover, and a U.S. AID identifying all enabled networks. Merchants complain the global AID is often the default. However, they frequently chose the global AID to support mobile payments and contactless as the easier path.

If there is competition, and if access to the PIN debit networks is not being purposely blocked -the  jury is out on that point- is it Mastercard’s and Visa’s responsibility to push small merchants’ transactions to the PIN debit networks?

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Is the U.S. Market for Debit Competitive or Not? appeared first on PaymentsJournal.

Everyware, a leading contactless payments and customer engagement solutions company, announces becoming a Technology Partner of Cybersource and Authorize.net, both Visa Solutions. The partnership with these two Visa Solutions will power the payments processing for small and medium businesses (SMBs), while Everyware’s platform delivers seamless two-way communication with secure payment options, to help customer relationships and boost revenue goals. Cybersource will power enterprise level businesses while Authorize.net powers SMBs.

These integrated solutions will enable businesses to provide customers a touchless experience, meaning a safer payment and communications process during the COVID-19 pandemic, to support the modern future.

Here’s how it works: A customer orders items from the local shop and opts (due to COVID-19 safety precautions) for curbside pickup. When the order is ready, the shop texts to let her know, she arrives at the store and texts “I’ve arrived – Waiting in Parking Spot 1”,  to which the shop text-replies “Coming right out” along with a secure payment link. The customer pays from the comfort of her vehicle, never having to physically enter the store, pull up an app, hand off, or even tap a credit card. The communication and payment by SMS are supported by Everyware while the payment processing, fraud management, and other valued payment gateway features are handled by Authorize.net for small businesses or Cybersource for enterprise.

Veterinary clinics,  medical practices and other types of local service providers are ushering in digital and touchless solutions as customers have grown to expect this type of digital transformation since the pandemic began. With these solution offerings, businesses will be able to provide a suite of essential touchless service options paired with paying by text, two-way messaging, chatbot features and more to drastically improve customer service and communications.

“Becoming a Technology Partner of Cybersource and Authorize.net provides a complete packaged solution to local businesses who need to offer innovative, touchless communication and payment options due to high demand,” said Everyware Founder and CEO Larry Talley. “Pay by Text and SMS communications is a safe, simple and easily adaptable technology for any industry. The partnership is a win for everyone involved.”

Consumers’ digital shopping channel use in the U.S. has increased by 60% since March 2020, and those businesses offering digital features such as touchless payments that prioritize consumer convenience were viewed as the most satisfying in the eyes of consumers. (Source: Global Shopping Index, a collaboration between Cybersource and PYMNTS.com – U.S. and SMB Editions). SMBs often don’t have the tools or ability to afford building a mobile app or maintaining effective customer communications. Combining these solutions will allow businesses to connect with customers at a crucial time while collecting payments with ease.

New and innovative user experiences powered by Everyware and Visa Solutions’ Authorize.net and Cybersource, are packaged to empower and modernize businesses well beyond 2021. Everyware’s platform is HIPAA compliant, PCI certified and conveniently contactless, which keeps everyone and their data safe. Users don’t need to download a mobile app or log into a portal. Automated text messages can be easily set up to alert customers to news and offers as well as a tool for immediate SMS communication.

For more information, visit Everyware at Everyware.com or follow on Facebook, Twitter, Instagram and LinkedIn.

The post Everyware® Announces Partnership with Visa Solutions: Cybersource and Authorize.net appeared first on PaymentsJournal.

In an announcement from Visa which we picked up at Finextra, the payments company has launched an expanded version of Visa Direct platform that allows for additional use cases, including x-border disbursements. 

We recently covered the B2B faster payments space for the U.S. market in member research and mentioned Visa Direct as one of the growing alternatives for B2B cases, and in the release specified business–to-small business as one of the target constituencies for using the service.

‘The Visa Direct Payouts APIs are designed to reduce the complexities often associated with managing and sending money across multiple networks and intermediaries worldwide….Users can move money globally through a single connection to VisaNet, enabling financial institutions, fintechs, remittance providers and corporate banks to capture new payment flows, says Visa….The system supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, such as insurance disbursements, marketplace seller payouts, providing workers faster access to their earnings, as well as remittances.’

We have not received a detailed briefly on the platform enhancements but it seems likely that it involves further integration with the Earthport capabilities, which Visa acquired back in 2019.  Since Visa’s B2B Connect platform is more targeted for high value B2B, we expect that the new Visa Direct B2B cases are more high velocity and low value, which is more what payouts and remittances are in the first place.

‘Bill Sheley, SVP, global head, Visa Direct, says: “As digital commerce accelerates, Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card….”The launch of Visa Direct Payouts marks an important milestone in Visa’s expansion of its account-to-account capabilities to now reach an additional 2 billion bank accounts around the world.”  ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Visa Expands Global Money Movement beyond the Card appeared first on PaymentsJournal.

M&A activity remains at a steady pace in the payments industry as platform integration, omnichannel, and small business solutions continue to be targets of interest. Fiserv just announced its planned acquisition of Pineapple Payments that is already a current partner.

While a small-sized company itself that began in 2016, Pineapple brings fast track growth of its own to Fiserv as it has scaled up to a current client base of over 25,000 merchants. One area of note to watch is Pineapple’s healthcare market solutions as this is a vertical that still has high growth potential for payments providers.

The following excerpt from a Yahoo! Finance article reports more on the topic:

Fiserv, Inc.  announced yesterday that it has agreed to acquire its key distribution partner and Pennsylvania-based payments technology company, Pineapple Payments.

The deal, subject to customary approvals and closing conditions, is anticipated to close in the second quarter of this year. Financial terms have been kept under wraps.

Frank Bisignano, president and chief executive officer of Fiserv, said, “With Pineapple Payments already operating as a key distribution partner of Fiserv, we expect to accelerate the delivery of new and innovative capabilities to a host of new merchant clients.”

Notably, Fiserv’s shares have charted a solid trajectory in recent times, appreciating 18.2% over the past six months, ahead of the 5% rise of the industry it belongs to and 16.8% rally of the Zacks S&P 500 composite.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Fiserv Adds Pineapple Payments to Its Shopping Cart appeared first on PaymentsJournal.

PPP provides a great opportunity for small businesses—and in particular businesses that saw a reduction in business in 2020 due COVID-19—to access capital that can help stabilize their business. The capital is intended to help business owners pay employees, pay outstanding rent and other bills, and invest in reopening and getting back to business. What options are there for small business lending?

This is a 5-year loan carrying a 1% interest rate, with no payment for the first 10 months, so it is some of the lowest cost financing small businesses will ever find.  Much, if not all, of the loan is likely to be forgiven assuming the business continues to pay its bills and employees, so the program has tremendous benefits with limited downsides.

The maximum loan that a small business qualifies for is calculated as 2.5x the average monthly payroll of the company during either 2020 or 2019.  Businesses in the accommodation and food service industries (defined as businesses with a NAICS code beginning with “72”) have a maximum loan size of 3.5x average monthly payroll.  Payroll is capped at an annual rate of $100,000 per employee when calculating average monthly payroll.

Key qualification requirements of second draw PPP loans include:

1. Eligible businesses must have experienced a 25% reduction in revenue in one quarter of 2020 (1st, 2nd, 3rd, 4th) over the same quarter in 2019.
2. Must have been in business on or before Feb. 15^th 2020 (before COVID shut down the US)
3. Must have 300 or fewer employees
4. Public companies are ineligible

Requirements to obtain forgiveness include:

1. Similar to the first round, forgivable expenses include payroll, rent, mortgage interest, and utilities. The second round has expanded forgivable expenses to include general operating expenses, property damage expenses, supplier costs and worker protection expenses.
2. Sixty percent of eligible forgiveness must come from payroll expenses.
3. The loan forgiveness period in which forgivable expenses may be accrued is 24 weeks from the time the loan is issued.
4. If the borrower’s loan is less than $150,000, they will be eligible for a simplified one-page loan forgiveness process.

Additional Lending Products Available to Small Businesses

In addition to the PPP, there are a number of loan products that are available to small businesses that are open, operating and have maintained an acceptable credit profile despite the stresses of the past year.  Each of these products can be offered by both banks and non-bank lenders.  Products include:

1. SBA loans can be secured or unsecured and may carry fixed or variable rates.  SBA loans used for equipment, working capital and inventory have a term of 10 years.  SBA real estate loans have a term of 25 years.  Personal guarantees are required.
2. Equipment finance loans are generally secured by the equipment being purchased.  They generally carry fixed rates and typically have terms ranging from 3 years to seven years.  Personal guarantees are generally required.
3. Term loans may or may not be secured, depending on lender and credit profile.  Term loans come in a wide range of options depending on credit, term, fixed vs. variable rates, position of lender in the capital stack and speed and ease of funding.  A personal guarantee is often, but not always, required.
4. Cash-flow based factoring products are generally unsecured, have variable repayment periods based on velocity of cashflow and generally do not carry personal guarantees.
5. Revolving lines of credit are offered by both bank and non-bank lenders, tend to be shorter in term, unsecured and often carry personal guarantees.
6. Invoice factoring products are offered by bank and non-bank lenders as an advance against outstanding invoices for products and services already completed and delivered.  These products tend to revolve every 30-90 days in accordance with standard payment terms and are secured both by outstanding accounts receivable and a blanket guarantee from the borrowing entity.

The post An Overview of Small Business Lending Options appeared first on PaymentsJournal.

Readers will be familiar with the acronym SME (aka SMB) for small and medium-sized enterprises, which has a few definitions that differ mostly on the upper band of employees and/or revenue size. The definitions don’t include the smallest of businesses, or microbusinesses, which typically are defined as having between 1-10 employees and around $1 million or less in revenues. 

So the acronym MSMEs accounts for all of the smaller enterprises in any particular market. This posting in egov discusses the India MSME market and the importance of access to and usage of digital commerce platforms allowing for more flexible supply chain finance.

‘Delayed payments choke MSME suppliers and bring the supply chain to a grinding halt, and adversely affects everyone dependent on them. The concurrent drop of MSME earnings by 20-50 per cent and the decline in India’s Manufacturing PMI Index to 50.6 during the COVID-19 pandemic prove the same. Why are MSME suppliers yet to benefit from supply chain finance automation?…MSMEs in India have an offline legacy and have been historically underserved by technology. Supply chain financing automation in emerging economies, including India, is in stages of infancy. Any technology solution must first prove to MSMEs what is wrong with offline credit platforms and processes before enrolling them into a digital working capital ecosystem.’

In one of our member research reports during 2020, we reviewed the liquidity issue, especially for small businesses, which became (and continues to be) a critical result of the pandemic. Moving commerce onto digital platforms opens up the participants to a whole new world of liquidity options since data visibility promotes the issuance of credit, one lifeline of small businesses.

The article covers some other key points and is worth a few minutes read, for those interested in that region. The points are applicable in any market, but certainly key in developing ones.

‘An easy way for MSMEs to receive timely payments is to use digital commerce platforms. Such platforms connect related but distinct documents of the purchase order (PO), goods received notification (GRN), and the suppliers’ invoice. It speeds up the invoice approval and supplier payment processes….Offline processes create asymmetries of information between enterprise buyers and suppliers….The offline to online swing in the B2C segment of the supply chain has had a powerful impact on the B2B segment of the supply chain. An NPCI report suggests that one-third of India’s households are now using digital payment interfaces for purchase transactions. With digital purchasing gaining critical mass in B2C transactions, enterprises are choosing to procure goods from MSME suppliers through digital processes to make their entire supply chain online.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Automating Supply Chain Finance Can Augment Payments For MSMEs appeared first on PaymentsJournal.

This posting is found in ValueWalk and written by an exec at a payments automation fintech.  The headline can be interpreted another way, but is really about suggestions for things to stop doing if your company remains stuck in analog financial operations and needs to modernize.

We have covered this most recently in member research on digitizing the cash cycle.  So the author goes through the problem, then offers up some of the fundamental changes required to improve.

‘We can point to several reasons leaders may hesitate to implement new technology — whether they fear disruption to the status quo, worry that people will reject new tools, believe that change management efforts will be overwhelming, or struggle to grasp the value of something that seems so unnecessary. On the one hand, it is challenging to comprehend value for something you haven’t experienced. It’s not uncommon for B2B companies to resist a high price tag for a piece of technology they don’t think they need. But often, that’s because B2B leaders don’t fully understand the technological capabilities. For example, they may think that accounts payable automation is a simple process that’s been around for decades. But that’s not true.  Sure, something like invoice processing, which allows supplier invoices to be captured digitally, has existed for a while. But if that’s all a B2B leader thinks payment automation is, they’re missing out on myriad solutions available to them. Modern payment automation and accounts payable solutions not only digitize invoices — they also streamline and manage internal processes and procedures along the way.’

So the point is that inertia has been a long standing issue (‘if it ain’t broke….etc) in these types of modernization processes, but as we know the pandemic caused a major call to action in many cases given the WFH circumstances and follow-on adjustments.  So financial operations modernization projects have become much more of a priority, especially as it pertains to sending and receiving payments.  So the author points out some of the things to dump overboard, and each one has a summary. Worth a quick look.

‘To survive and succeed, your organization must transform its underlying accounts payable solution and cost structure. Now is the time to strategically rethink how to operate and make a commitment to lasting gains….Ready to learn how to implement the right technology for your business? Below are the top four processes that hinder B2B growth and how you can flip the script.

Operating With Manual Processes And Approvals

Relying On Inefficient B2B Payment Methods Like Paper Checks

Slacking On Implementing Financial And Compliance Controls

Failing To Optimize For A Multi-Entity Structure

Finally, remember that you’re not starting from scratch. The great thing about embracing technology is that it allows you to determine the highest and best use of your human capital — and then automate the rest. Maybe you have a rock star teammate who’s bogged down in accounts payable management when they could’ve been managing a team and leaving old tasks to a computer. Start by assessing your current talent — human, machine, and otherwise — and putting together a game plan for how you can build on all those components using technology. Ultimately, technical solutions should augment your human talent, not detract from it.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post 4 B2B Payments Practices to Retire in 2021 appeared first on PaymentsJournal.

Mastercard and Visa had intended to increase some fees in April of 2020 on certain transaction categories including remote purchases. The global card networks held off making these changes during the pandemic. But now a year later, they are moving forward with their original plans to increase some rates. 

This got the attention of Senator Dick Durbin (D-IL), U.S. Representative Peter Welch (D-VT) who sent a letter to Mastercard’s and Visa’s CEOs asking them to hold off on raising fees again.  They stated in the letter:

On March 26, 2020, we wrote your companies to urge to you call off your plans to raise swipe fee rates during this pandemic.  Commendably, you did postpone those fee increases.  However, it has now been publicly reported that Visa and Mastercard are again preparing to significantly raise many of the swipe fee rates you charge for card transactions.  This is a mistake. 

For the sake of consumers and small businesses, we again urge you: don’t do it.

Over the past year, the COVID-19 pandemic and economic disruption have hit American consumers and small businesses hard. Tens of thousands of small businesses, the backbone of our nation’s economy, have permanently closed. Many businesses that are left, according to the February 24 Wall Street Journal article “Covid-19 Shopping Makes Card Fees a Bigger Burden for Merchants,” have only stayed afloat through online purchases. But your proposed fee increases would disproportionally affect online transactions.

Millions of Americans are unemployed, unsure of how they will pay the bills or put food on the table. Yet several of your proposed fee increases, according to the Wall Street Journal, would target supermarket and restaurant transactions as many more of those purchases have moved online.

As a guess, I would suspect that the card networks do hold off until later this year.  A gesture of good-will might go a long way least the members of Congress decide to retaliate and take on other so-called swipe fee issues like regulating credit card interchange.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Senator Durbin asks Mastercard and Visa to Hold Off on Planned Card Fee Increases appeared first on PaymentsJournal.

Last July, we shared the news of a new tool piloting on Venmo that allowed sole proprietors and casual sellers to sign up for a business profile on Venmo to accept payments for goods and services. 

Today, we are excited to share that business profiles are now officially available for all small businesses, including sole proprietors and casual sellers, to create a profile directly from the Venmo app. Businesses can now get discovered, organize their business transactions and easily accept payments from customers touch free, all while leveraging the same social experience nearly 70 million Venmo customers enjoy when using the app with friends and family today. Creating a business profile also allows you to keep your business transactions separate from your personal ones, as you can seamlessly switch between profiles in the app, all with the same login. 

More than 150,000 businesses have already signed up for a profile to help grow their business ranging from professional services, artists, real estate services, personal trainers, beauty shops and more. 

To further facilitate payments and support small businesses, Venmo is waiving seller transaction fees until April 1, 2021.*  

Sign up for a business profile by tapping your profile picture in the app or clicking on the menu icon. You can also find more information about how a business profile can help you grow your business here or by following Venmo on Instagram or Twitter for updates. If you already have a business profile and have questions, we encourage you to visit the Help Center. 

* After April 1, 2021, business profiles will be charged 1.9% + $0.10 per transaction they receive. Fees subject to change. Other fees may apply. 

The post Help Grow Your Small Business with Venmo: Business Profiles Are Officially Available for All Sellers appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Primary Drivers for Small Businesses Using Online Lenders:

• In 2020, respondents were twice as likely to say their interest rate was the primary reason for using an online lender.
• Ease of application was still the top overall reason for using an online lender, at 38%.
• Speed of decision and funding was also a popular reason to use an online lender for small businesses, at 29%.
• Lastly, online lenders require fewer documents, which was the top reason for 16% of small businesses to use an online lender.
• Current loan holders are more than twice as likely to report it was easier to deal with online lenders than a bank.
• Recent years have seen a decrease in available SMB credit from many large banks.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Primary Drivers for Small Businesses Using Online Lenders: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Businesses and Online Lending:

• Firms in business 10 years or more are the least familiar with online alternative lenders.
• 17% of small businesses which have been in business less than 6 years have applied for a loan but not taken/given one.
• The largest small businesses are the most likely to have obtained a load from an online lender.
• 37% of small businesses $5-10 million in size currently have a loan from an online lender. 
• 10% of small businesses $5-10 million in size are not familiar with online lenders.
• Small businesses positively impacted by the pandemic are the most likely to have a current loan from an online lender (36%).

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Businesses and Online Lending: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Businesses’ Familiarity with Online Lenders Continues to Increase:

• 26% of small businesses currently use an alternative lender, similar to 2019 & 2020.
• Fewer small businesses (18%) claim to be “unfamiliar” with online lenders compared to 2017 (25%).
• One in five small businesses looked into online lenders in 2020.
• 18% of small businesses had an online loan, but no longer use an online lender.
• 4% of small businesses are unsure if they’ve worked with an online lender.
• Firms in business 10 years or older are least familiar with online alternative lenders

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.
“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group.

The post Small Businesses’ Familiarity with Online Lenders Continues to Increase: appeared first on PaymentsJournal.

This Sunday’s Super Bowl may prove to be a high scoring game, but some small businesses in the U.S. and Canada may run off some winning plays of their own. Authorize.net, Visa’s payment gateway platform, is offering up a one-day promotion that features some monthly and transaction fee savings for new merchant accounts.

E-commerce transactions continue to grow and competition is intense among payment providers. Authorize.net’s play action may not be a game changer, but it should get the attention of many small business owners.

The following excerpt from a Business Wire article reports more on the topic:

On Super Bowl Sunday, Visa, the official payment technology partner of the National Football League, will change the game for the small business community with a one-day offer that will eliminate some of the costs associated with getting online and accepting digital payments – a value of over $10,000 per small business.

Visa’s small business digital payment management platform, Authorize.net, is waiving its monthly gateway fee for the life of an account along with its transactional fees for the first 100,000 transactions of new United States and Canada customers signing up on February 7^th. The sign up process can only take a few minutes and Authorize.net works with a wide array of banks and credit unions to make the onboarding easier, alleviating another hurdle for businesses in their demanding routine. Visa’s Authorize.net offer can help aid businesses bottom line and enable increased revenue by opening new digital payment streams.

“The resiliency of small businesses is inspiring, but there is work to do to help them recover and thrive. The Authorize.Net offer extends Visa’s commitment to digitally enable businesses and helps alleviate burdens by minimizing some recurring operational costs,” said Carleigh Jaques, senior vice president and general manager of Visa’s Authorize.net. “While we have rallied behind our small businesses all season, Super Bowl Sunday is an opportunity to give small businesses support that could last a lifetime.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Authorize.net Calls Super Bowl Play For Small Business appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Pandemic Spurs the Use of Online Banking Services for Small Businesses:

• The use of many online services has increased year over year, likely due to the pandemic.
• Online payroll and direct deposit jumped from 55% used in 2019 to 65% in 2020.
• Online payment processing services jumped from 55% used in 2019 to 64% in 2020.
• Mobile check deposit jumped from 59% used by small businesses in 2019 to 69% in 2020.
• Mobile ATM withdrawal increased 13% between 2019 to 2020, with 63% of small businesses currently using it.
• “Mobile ability to lock accounts” increased from 47% of small businesses using in 2019 to 59% in 2020.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Pandemic Spurs the Use of Online Banking Services for Small Businesses: appeared first on PaymentsJournal.

Early Warning’s Zelle reported their 2020 results for the P2P app. Growth continued at a sharp pace, closing out 2020 having processed $307 billion in value (up 58%) and 1.2 transactions (up 62%). Here’s a graph of Zelle’s growth since launching in 2016:

If we consider the timeframe from 2017 when Zelle really started taking off to 2020, we find the network has achieved a CAGR of 60%.  Now the next trick will be to continue that level of growth.

In a conversation with Early Warning’s CEO, Al Ko, a portion of the go-forward growth will come from extending the use case for Zelle to include small business transactions.  Small business, often service providers like contractors, can get paid by consumers through Zelle.  More financial institutions are rolling this solution out as a part of their faster/real-time payments strategy. 

For the moment at least, financial institutions are charging small transaction fees to businesses to use this service to get paid instantly.  The number of financial institutions rolling out this service for small businesses has expanded to 11. Here’s what the press release had to say on the topic:

Today, more than 80% of consumers either use or plan to use P2P services – and nearly 1/5 (19%) of consumers began or planned to use P2P during the pandemic, according to research by Zelle. These same consumers and more can now use Zelle to send money to eligible small businesses, with 11 financial institutions—Bank of America, Bank of the West, Chase, Citi, FirstBank, Frost, Investors Bank, Morgan Stanley, Truist, U.S. Bank, and Wells Fargo—having launched Zelle for small businesses in 2020. Corporations are also turning to Zelle to meet consumer demands. In 2020, Disbursements with Zelle achieved a 41% increase year-over-year as corporations disbursed funds to individuals electronically rather than checks.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Zelle P2P Appears Unstoppable appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Businesses and Online Banking Services:

• There is considerable interest among small businesses for online banking services they do not yet have.
• 46% of small businesses do not have “single sign on” and want it.
• 30% of small businesses do not have international payments but want them.
• About one in three small businesses have online services, but are not particularly interested in them.
• 70% of small businesses have online bill payment and remain interested in online bill payment.
• 69% of small businesses have fraud management services that interest them.
• 68% of small businesses have mobile ATM withdrawal.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Businesses and Online Banking Services: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Businesses Use a Wide Variety of Financial Institutions:

• Business checking accounts (94%), savings accounts (89%), and online banking (88%) round out the most popular, along with credit and debit cards.
• The least popular small banking needs include vehicle loan (68%), real estate loan (69%) and business CD (71%).
• Beyond checking accounts, many small businesses get banking services from banks outside their primary bank.
• Business debit card use rose dramatically in 2020 from 35% (2019) to 50%.
• Large lines of credit >$500,000 have been decreasing over time, from 15% in 2018 to 6% in 2020.
• Interest in a large line of credit (>$500,000) shot up this year, from 6% in 2019 to 14% in 2020.
• In 2019, 16% of small businesses wanted less credit; in 2020, 3% of small businesses wanted less credit.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Businesses Use a Wide Variety of Financial Services: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Businesses’ Satisfaction with Their Banks:

• Small business satisfaction with their primary financial institution continues to be very high.
• New small businesses tend to be slightly less satisfied with their banks than older firms.
• Unsurprisingly, small business satisfaction with their bank increases with company revenue.
• Even small businesses negatively impacted by the pandemic are highly satisfied with their banks.
• This year, small businesses are reporting greater use of all banking services.
• Notably, mobile business banking jumped 16%, from 70% of small businesses to 86%.
• Payroll processing services also saw a dramatic increase, from 72% of small businesses using them to 86%.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Businesses’ Satisfaction with Their Banks: appeared first on PaymentsJournal.

January 28, 2021 09:00 AM Eastern Standard Time

OMAHA, Neb.–(BUSINESS WIRE)–BHMI, a leading provider of payments software and creator of the Concourse Financial Software Suite^®, announced that Everlink Payment Services Inc. (Everlink), a leading provider of payments solutions and services for credit unions, banks, and small/medium enterprises (SMEs) throughout Canada, will be migrating to the latest version of Concourse to further bolster its payment processing functions. BHMI has been a partner with Everlink since 2003, supporting the company’s back-office payment needs.

The upgrade to the latest release of Concourse will replace Everlink’s existing settlement systems, consolidating to a single, highly efficient and functionally rich system for all back-end processing. This major uplift will include the following Concourse modules:

• Concourse – Core
• Concourse – Extended Settlement
• Concourse – Reconciliation
• Concourse – Fees & Commissions
• Concourse – Disputes

Concourse will seamlessly integrate with other current Everlink systems, continuously pulling and loading data as it becomes available to immediately perform back-end processing. Furthermore, Concourse’s highly configurable reporting infrastructure will allow both Everlink and its clients to access data securely without impacting back-end operations, providing them with detailed reporting functions on-demand.

“As our business volume and complexity continues to increase dramatically, together with the inexorable evolution toward digital payments across Canada, it is critical that Everlink remains current and compliant, offering the latest and most functionally relevant capabilities,” said Mark Ripplinger, President and CEO of Everlink. “BHMI’s Concourse solution provides us the flexibility and functionality we require to meet the needs of our clients and the rapidly changing demands of the payments industry.”

“We are pleased to continue our partnership and support of Everlink with the latest release of Concourse,” said Lynne Baldwin, President of BHMI. “We strive to make Concourse the best back office payments solution available. Our latest version is the result of the continual process of improvement, reflecting our commitment to provide our customers with a superior software experience.”

About Everlink

Everlink Payment Services Inc. is a leading provider of comprehensive, innovative, and integrated payments solutions and services for credit unions, banks, and SMEs across Canada. In addition to supplying best‐in-breed technology infrastructure and payment network connectivity, Everlink offers a comprehensive range of integrated payments Lines of Business including: Payment Network Gateway, ATM Managed Services, Card Issuance & Management, Fraud Management Solutions, Mobile Payments, Professional Services and SME Solutions. To learn more, please visit www.everlink.ca.

About BHMI

BHMI is a leading provider of product-based software solutions focused on the back office processing of electronic payment transactions. The company is best known as the creator of the Concourse Financial Software Suite® – a unique integrated collection of back office products that allow companies to adapt to the rapidly changing world of payments quickly and easily. Concourse is a cohesive and integrated package, including settlement, reconciliation, fees processing, and disputes workflow management, that reduces the cost and complexity of back office processing. Concourse’s continuous processing, near real time architecture and powerful rules engine is ideally suited for new payment initiatives like P2P and enables companies to perform back office processing for any type of payment transaction. To learn how your company can benefit from the power and flexibility of Concourse, please visit www.bhmi.com.

The post Everlink Upgrades to Latest Version of BHMI’s Concourse Financial Software Suite® appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Where Do Small Businesses Get Their Advice?

• The pandemic had more SMBs seeking advice from more outlets this year, except maybe accountants.
• SMBs that were negatively impacted by COVID were much more likely than others to seek advice from their bank.
• Smaller companies are more likely to rely on friends and family and less likely to rely on their bank than others.
• Banks and financial advisors are the more relied sources of advice for small businesses.
• Firms that were positively impacted by the pandemic were more likely to turn to their bank for advice.
• Banks and financial advisors are the most trusted, though companies under $1M are least likely to have financial advisors.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Where Do Small Businesses Get Their Advice? appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Small Business and Technology:

• This year, more SMBs are reporting they employ the latest technology and that keeping up with the latest is critical.
• Firms with revenue below $1 million are less technologically sophisticated than those with higher revenue.
• As the number of employees increases, so does the companies’ reported technological sophistication.
• Perhaps due to COVID-19, more SMBs are having trouble keeping track of business metrics and worrying about cash flow.
• Companies that have been in business longer have fewer concerns about payments, receivables, etc., than newer companies.
• Even SMBs that have been positively impacted by the pandemic have concerns about their business.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Business and Technology: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

 Small Business Attitudes Towards Their Business:

• This year, a greater number of small businesses are more inclined to keep up with new technology.
• Larger small businesses are more likely to see the value in technology than smaller ones.
• Small businesses were more concerned about cash flow in 2020 than 2019 (2020 48%, 2019: 40%).
• Small businesses were also more concerned in 2020 (49%) about keeping track of business KPIs like payments and receivables than they were in 2019 (42%).
• Firms that have been positively affected by the pandemic are the most likely to worry about many aspects of their business including cash flow. 
• 3 in 10 small businesses report their most trusted source of advice is their banker.
• 17% of small businesses report their accountant was their most relied on source of advice.

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Small Business Attitudes Towards Their Business: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course

Demographics of U.S. Small Businesses:

• Smaller businesses tend to be service-oriented, while larger small businesses trend toward retail. 
• There is a strong relationship between the number of years in business and number of employees.
• Small businesses that have been operating for longer are more likely to serve both consumers and other businesses.
• Business debit cards and charge cards are gaining popularity among small businesses.
• The ownership of American Express has doubled since 2018.
• Larger small businesses tend to use a broader range of payment options than smaller companies.
• The restaurant and hospitality sector appears to be the most impacted by COVID-19, while non-profit is the least. 

About Report

Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.

Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.

While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.

SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.

“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group. 

The post Demographics of U.S. Small Businesses: appeared first on PaymentsJournal.

This year’s early Covid-19 lockdown came crashing down on small retail businesses. But many did survive by successfully pivoting most or all of their business to online sales. E-commerce marketplaces such as Etsy, Shopify, BigCommerce and others have been the salvation for small retailers. Providing an end-to-end online sales process from item selection to checkout to order fulfilment has been a winning formula for the e-commerce marketplaces.

Shopify serves over 1 million merchants and has started its own warehouse and fulfillment infrastructure. Etsy became a go-to website for face masks but carries goods from many micro-retailers, with a total merchant base of over 2 million. Expect to see record sales from e-commerce marketplaces when final Christmas shopping numbers are in.

The following excerpt from a Wall St. Journal article reports more on the topic:

While the year has been a struggle for small businesses, some companies that host their transactions have been soaring. Shares in Etsy Inc. and Shopify Inc., whose e-commerce platforms primarily cater to small businesses, have surged during the pandemic. Etsy has more than quadrupled this year, while Shopify has tripled.

For many small-business owners, the technology platforms have served as a lifeline as their companies shift to a focus on online sales.

Matthew Cummings owns a glass-blowing company that makes custom beer glasses in Knoxville, Tenn. He has been on Etsy since 2012, but didn’t move fully online until the pandemic hit and he had to close the doors of his bricks-and-mortar store. He said his Etsy sales are about 10 times higher this year.

Both companies have kept their pricing competitive during the pandemic. Etsy charges 20 cents per item listed by a vendor and a 5% transaction fee for each sale. Shopify offers tiered monthly plans. The most basic level charges a monthly fee of $29 for sellers and a 2.9% transaction fee.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Etsy and Shopify Give Needed Boost To Small Business During Covid-19 appeared first on PaymentsJournal.

This referenced article is in Forbes and describes the main business focus of Ramp, a 2019 fintech startup based in New York City. The company already has substantial funding and develops corporate card software to improve the end user experiences and ultimately, saves time and money for companies using a Ramp corporate card. 

The fintech is a sponsored issuer on the Visa network, and this particular piece describes a main feature of the Ramp card program; that is, expense management.

‘Ramp’s growth and success in attracting venture funding in a challenging economic environment further prove that their business model is prescient and signals the future of fintech, which is using AI and machine learning to deliver more savings to customers….Keeping track of receipts and submitting them with expense reports is the greatest time-waster any corporate cardholder has today. From purchasing software subscriptions, services and supplies to paying contractors, keeping track of receipts to reconcile a corporate card wastes time. For small businesses where people have multiple jobs, tracking receipts can get chaotic.’

Anyone who has ever used a corporate card will understand some level of time consumption and frustration with standard expense reporting processes at many companies. A new level of automation has entered the picture in the past few years with more mobile capabilities available that offer process relief. Ramp automates the matching process of a card transaction and the payment receipt using machine learning. 

So highlighting such a feature can create selling differentiation, especially among smaller businesses that may not be particularly dependent on gaining large spending rebate share, and who may have employees more in the ‘app’ generation. Although corporate cards have been primarily used for travel and expense, one of the main challenges for the broader commercial card-based programs (including P cards and virtual cards) is gaining acceptance by merchants in the general B2B payments landscape, thereby limiting spend (and revenues). 

That resistance has dissipated somewhat as a result of the pandemic and greater appreciation of card impact on DSO.  The article points out that Ramp is gaining spend through their broader platform controls, so in effect replacing P.O.s, which is where P Cards and virtual cards have their use cases. So spend management becomes a more automated and flexible experience, opening up more spend channels.

‘Having designed in AI and machine learning from the very start, Ramp’s spend management platform has the flexibility to tailoring specific workflows to specific customers, matching the nuances of their business. Using machine learning algorithms to learn from and tailor spending policies to each workflow shows accuracy and scale gains because the platform continually looks for and learns what’s best for every client. Eric says that clients can put in rules that further refine the platform’s performance for individual workflows. “You can put further rules too, to say, “Look, I, as a business, want to know anytime that someone spends above $100,” and you can get alerted. There’s a number of safeguards, both in terms of advanced controls that haven’t been possible on other cards and workflows, notifications based on activities that businesses can be set,” Eric explained. Ramp is delivering on this vision as their customer satisfaction and G2 ratings show. The following is an example of how intuitive the user interface is to Ramp, while also providing a glimpse of how powerful its AI and machine learning-based workflows are in highlighting transactions that need attention. ‘

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post How Corporate Card Startup Ramp Is Using AI To Save Clients Money appeared first on PaymentsJournal.

Make it Saturday at 10AM. Reserving a specific time slot at a local salon or health spa can now be arranged much easier. Too often, small personal care and wellness shops relegate client bookings to scribbling notes in loose leaf binders. Now Square announces an appointments manager that is integrated with its POS platform, Square Register.

Customer scheduling, payment, and inventory management are bundled with this solution. Small businesses are challenged while trying to survive the pandemic and any business tool that enhances sales and raises productivity is a welcomed relief.

The following excerpt from a Business Wire article reports more on the topic:

Square announced the availability of Square Appointments on Square Register, a point-of-sale solution specifically built for beauty and wellness sellers that now runs on Square’s first-class hardware. This offering provides integrated hardware and software so sellers can book and confirm appointments, manage inventory, accept payments, and check out customers all from Square Appointments for a front desk experience that provides simplicity and a professional look that elevates any business.

Businesses can manage their appointments and send automatic client reminders to streamline confirmations, cancellations, and last-minute rescheduling, all with accurate reporting as services and payments are automatically attributed to the appropriate staff when checking out via appointment.

“We’ve seen beauty and wellness sellers gravitate towards using Square Register since it first launched, and we’re excited to offer this integration with Square Appointments. This marks the point where all of Square’s POS offerings are now available on Square Register,” said Jesse Dorogusker, Hardware Lead at Square. “Multi-staff beauty and wellness merchants can utilize this specialized POS with powerful payments integration, while still getting the beautiful countertop solution their business deserves.”

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Square Appointments Streamlines Small Business Client Bookings appeared first on PaymentsJournal.

Affordable, easy-to-use software helps restaurants, gyms, retail stores and other businesses collect contact tracing data, enabling them to stay open and compliant

SAN FRANCISCO— NOVEMBER 18, 2020 – SpotOn Transact, Inc (“SpotOn”), a leading supplier of operating software and merchant services for small- and medium-sized businesses and restaurants, is expanding its solutions for those who need to integrate contact tracing and other enhanced COVID-19 compliance requirements into their operations. SpotOn’s new product leverages reservations management software to record and store necessary contact tracing information, which ensures that if a business needs to alert customers to a COVID-19 event, their contact information is easily accessible.

“Small businesses have been in a fight for survival for nine months now, and SpotOn has been in the trenches with us since the beginning,” said Stryker Scales, owner of Blue Barn artisanal delis. “They’ve gone deep to understand what technologies small businesses need to stay open and serve customers, creating innovative new products that meet the moment. With their help, we got online ordering up and running in a matter of days. They’ve also anticipated the need for business owners to help with contact tracing and created an easy-to-use solution that helps us do our part, and even waived software fees to ease operating costs.”

SpotOn offers a suite of software solutions and payment processing services that allow owners to market and grow their businesses, create better customer experiences and reduce operating costs. Current users of SpotOn Reserve and SpotOn Appointments will receive this product upgrade automatically and at no additional charge – another advantage of SpotOn’s customer-centric and simple cloud-based technology solution.

Automated, cloud-based contact tracing, such as this solution from SpotOn, is a major contributor to helping small businesses continue serving their customers during the pandemic, while at the same time giving public health officials confidence that merchants can quickly and thoroughly respond to new outbreaks. SpotOn’s software saves the names, email addresses and phone numbers for each merchant location and is supported by automated texting features to ensure quick and complete notifications.

“We founded SpotOn with the mission of helping small businesses thrive because they are the heart and soul of our communities and our economy,” said Matt Hyman, co-founder and co-CEO of SpotOn. “We knew that when the pandemic hit small business owners would be faced with unexpected challenges, and our task was to innovate our technologies so that they could adapt to new requirements, such as contact tracing. Our customers have seen real value from our products, which has in turn accelerated our growth.”

SpotOn’s new contact tracing software comes on the tails of its $60 million Series C fundraise led by DST Global in September, as well as its acquisition of leading reservation management software provider Seatninja in August. SpotOn is based in San Francisco with offices in Chicago, Mexico City, Detroit, Denver and Krakow, as well as with field sales account executives nationwide. For more information, visit www.spoton.com.

About SpotOn Transact, Inc

SpotOn Transact, Inc (“SpotOn”) powers small- and medium-sized businesses (SMBs) with the digital tools they need to run and grow their business. The software and payments platform, coupled with a hands-on service model, offers end-to-end solutions which include marketing, website development, appointment scheduling, digital loyalty, review management, and both retail and restaurant point-of-sale (POS) solutions. SpotOn has employees and offices around the world, including San Francisco, Chicago, Mexico City, Detroit, Denver and Krakow. For more information, visit www.spoton.com.

The post New SpotOn Contact Tracing Software Helps Restaurants and Small Businesses Operate Safely Amid COVID-19 Precautions appeared first on PaymentsJournal.

This release was posted at the Amex site and provides some highlights of two surveys simultaneously conducted amongst both small businesses and consumers in the U.S. The surveys are in support of what Amex is referring to as the inaugural American Express Entrepreneurial Spirit Trendex. For readers’ edification, the SME qualification for the survey was to have revenues between $500 thousand and $300 million.  

‘The survey of 1,000 small and mid-sized business owners and 1,000 consumers reveals that despite the economic downturn and the ways in which the pandemic has changed many aspects of life and business, 81% of business owners polled still believe the benefits of owning their own business outweigh the challenges. When asked about the top benefits of running their own business, respondents cited financial stability (89%), being their own boss (88%), turning a passion into a business (86%), creating jobs (85%) and the flexibility to set their own hours (85%).’

These would seem to be regarded as generally characteristic of small business owners, so it’s likely not too surprising to many readers, despite the 2020 difficulties. We would expect there to be quite some differences between both vertical industries (think travel and entertainment) and the revenue size sub-segments, but we do not have access to the cross tabs, so the overall conclusions are broadly applied. For those thinking that all is gloom and doom, this survey suggests otherwise.

One thing that we know from the numerous virtual events we have attended during the past two months is that there is a lot of resilience and adaptation going on, which fits in with small business owners anyway, who constantly face problems even in normal times. The Amex survey reveals that pivoting to e-commerce products and services is one of those adaptations occurring among SMEs. The consumer portion of the survey was designed to help the SMEs understand what priorities are changing among their customers and aid in their decision making during (and for some time after) the pandemic. Some other areas are addressed as well, which are also likely not too surprising under the circumstances.

‘Small and mid-sized business owners are seeking resources to navigate these unprecedented times. The top resources business owners would find helpful are: virtual business conferences/webinars (47%), virtual networking events (44%), advice and resources about leading through a crisis (44%) and learning ways to de-stress and stay mindful (42%)….Beyond resources, business owners said right now they are looking for support with: identifying new growth opportunities (44%), marketing, branding and social media (41%), managing their cash flow (37%), flexible payment terms for expenses (34%) and knowledge about accessing capital (33%).

So worth a read and perhaps some further detail will be forthcoming. One other interesting thing about the information provided was that only 21% of responders expect their businesses to recover in less than one year.  This again is likely to have some clear differences by vertical and size.  So the spirit remains high and we will see how the reality plays out.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post New Amex Research Reveals 75% of Small-and-Medium-Sized Business Owners are Optimistic About Their Recovery appeared first on PaymentsJournal.

The holidays are right around the corner. This year has been quite the rollercoaster so it’s hard to say how this holiday season will unfold as states begin reopening and consumers adjust their purchasing behaviors. eCommerce/retail giants like Amazon, Target, and Walmart are likely to pave the way for others in the industry. These retailers are stretching the best deals throughout the holiday season.

Amazon already had a record-breaking Prime Day event for small and medium businesses worldwide, with sales surpassing $3.5 billion; an increase of nearly 60% from last year. Target started its Target Deal Days sales event to run concurrently with Prime Day, and also kicked off Black Friday deals in October. And, Walmart is offering more deals online so consumers can shop in the comforts of their own homes.

According to Yelp’s Local Economic Impact Report, 163,735 total U.S. businesses on its platform have closed since March 2020. SMBs have been hit particularly hard and predictions from this summer contended that millions may never reopen. In fact, the reality is a bit more optimistic and encouraging. A new survey of SMB owners conducted by the Electronic Transactions Association and The Strawhecker Group found that eight in 10 SMBs that were closed at some point during the COVID-19 pandemic have reopened, and that 55% of owners are optimistic about their business’s recovery, with retail merchants being the most optimistic.

To keep up with the holiday shopping, SMB owners will need to ensure their businesses are running at optimum capacity and internal processes aren’t creating external strife for customers. Even before the pandemic hit, 39% of SMB owners were spending five hours or more per week dealing with payments issues according to WePay’s State of Small Business Payments 2020 Survey. As such, owners will need to prioritize new payments technology that is able to help them support their loyal customers while also expanding back-end capabilities to handle the surge of new customers this holiday season.

Offering new payment options and managing cash flow

As consumers are increasingly reluctant to touch point-of-sale systems that require constant sanitization, SMBs will need to incorporate new no-touch portals. A Mastercard survey found that 74% of consumers will keep using contactless payments in a post-pandemic future. It would be wise for SMBs to make this investment now before we get too close to the tail end of the holiday season. In 2019, Small Business Saturday saw a record high total of $19.6 billion. To prepare for this influx of payments processing, SMBs will need to offer a wider variety of payments options to their customers. Using digital wallets on mobile devices or accepting payments services from Apple Pay or Google Pay helps to ease the friction at checkout and limits physical contact.

Pre-pandemic, 25% of SMB owners experienced cash flow problems. The financial fragility of SMBs continues to be an issue they contend with on a daily basis. One of the reasons why so many SMBs suffered earlier this year was that they couldn’t access their funds on time due to payment systems delays. SMBs trust their banks to handle all their financial activity, and they also have an appetite for more payments technologies backed by industry-leading software vendors. With a strong payments ecosystem allowing SMB owners to access funds quickly (preferably same day) and easily, SMBs will be better equipped to meet pressing business needs and have cash on hand if needed.

Leveraging eCommerce platforms

In order to stabilize sales and make up for financial losses during the lockdown, SMBs will need to implement new strategies, including adding new sales channels. With a new or updated eCommerce channel, SMBs will be able to engage and acquire more customers outside of their brick and mortar store and reach new online customers with strong buying intentions. Whether SMB owners choose to handle eCommerce internally by setting up their own website or externally through existing third-party vendors, like Amazon or BigCommerce, this exposure creates increased sales and a new revenue stream.

For this sales tactic to work, SMBs need payments processing to be streamlined to handle eCommerce purchases made through their site or through another vendor. With an omnichannel approach, SMBs are able to better facilitate mobile payments and manage their cash flow. This, in turn, creates more positive customer experiences and drives increased revenue.

Diversifying product/service offerings for the holidays

As SMBs continue meeting customer needs amid this new reality, now is also an opportune time to diversify product and service offerings. For example, a jewelry small business owner may consider offering curbside pickup for online orders or free gift wrapping and Christmas cards to customers. Mom and pop coffee shops may offer gift cards or expand into seasonal treats in order to continue engaging customers

Consumers want to continue supporting small businesses beyond just Small Business Saturday, so it will be interesting to see how these businesses fare in the holiday season. SMBs being able to adapt to this new environment will be key. They will have to integrate new payments technologies as they look to leverage new sales channels and offerings. This holiday season is gearing up to be one to watch.

The post How SMBs Can Survive during 2020’s Holiday Season appeared first on PaymentsJournal.

One of the biggest challenges faced by small businesses amid COVID-19 has been accessing capital to support cash flow. This was especially evident in the early months of the pandemic. An April survey of U.S. small businesses found that those with less than $10,000 in monthly bills had enough cash on hand to cover only one month of expenses.

But what many stakeholders may be unaware of is that small businesses, governments and lenders in various regions around the world have been experiencing different realities when it comes to keeping working capital flowing. While governments offered various grants and state-backed loans, some business owners were slowed by the daunting task of compiling and submitting documentation about their finances and business conditions. COVID-19 shone a light on the importance of accurate and up-to-date financial information – and the ability to share it digitally.

Across three large economies—U.K., Australia and the U.S.—some businesses and financial institutions were able to respond with greater agility than others. In particular, businesses running their accounting systems on the cloud, with seamless connections to their banks, were able to access simpler and quicker application processes than those using desktop-based software or none at all. Given that the financial technology within these three markets is at different stages of development, it’s important that we compare how businesses and financial institutions reacted to continue to improve small businesses’ access to capital.

Open Banking U.K.

In the U.K., Open Banking had already been mandated for two years when COVID-19 emerged. Small businesses were becoming accustomed to sharing their financial data with third parties such as lenders, budgeting apps and accounting software. This meant that the financial documentation needed to access grants and loans was more readily available. Banks could share it at the customer’s request or customers could choose to share it themselves from their cloud-based accounting software, confident that it offered a real-time picture. Meggie Palmer, the founder of corporate consulting company PepTalkHer, said her cloud-based accounting platform was “a lifesaver” when it came to applying for government grants.

U.K. alternative lender iwoca already had a rich cloud accounting integration in place when COVID-19 hit. Iwoca offered a five-minute application process for loans of up to £250,000, with a promise of funding delivered within 24 hours. More traditional banks, such as NatWest, offered similarly fast decisions on an invoice finance product called Rapid Cash. By connecting their accounting platform, small businesses could access a credit line of £25,000 to £500,000 within 48 hours of approval.

Down Under

In Australia, open banking had yet to launch when COVID-19 appeared. But the nation’s businesses already had some of the world’s most robust direct feeds of transaction data or ‘bank feeds’, thanks to a decade of integration with cloud-based accounting platforms. Businesses were able to apply for unsecured loans of up to A$500,000 from a variety of bank and non-bank lenders by sharing their accounting-platform data, receive a decision within minutes and get funding in as quickly as a day.

Australian accounting platforms, meanwhile, pivoted to develop software that would help customers apply for government relief. One is a tool that helps small employers identify workers eligible for a wage subsidy program called JobKeeper – and to report those payments to the tax office every month. Another solution is a cash-flow forecast tool, which projects cash flow a month in the future, assuming all bills are paid on time.

Because these tools are built on a cloud-based accounting platform, software updates can be pushed to subscribers seamlessly with no need for any downloads or action on the user’s end; the new functions simply appear in the software.

And while data from Xero Small Business Insights for July showed for the second month in a row that small businesses continued to add jobs and saw levels of revenue recovery, varied state restrictions translated into different levels of economic activity. In July, New South Wales and Victoria outperformed other states; however Victoria’s resumption of lockdownserves as a reminder of current volatility and the continued importance of cloud-based services.

The United States

In the U.S., meanwhile, open banking has yet to arrive, and few banks offer direct feeds of transaction data into a customer’s accounting software. Perhaps these are two of the reasons many small businesses and financial institutions were frustrated with the federal government’s $669 billion Paycheck Protection Program. Of course, one-fifth of the available PPP fund was unallocated.

The good news is that we have seen cloud-based applications and accounting platforms help fill the gap. For example, in the U.S., the cloud-based payroll app Gusto moved quickly to help small business employers access federal relief. Gusto integrates with cloud-based accounting software. It built features to help automate the process of applying for the PPP.

By drawing on tax, accounting and payroll data stored in the cloud, the app was able to expedite the application process, saving hours of work and reducing manual errors.

In Wisconsin, certified public accountant Mike Jesowshek used Gusto to help secure PPP loans for just over half of his small-business clients, which are mostly attorneys, fitness studios and professional services firms.

“All of our clients use cloud-based accounting software, which made the process much easier,” says Jesowshek, founder of Brookfield-based JetroTax. “We didn’t have to worry about sending files back and forth to the client, or wondering whether we had the most up-to-date one. We were able to access everything we needed without having to bother the client. It made the rough, stressful, and bumpy rollout of PPP much easier to bear.”

Once small businesses emerge from the pandemic, they may have to be prepared financially and technologically to survive the next one. The last six months have underscored the need for U.S. small businesses to move beyond spreadsheet accounting, embrace the cloud and eventually open banking. Those that do can more quickly evaluate their cash position, improve their chances of success, and be better prepared to share data with their financial institutions when help is needed.

The pandemic also shone a light on the role of financial institutions in enabling fast and efficient access to capital. And we may see the acceleration of new services, such as those offered through the likes of cloud based lending platform Waddle, which enables banks and fintechs to more easily lend to small businesses by leveraging their accounting data. Financial institutions that are able to seamlessly connect to these customers through the cloud and reduce friction in processes such as loan applications will also be well-positioned as we navigate the economic repercussions of this crisis and other unexpected challenges ahead.

The post COVID-19 and Accessing Capital: Lessons from Abroad appeared first on PaymentsJournal.

Starting your own business sounds fantastic in theory. Who doesn’t want to march into their boss’ office, hand in their resignation, and spend the next year working from Fiji’s beaches?

No boss, no stress, just fun in the sun and plenty of money.

That’s a great dream, but that’s not how entrepreneurship works. If you want to start your own business successfully, there are some foundational steps to take. And yes, you need to do these things before you can tell your boss goodbye.

The good news is that running your own business is possible. The bad news is that it’s not easy, and you aren’t likely to do it from the beaches of Fiji.

The first step is to understand your finances and make plans for navigating the ups and downs of entrepreneurial life. Here’s are the tips you need.

Prepare For Uneven Income

One of the most significant changes, when you move from a regular job to running your own business, is that you no longer get a steady paycheck every two weeks. That might not sound like a big deal, but the reality is that we rely on that consistency more than we realize.

Bills still come due whether money comes in from your business or not. You’ll need a way to deal with the shortfalls, especially in the beginning.

There are two ways to do this, and the most successful entrepreneurs do both of them.

The Side Hustle

First, you can run your business as a side-hustle alongside your regular day job. This allows you to build your brand, your client base, and prove that there’s a demand for your product or service. Almost any type of business can start small enough to be a part-time venture for a while.

You’ll also get plenty of opportunities to practice time management, handle stress, and cope with uncertainty. However, you’ll have the safety net of your job to fall back on.

The Savings Plan

The other important financial step to take before you quit your job is to build a healthy savings account. This will allow you to smooth your transition to full-time entrepreneurship and give you a financial cushion for hard times.

While you’re building your savings, make sure you choose a bank that makes sense for your needs. Transactions should be simple and you want to avoid fees as much as possible.

While there’s no amount of savings that will make running a company risk-free, the more of a cushion you can build up, the more confident you will be when you make the leap to full-time entrepreneurship.

Research the Business Environment

Before you start any company, you need to understand the current business environment. For instance, mobile payments are essential in most retail environments — if you plan to be in the retail space, you need to prepare for that.

You can’t afford to be caught off-guard, so be sure to educate yourself before you start a business. You can use online research and look at potential competitors for ideas. If you want a broad overview of the business world and what it takes to succeed, you might consider returning to school and getting your MBA.

The better educated you are about business and the specific niche you plan to enter, the more likely you will be successful.

Prepare Your Business Plan

A business plan is essential for setting goals and knowing where you want your business to go. However, there’s more to it than that. A well-crafted business plan will help you present your business idea to others when it’s time to raise money.

If you’re planning to take out business loans, you’ll need an excellent credit score. Your business will be based on your personal rating in the beginning. Banks also establish a lot of their lending decisions on how realistic and well-thought-out your business plan is.

Suppose you aren’t able to secure a bank loan, or you need additional funds. In that case, your business plan will be instrumental in helping you present your ideas to investors and even friends and family who may want to put money toward your company.

The Right Finances Smooth the Way to Business Success

There’s no way to guarantee that your business will be successful, but there are definitely ways to make it harder than it should be.

Not having proper savings, failing to understand the business environment, and not creating a clear business plan can all trip you up. However, by having these components in place, you can make your transition to entrepreneurship much more manageable.

There’s never a perfect time to start a business, but today is generally better than tomorrow. Get started laying your financial foundation now!

The post Understanding Your Finances Before Starting Your New Business appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Small Businesses Are Making More International Payments, and Using More Cards:

• In 2019, 37% of small businesses made an international payment. In 2020, 43% of small businesses did so.
• While business credit card (50%) and business debit card (43%) are still the most dominant payment methods, others are seeing huge gains.
• The largest increase in payment method came from PayPal, increasing from 13% in 2019 to 25% in 2020.
• Business charge cards and personal credit/charge cards also increased substantially, with each increasing by 9% from 2019 to 2020.
• In 2019, 12% of small businesses used bank account transfers to make international payments; this rose to 20% in 2020. 
• In 2020 small businesses began using cross-border payments specialists (6%), up from a base of 0% in 2019.
• International wire transfers for small businesses increased 7%, from 10% in 2019 to 17% in 2020. 

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Small Businesses Are Making More International Payments, and Using More Cards: appeared first on PaymentsJournal.

In the face of an unprecedented crisis, the federal government stepped in to help millions of businesses with PPP Loans.

The Paycheck Protection Program (PPP) doled out billions to businesses of all sizes to keep them afloat during the coronavirus pandemic. That’s the good news.

The less good news is that plenty of struggling small businesses were turned down for PPP loans, some of them multiple times. Many small businesses run by women, Black, and Latinx people were left out in the cold due to structural racism and a lack of relationships with big banks.

There is hope beyond the PPP, though.

Small and medium-sized businesses can look elsewhere for financing and can employ specific strategies to cut corners in order to get by during these turbulent economic times.

Alternative options for small business financing

If your business needs the cash, there are other ways to find it.

Businesses like yours have weathered storms before without PPP, and they’ll do it again even at a time like this. Here are few options to consider:

• SBA’s Economic Injury Disaster Loan (EIDL) program: Designed for small business, sole proprietors, and independent contractors impacted by COVID-19. Funds can be spent on any working capital-related expenses, unlike PPP.
• Federal pandemic assistance programs: There are a variety of alphabet soup-like programs to supplement traditional state-based unemployment insurance. They range from the Federal Pandemic Unemployment Compensation (FPUC) program to the Pandemic Unemployment Assistance (PUA) and the Pandemic Emergency Unemployment Compensation (PEUC) programs.
• SBA Express Bridge Loan program: If you have an existing relationship with an SBA Express Lender, you could qualify for a fast $25,000 loan.
• SBA Microloans: Up to $50,000 for qualifying small businesses (though the average loan size is around $13,000).

These are just a few options open to business that have not found success with their PPP applications. Take the time to do your research and explore other opportunities for loans and lines of credit. They are out there and lenders have been given considerable support by the government to be rather generous given the economic downturn.

Beyond additional funding for your business, there are a number of ways to make your dollars go further.

Other ways to ease the burden of small business finances

Now is the time to cut operational costs. Luckily, with some ingenuity and technology, that’s very possible.

Innovate how you manage payments.

Since in-store purchasing and handing over cash is much harder these days, now is the time to introduce contactless payment solutions (if you haven’t already). Beyond that, customers will now be looking to make purchases through a variety of third-party applications like Apple Pay and PayPal, so be sure your business has a strong omnichannel presence when it comes to payments. Also, switching payment processors could help you save on fees in the near-term.

Automate where you can.

If you’re looking to save a few hours each week and a few dollars, automating routine processes is the way to go. The key here is setting up workflows that are simple yet effective using software that isn’t too dense to navigate for employees to ultimately optimize your small business operations. This is both a short-term and long-term fix that reduces your overall operational costs and makes more time for more important work like securing new customers and improving product quality.

Streamline core business functions.

Now is the time to revisit key business processes like vendor communication and invoice management. The right software can help you speed up processing times while catching costly mistakes and keeping more accurate records. Over time, these little improvements will pay dividends in the form of time and dollars saved.

Strike a better deal with your bank and other lenders.

Take the time to review your banking and lending agreements. The first step is to ensure that your business is getting a good deal and that no unfair banking practices are taking place. If something suspicious is going on, address it immediately. Beyond that, many lenders are allowing customers to re-negotiate lending terms given the economic circumstances. Whether that’s deferring payments or securing more favorable loan terms, it’s worth a conversation with your lending institution.

Many options to support your small business beyond PPP loans

Finding other funding sources will mean lots of time spent researching and applying to various programs, but hopefully some of the resources here speed up your journey.

Putting into practice some tried and true methods for cutting corners and reducing your business’s burn rate can make a huge difference when it comes to staying afloat. Whether that’s automating key business tasks or streamlining business functions, there’s a great deal that small businesses can do to stay strong even in the toughest of times.

The post Your SMB Was Turned Down for a PPP Loan. Here’s What to Do Next. appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Small Business Payment Methods Are Changing:

• Business credit cards are still the dominant transaction type (56%), but a host of transaction types are gaining popularity.
• Small businesses’ use of PayPal jumped from 18% in 2019 to 26% in 2020.
• Direct transfers increased from 16% in 2019 to 20% in 2020.
• Business debit card use (42%) increased 8% from 2019, as did business charge card use (31%).
• Use of personal debit cards increased 8% in 2020, up to 26% from 18% in 2019.
• Business checks declined in use from 41% to 39%.
• Petty cash for small purchases also decreased from 12% in 2019 to 9% in 2020.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Small Business Payment Methods Are Changing: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Small Business Attitudes Towards Technology Are Changing:

• 6% more small businesses claim “keeping up with technology is critical”: 61% in 2020 vs. 55% in 2019. 
• 6% more small businesses claim to be “trying to employ the latest technology”: 59% in 2020 vs. 53% in 2019.
• 49% of small businesses claim they “try to keep up with bigger companies re: Tech” in 2020.
• Small businesses also registered marginal increases in the use of social media, cloud computing, and security issues.
• 35% of small businesses claim they don’t have the time to learn about new technology in 2020.
• 40% of small businesses describe technology as a “distracting headache.”
• 41% of small businesses claim that technology is too expensive.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Small Business Attitudes Towards Technology Are Changing: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

2020 and COVID Have Expanded Small Businesses’ Use of Banking Services:

• Services like ‘mobile business banking’ have seen an increase of small business usage, jumping from 70% in 2019 to 86% in 2020.
• Similarly, ‘Payroll processing services’ were used by 72% of small businesses in 2019 and 86% in 2020.
• 66% of small businesses used mobile deposit and check scanning in 2019; 80% do in 2020.
• In 2019, 63% of small businesses used their bank for advice on managing company finance;  77% of small businesses did so in 2020.
• 58% of small businesses used their bank for leasing in 2019; 71% did in 2020.
• 58% of small businesses used their bank for an equipment loan in 2019; 69% did so in 2020.
• 56% of small businesses used their bank for a vehicle loan in 2019; 68% did so in 2020.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post 2020 and COVID Have Expanded Small Businesses’ Use of Banking Services: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Small Business Concerns, Ranked:

1. The top concern for small businesses, cited by 49% of respondents, is customer retention. 
2. Second to customer retention, 48% of small businesses are concerned about cash flow.
3. 47% of small businesses are concerned about employee retention; another 47% are concerned about fraud and security.
4. Other notable concerns (41%-45%) include customer/employee acquisition, access to financing, and government regulation.
5. ‘Strategic planning’ has also been put on the back burner for small businesses; only 40% report it as a concern.
6. ‘Back office simplification’ was the least of small business owners’ reported concerns, at 38%.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Small Business Concerns, Ranked: appeared first on PaymentsJournal.

In the current covid climate, small businesses are struggling more than ever. One way to help them survive is to offer a business card line of credit. This can give them the funds they need to keep their doors open and their employees paid. It can also help them take advantage of opportunities that may arise, such as discounted supplies or new contracts.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

6 in 10 Small Businesses Report Using Their Business Card Line of Credit Due to COVID:

• 59% of small businesses report using their business card line of credit because of COVID-19.
• 43% of small businesses report they expect to use their business line of credit more as a result of COVID-19.
• 41% of small businesses expect to use their main business card more in the next 6 months.
• 14% of small businesses expect to use their business line of credit less.
• Perhaps related: 9% of small businesses report being “very positively impacted” by COVID-19.
• 2% of small businesses have exhausted the credit line on their main business card.
• Mercator projects that opportunities exist for non-card related lenders to offer loans that have lower overall costs to small businesses.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post 6 in 10 Small Businesses Report Using Their Business Card Line of Credit Due to COVID appeared first on PaymentsJournal.

There is no doubt that the COVID-19 pandemic has been debilitating to many small businesses across the globe. Companies that sell their products and services to this critical sector of the economy would do good to understand the issues they are facing and develop strategies for helping them regain some sense of normalcy.

In all the discussion about how the pandemic has affected small businesses, the human factor many have been lost. The spread of COVID-19 and its subsequent effect on the U.S. economy has caused a precipitous deterioration in the outlook of small businesses. They have less access to operating capital than larger businesses, a fact which has broad implications; from paying employees to paying rent, it is more difficult to stay in business. Moreover, small businesses are more likely than larger businesses to face shutdowns and voluntary or involuntary shelter-in-place orders. Many constituents of the retail sector have also missed out on the lift generated by the Economic Impact Payments (EIP) made by the federal government.

Visa recently published a global research report entitled The Visa Back to Business Study which surveyed consumers and small businesses in eight countries around the globe. I wanted to address some of the highlights from the small business portion of this study.

The report identifies generating revenue and attracting customers as the top concerns for small business. Mercator Advisory Group has seen very similar results in our most recent U.S. Small Business PaymentsInsights results which identify customer retention and cash flow as top concerns. Our survey also revealed that employee retention and security are also key concerns to U.S. small businesses.

One of the most interesting insights I saw in the report was the more personal challenges that the pandemic has made small business face.

The unpredictability about virtually every matter associated with COVID-19 is unsettling for business owners who depend on projections and forecasts. The biggest operational challenges SMBs are facing are shifting consumer behavior (35%), balancing challenges in their life with their business challenges (28%) and keeping their employees safe and healthy (27%).

The current environment brings new challenges and mystifying advice from “experts.” As consumers try to react to all these changes, small businesses are trying to figure out which of these changes are fleeting and which will stick. Clearly, this is a daunting task.

I also found it interesting that about three in 10 worry about balancing their work and personal life in the midst of a pandemic. Also, a similar proportion worry about the health and wellness of their employees.

Sometimes we forget the humans behind small businesses and the very personal issues they face.

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post The Human Side of Small Business in a Pandemic Environment appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Non-store Purchase Channels Increase in Importance for Small Businesses Amid COVID:

• 86% of small businesses report that order and delivery through a third party has gained importance.
• 86% of small businesses report that order and pay by mobile app then delivery to the customer has gained importance.
• 80% of small businesses report that order by phone then delivery to the customer has gained importance.
• 80% of small businesses report that order and pay online then delivery to the customer has gained importance.
• 78% of small businesses report that order and pay by mobile app then pick up in-store has gained importance.
• 76% of small businesses report that order by phone then pick up in-store has gained importance.
• 66% of small businesses report that order and pay online then pick up in-store has gained importance.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Non-store Purchase Channels Increase in Importance for Small Businesses Amid COVID: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Small Businesses Have Changed How Consumers Can Purchase at Their Stores During COVID:

• 52% of small businesses offer ordering by phone then pick up in-store.
• 49% of small businesses offer ordering and paying online then pick up in-store.
• 27% of small businesses offer ordering and paying by mobile app then pick up in-store
• 47% of small businesses offer ordering by phone then delivery to the customer.
• 51% of small businesses offer ordering and paying online then delivery to the customer.
• 47% of small businesses offer ordering by phone then delivery to the customer.
• 22% of small businesses offer ordering and paying by mobile app then delivery to the customer.
• 35% of small businesses offer ordering and delivery through a third party.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Small Businesses Have Changed How Consumers Can Purchase at Their Stores During COVID: appeared first on PaymentsJournal.

Small and medium-sized enterprises (SMEs) and the gig economy are both growing rapidly. The gig economy offers contract workers flexibility and opportunities to generate income in difficult times, such as the ongoing COVID-19 crisis that has left millions unemployed. As these sectors of the economy continue expanding, payment companies and marketplace platforms need to be able to verify users and merchants/contractors to protect against bad actors and ensure trust and safety.

To learn more about why now is the time for payment companies to become involved in the gig economy and the unique identity verification needs of small and contract businesses, PaymentsJournal sat down with Zac Cohen, COO at Trulioo, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

The SME marketplace and gig economy are expanding

The world is in a digital age, making now an easier time to start a business than ever before. Consequently, small and medium enterprises are experiencing explosive growth. According to data from Trulioo: 

Much of this growth comes from the fact that we’re in the digital age, making it easier than ever to start a business. For SMEs to continue to grow and thrive, they need access to the same tools, technologies, and capabilities as their large enterprise counterparts—but this isn’t always the case. Consequently, there is room for improvement in terms of how payments companies are supporting small business growth.

Then there’s the gig economy, which is similarly expanding. The number of gig economy workers in the U.S. has grown 15% in the last decade. In 2019, over 56.7 million Americans engaged in the gig economy, and this number is only expected to grow; gig workers are anticipated to comprise more than half of the labor force by 2024.

“The beauty of the gig economy is its flexibility and its ability to provide opportunity even in difficult times” such as the ongoing COVID-19 pandemic, said Cohen. Contract workers having the option to choose their own service provision in real time is critical to the structure of the gig economy.

On that note, it makes sense for companies to compensate gig workers in real time. After all, the spirit of the gig economy model is instant, on-demand, and flexible in times of need. Rather than withholding payments until a specific date, payment companies need to “replicate that instantaneous interaction and transactions; to do so and make the gig economy grow, verification is a key part of that process,” explained Cohen. 

SMEs and the gig economy share an underlying challenge: Identity verification

Verification is a key part of serving SMEs and the gig economy, but quickly and effectively verifying the legitimacy of small merchants and contractors remains a key challenge. Having to navigate new business models presented by the gig economy does not negate compliance obligations or risks related to fraud. It does, however, require a different approach to identity verification, as there are different types of businesses that need to be accommodated.

Identity verification becomes even more complicated when it comes to small merchants and contractors that aren’t registered or incorporated. Gig economy workers who onboard as merchants sometimes don’t have a business registration number, making it challenging to verify them as a business entity.

“When you attempt to apply the same business or compliance logic on a completely new or different use case, yet expect the same high quality result, it just breaks down,” noted Cohen. For example, companies with individual merchants and freelancers from dozens of countries need to evaluate their technology toolkit to avoid having an ineffective traditional verification process or a costly, inefficient internal process. 

What SMEs should look for when choosing an identity verification technology partner

The gig economy business model requires a new approach to identity verification. A holistic approach to identity verification makes it easier to verify sole proprietorships, freelancers, and micro-merchants by combining Know your Business (KYB) and Know Your Customer (KYC) processes. But even a holistic approach requires a corresponding map, or stack of technology, that easily applies the right tool for the right scenario at the right time.

According to Sloane, there are three critical determining factors in an effective identity verification solution:

1. It has the capability of identifying down market individuals and entities outside of large corporations with annual reports.
2. The information collected to identify users is significant and capable of meeting the obligations of countries being operating in. 
3. The solution is packaged in a way and at a price level that meets the needs of small business and enterprises.

“Those are three amazing and important parameters that need to go into the decision about who to partner with from a technology perspective,” agreed Cohen. By having a technology partner that satisfies these needs, SMEs can focus their time on the business itself, instead of facilitating and optimizing the complex customer onboarding and identification process.  

Conclusion

The rise of the gig economy and SMEs mean that a one-size-fits-all approach to identity verification, fraud risk, and compliance is no longer a cost efficient or effective solution. Rather, the unique needs of these types of businesses make it crucial for them to partner with a technology provider that offers a holistic approach to identity verification and onboarding. By doing so, companies can focus on other aspects of business while protecting against fraudsters and bad actors.

The post Identity Verification is Crucial–but Complex–for SMEs and the Gig Economy. This Approach Can Help. appeared first on PaymentsJournal.

Plastiq, the intelligent payment solutions provider for businesses, has announced its inclusion on the U.S. Visa Small Business Hub. The Visa Small Business Hub brings together tools and resources from Plastiq and other leading small and medium business (SMB) solution providers to help the SMB community create and strengthen customer relationships through safe, digitally-enabled practices.

“Helping small businesses is a part of our DNA, so we are thrilled to come together with Visa to support entrepreneurs as they start and grow their businesses in today’s challenging economic landscape,” said Eliot Buchanan, CEO and co-founder of Plastiq. “By utilizing our payment tools and Visa’s business  cards, small businesses will be able to free up vital cash reserves and better manage cash flow to set themselves up for long-term success.”

The Visa Small Business Hub offers access to tools and tips that focus on three main stages of the small business lifecycle: starting, running and growing your business. Resources cover securing funding, budgeting, attracting customers, managing finances, selling online, reputation management and other   vital aspects of business management.

With Plastiq, SMBs can use their Visa card to pay virtually any business expense—even when a supplier doesn’t accept credit card payments. Plastiq enables SMBs to free up 30-45 days of cash flow by putting previously cash-only payments on their Visa. This seamless and secure payment platform gives companies the flexibility they need to continue growing their business. In addition, paying bills through Plastiq enables SMBs to earn rewards using their Visa, while also conserving their cash on hand.

Further building on the collaboration, Visa and Plastiq will launch a digitally-focused campaign to make account holders aware that they too can utilize Plastiq to pay bills online, even if the biller does not accept credit cards or digital payments.

Plastiq has revolutionized how its more than 1 million customers optimize working capital by enabling    them to pay or accept payment for anything with a credit card, even where credit cards or digital payments are not accepted. Payments can be sent in whichever manner the SMB prefers, whether via check, wire transfer or ACH transfer. The intelligent platform provides real-time insights into businesses’ payments, cash flow and working capital. These insights inform how and when to pay business expenses, allowing businesses to efficiently manage resources across any industry supply chain.

Visit the Visa Small Business Hub to learn more about Plastiq. Businesses can also set up an account with Plastiq to start optimizing their working capital through credit card payment and acceptance.

About Plastiq

Plastiq is the intelligent payments solutions provider enabling businesses to pay or accept payment via a credit card for virtually any expense. With Plastiq, it is easier for businesses to access working capital in ways that make the most sense for them, so they can maximize every business opportunity. Plastiq works with all major credit card providers, including Mastercard, Visa and American Express, and its automated payment platform has signed up more than 1 million clients, processing billions in payments for a wide range of expenses, from business supplier payments to contractors, taxes and rent. Plastiq has won a number of awards and recognitions, including being named to the 2020 Forbes FinTech 50. Learn more at www.plastiq.com.

The post Plastiq Continues to Help Small Businesses Flourish with Launch on Visa’s Small Business Hub appeared first on PaymentsJournal.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Which Payment Types Are Winning Contactless Acceptance for Small Businesses?

• In 2018, 37% of small businesses accepted zero contactless payments; in 2020, 26% of small businesses accepted none. 
• 50% of today’s small businesses accept Apple Pay, compared to 42% in 2018.
• 41% of today’s small businesses accept Android or Google Pay, compared to 34% in 2018 & 2019.
• Samsung Pay has seen modest gains in acceptance of 4% among small businesses between 2018 & 2020.
• Chase Pay barely improved on its 22% (2018 & 2019) small business acceptance rate, coming in at 24% in 2020.
• Contactless cards jumped to 16% small business acceptance in 2020, up from 8% in 2018.
• LevelUp, AliPay, WeChatPay, and proprietary payment app solutions saw little progress and are accepted by less than 10% of small businesses.

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business Payments Insights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business Payments Insights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Which Payment Types Are Winning Contactless Acceptance for Small Businesses? appeared first on PaymentsJournal.

TD Bank, America’s Most Convenient Bank^®, today announced that it is launching TD Online Accounting to provide a convenient, integrated payment and accounting experience for its small and closely held business customers to conduct banking and bookkeeping activities through TD’s Small Business Online Banking platform. 

TD Online Accounting uses the technology of Autobooks, an integrated accounting and receivables platform that allows business owners to get paid faster by settling credit card and electronic payments directly in their TD Bank business checking account. Accelerating transaction settlement times is especially important for businesses as they seek to maintain a healthy cash flow as a result of COVID-19. 

“Many business owners are constantly juggling numerous activities to keep their businesses running smoothly. TD Online Accounting takes away much of the administrative tasks of one of these critical activities – reconciling books and accounts – and empowers business owners to keep track of inflows and outflows more efficiently. Most importantly, this new tool allows business owners to have more time to serve their customers,” said Chris Giamo, Head of Commercial Bank, TD Bank. “TD Bank is committed to helping small and closely held businesses maintain and grow their businesses through effective, innovative solutions and a convenient banking model. The addition of TD Online Accounting demonstrates this commitment, especially during these extremely challenging times, where every transaction and payment is critical.” 

TD Online Accounting helps businesses increase and accelerate their cash flow by providing a self-service, digital onboarding experience to help business owners get paid electronically. As a payment facilitator, Autobooks enables a business to begin invoicing within moments of enrollment and to start processing payments shortly after. For ease of use, TD Online Accounting is available to current TD business customers with a business checking account who are enrolled in online banking. 

Beyond the ability to help businesses get paid faster, TD Online Accounting allows TD’s eligible business customers to: 

• Electronically send invoices 
• Accept payments from any location via a payment link (text, email, social media, etc.) 
• Automatically and immediately reconcile all incoming payments 
• Create customizable reports including balance sheets and income statements 
• Keep track of payments 
• Automatically handle bookkeeping tasks 

TD Online Accounting users also can access dashboards with real-time data and insights on their business’ health through their TD Small Business Checking Account. 

“TD truly understands the needs of our business customers and providing them with a payment and accounting service that simplifies their banking experience and enhances real-time access to funds addresses business owners’ concerns about getting paid in full and on time,” said Rick Burke, Head of Corporate Products and Services, TD Bank. “TD chose to collaborate with Autobooks to develop this service due to its comprehensive knowledge of small and closely held business operations, a proven track-record of working with financial institutions and the strength of its business model.” 

TD small and closely held business customers can self-enroll in TD Online Accounting here: https://www.td.com/us/en/small-business/online-accounting/. Customers may also schedule a virtual appointment via www.td.com/us to speak with an Autobooks small business specialist for one-on-one help with enrollment. 

“TD Online Accounting marks the beginning of a new era in banking convenience,” said Steve Robert, CEO and co-founder of Autobooks. “Similar to how bill pay and remote deposit capture made business banking more convenient, accepting online payments and automating accounting are enhancements needed for today’s small business and we couldn’t be more pleased to work with TD Bank to help support its business clients.” 

For more information, please visit: https://www.td.com/us/en/small-business/online-accounting/.  

About Autobooks

Detroit, MI-based Autobooks reimagines small business banking for today’s business owner, transforming the financial institution into a digital destination. Through Autobooks, a small business owner can upgrade their checking account to accept online payments in minutes.  In addition to integrated receivables, Autobooks offers cashflow management and automated accounting tools to position internet banking as an ecommerce platform for small business.    

Please visit www.autobooks.co to learn more. 

About TD Bank, America’s Most Convenient Bank^®

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9.5 million customers with a full range of retail, small business and commercial banking products and services at more than 1,220 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth^®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US. 

TD Bank, America’s Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us. 

The post TD Bank Launches TD Online Accounting to Provide Integrated Payment Services to Small Businesses appeared first on PaymentsJournal.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Who Are Small Businesses Turning to for Advice during COVID-19?

• The short answer: Everybody. 
• In 2020, small businesses ranked higher interest in advice from 11 of 12 channels surveyed compared to 2019. 
• Small businesses turn to banks first by a wide margin. 66% of small businesses turned to their bank for advice in 2020 vs. 59% in 2019.
• 47% of small businesses report turning to employees for advice, vs. 39% in 2019.
• The largest % increase in business advice came from financial advisors, used by 41% of small businesses in 2020, vs. 31% in 2019.
• Technology advisors also saw an outsized increase as a small business resource: 29% of small businesses used one in 2020, vs. 22% in 2019. 
• “Friends and family” as well as “accountant” saw only a nominal 1% increase as a small business resource.
• The only category which saw a decline as a small business resource was “Industry Publications”, used by 15% of small businesses in 2020, vs. 16% in 2019.  

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Who Are Small Businesses Turning to for Advice during COVID-19? appeared first on PaymentsJournal.

Small businesses are essential building blocks of our economy, and it is important to support them as much as possible. However, cash flow can often be a big hurdle for small businesses – many rely on cash reserves and borrowing in order to finance their operations. Being able to access cash quickly is key for any small business owner looking to grow or just stay afloat.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Cash Flow and Borrowing Are on the Minds of Small Business Owners:

• In 2019, 37% of total respondents claimed that it was “definitely” a good time to borrow, compared to 15% in 2020.
• Similarly, the proportion of small business owners who claimed it was “probably” a good time to borrow was cut in half.
• 24% of small businesses claim it’s “definitely not” a good time to borrow in 2020.
• Interestingly, 5% of small businesses earning $5-10m claim their firm “never borrows” in 2020, while only 1% claimed that in 2019. 
• In 2020, 22% of small businesses expressed “extreme concern” about cash flow, versus 17% in 2019.
• 60% of small businesses earning $5-10m expressed significant increase in concern about cash flow due to COVID-19; 56% of small businesses overall expressed the same.
• 5% of small businesses overall expressed a significant decrease in concern over cash flow due to COVID-19. 

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Cash Flow and Borrowing Are on the Minds of Small Business Owners: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Nonprofits, Healthcare, and Financial Services Are Less Likely to Be Adversely Affected by COVID-19:

• COVID’s least impacted sectors: 44% of nonprofits and healthcare, as well as 50% of financial services small businesses, report being negatively impacted by COVID.
• Predictably, restaurant and travel report the highest impact: 75% report negative impact.
• In total, 24% of all small businesses report improved conditions; 17% report no change; 59% report negative impact. 
• Business Administration: 27% positively impacted, 24% no change, 61% negatively impacted. 
• Retailers: 17% positively impacted, 24% no change, 60% negatively impacted. 
• Consumer Services: 22% positively impacted, 15% no change, 64% negatively impacted. 
• Manufacturing: 23% positively impacted, 11% no change, 66% negatively impacted. 

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Nonprofits, Healthcare, and Financial Services Are Less Likely to Be Adversely Affected by COVID-19: appeared first on PaymentsJournal.

The small business market in the United States is vast, yet a lot of these businesses struggle to access the financial services they need. In response to cash flow issues and other financial challenges, small business owners are forced to make decisions that directly, negatively impact not only the businesses themselves, but the owners’ personal financial situations.

Many of these challenges could be fixed with improved access to small business credit cards. However, card issuers are understandably hesitant to approve card applications from potentially risky merchants. Even so, the small business card market presents unique revenue opportunities for issuers—and these opportunities should not be ignored.

To dig deeper into how organizations can run a successful small business issuance program and a risk-free way to do just that, Mercator Advisory Group and Aliaswire teamed up to host a webinar: Small Business Card Opportunities: A Unique Revenue Approach. The presenters were Brian Riley, Director of the Credit Advisory Service at Mercator Advisory Group, and Eugene DeSilva, PayVus Head of Product at Aliaswire. 

The small business market is bigger than many realize

There are more than 6 million businesses in the United States, over 99% of which are small businesses. Just 42,500 of these businesses have more than 500 employees, classifying them as a large business under the U.S. Small Business Administration. Further, the largest segment of businesses are those with 20 or fewer total employees. Small businesses tend to be service-oriented, while their larger counterparts are more likely to be involved in retail.

Every major payment brand has small business card offerings of some sort, which small businesses are eager to take up. In fact, there is a forecasted small business credit card spend of $750 billion for 2020 alone. But small business owners are still using personal cards for business expenditures, leaving significant room for card issuers to capture the transactions currently being lost to personal cards.

“If card issuers capture items that small businesses place on their personal cards, this transaction throughput can increase by more than a third, which indicates growth potential in the small business sector,” explained Riley.

Even before COVID-19, small businesses struggled with cash flow

Prior to the COVID-19 pandemic, small businesses were facing various financial challenges, including credit availability, operation costs, and debt payments. To counteract these difficulties, business owners resort to tactics like downsizing their business, using personal funds for business expenditures, taking out additional debt, and making late payments.

“Small businesses face several challenges that force them into behaviors that aren’t in their best interest,” said DeSilva. Businesses aren’t necessarily failing because they aren’t good at what they do or because they are offering a bad product. Rather, they aren’t able to manage their cash flow successfully. Ultimately, “being able to separate business expenditures from personal expenses is critically important for a successful business,” he added.

Piling onto other challenges, increased risk, decreased transaction volume, and unprecedented levels of unemployment driven by COVID-19 are squeezing small businesses even tighter than before. And while business cards do play a strong role in small business payment usage, there is still a far too high usage of other methods, such as the aforementioned dipping into personal funds.

“Small business cards capture only a portion of credit card spend (66%) since many cardholders are using personal accounts,” added Riley. Additionally, a lot of small businesses are unhappy with their business credit cards. Over half are actively looking for a new small business card, creating a market opportunity for ISOs that can meet the needs currently going unaddressed. Better rewards, sign up bonuses, improved interest rates, and larger credit lines are top priorities in the search for a new card.

Underwriting is more complex on the business side

Consumers applying for credit cards are often approved in a matter of seconds, as the process is highly automated and relies on basic information such as their stated income and FICO score. Small businesses, on the other hand, require a more thorough evaluation. Startup failure rate differs from industry to industry, long term relationships and opportunities vary, and other complex nuances lead to frequent underwriting failures.

A small business issuance program must meet seven requirements to be successful, each of which are explored in-depth in the webinar:

1. Universally accepted card
2. Account level controls
3. Effective pricing
4. Incentives
5. Rewards
6. Transacting in any common form
7. Building progressive relationships

PayVus: A small business credit solution that benefits issuers and merchants alike

Banks that are unable to properly assess risk can have decline rates of up to 70%, making them miss out on revenue opportunities and exacerbating the cash flow and financing issues of small businesses. 

Knowing the challenges banks face in underwriting and small business card management, Aliaswire developed a solution: PayVus. PayVus is a SMB business credit card platform that offers merchants a business credit card with a line of credit. With PayVus, merchants have the ability to send a portion of their typical daily settlement to their PayVus card, which increases their spending line. 

The turnkey solution enables banks to rapidly assess the risk profile of customers and manage this risk on a daily basis. A particularly noteworthy aspect of the solution is its acceptance rate: 99.9% of small business credit applications are approved. Rest assured, banks themselves aren’t taking on the risk associated with a high approval rate. “We are so confident in our solution that we take on that risk so that our partners can focus on serving their customers,” concluded DeSilva. 

The Takeaway

Small businesses face unique cash flow challenges, presenting an opportunity for banks to generate revenue with small business credit cards. However, issuers often struggle with the nuances of the underwriting process and assessing merchant risk. PayVus, a profitable solution developed by Aliaswire, removes the risk from banks themselves while enabling them to accept nearly every small business card application.

To learn more about the opportunities in the small business card market for banks, ISOs, and merchant acquirers, and how PayVus can make those opportunities come to fruition, get complimentary access to the webinar recording: Small Business Card Opportunities: A Unique Revenue Approach.

Listen to the complimentary webinar – Small Business Card Opportunities: A Unique Revenue Approach

The post Small Business Credit Cards Present a Unique Revenue Approach for Card Issuers appeared first on PaymentsJournal.

Small businesses are the backbone of economic growth in communities around the world. With their unique offerings and personalized service, they provide value and a sense of connection to their customers. Whether it’s a local boutique or a family-owned restaurant, they tap into the heart of what makes a community special. From creating jobs to stimulating local economies, they are vital in shaping the communities we live in. As consumers, supporting these establishments allows us to give back to the neighborhoods we call home. They are more than just a place to shop or dine, they embody the spirit of community and are often the heartbeat of their neighborhoods.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report –U.S. Small Businesses are Reeling as a Result of COVID-19

COVID-19 Sparks a Precipitous Deterioration in Small Business Attitude:

• Revenue growth, steadily projected by ~85% of owners 2016-2018, fell to 42% in 2020.
• Likewise, profitability growth fell from 74% in 2019 to 44% in 2020.
• Employment growth, steady around 68% from 2016-2019, fell to 39%.
• Worse yet – the proportion of companies predicting a decline in profitability and revenue increased SEVEN TIMES!
• In 2019, 6% of predicted profitability declines, compared to 35% in 2020.
• In 2019, 8% of owners predicted employment declines, compared to 29% in 2020

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post COVID-19 Sparks a Precipitous Deterioration in Small Business Attitude: appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – U.S. Small Businesses are Reeling as a Result of COVID-19

Smaller Small Businesses Project More Pessimism Than Larger:

• In 2019, the most optimistic cohort of small business owners were those with 50-99 employees: 87% of them projected revenue growth in 2019 compared to 47% in 2020.
• In the 2020 COVID environment, the largest small businesses (>100 employees) are most optimistic: 63% project revenue growth in 2020 vs. 47% of firms with 50-100 employees.
• The same is true for profitability (59%) and employee growth (54%) vs. somewhat smaller firms with 50-100 employees: 49% profitability growth and 43% employee growth.
• Small business owners with less than 10 employees are typically the most pessimistic: 66% projected revenue growth in 2019 compared to 33% in 2020.
• Same goes for employee growth: just 27% of firms with fewer than 10 employees projected employee growth.
• 44% of the highest earning small businesses ($5-10 million) report they’ve been “negatively impacted” and another 21% report “very negatively impacted” by COVID-19.
• Interestingly, 9% of small business owners claim to have been “very positively impacted.”

About Report

Mercator Advisory Group’s new Insight Summary Report, 2020 Small Business PaymentsInsights, COVID-19 and B2B Payments & Cards – The Result of the Pandemic, reveals that U.S. small businesses have a much less positive view of the future than in previous years. The report is the first of three from Mercator’s annual Small Business PaymentsInsights Survey Series, a part of Mercator’s Primary Data Service. It is based on findings from Mercator Advisory Group’s online survey of 2,000 U.S. small businesses fielded in March and April 2020.

The report details the ways COVID-19 has changed small businesses and their outlook on the near-term future of their businesses. The report also provides insight into how small businesses bank and pay for goods and services, their banking relationships, how they view technology and their top business concerns.

“Small businesses have been hit hard by the pandemic. In many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” states the author of the report, Pete Reville, Director of Primary Data Services including Small Business PaymentsInsights Survey Series at Mercator Advisory Group.

The post Smaller Small Businesses Project More Pessimism Than Larger: appeared first on PaymentsJournal.

This release in GlobeNewswire highlights some new things from MineralTree, a 2010 Cambridge, Mass fintech specializing in AP automation and targeting the SME space.  The first is an expansion of invoice acceptance from domestic to international formats, along with integration into ERPs and accounting systems for FX conversion.  The second is a partnership with TransferMate, another 2010 startup based in  Dublin, Ireland, and specializing in cross-border payments.

‘The offering equips users to automate the capture, processing, and approval of international invoices from around the world leveraging the same platform and workflow they use for domestic invoices. It also syncs seamlessly with client ERP and financial systems to reconcile invoicing exchange rates with users’ native currency…In addition, a new partnership with leading B2B payments firm TransferMate enables MineralTree users to easily pay invoices in more than 130 different local vendor currencies. Integration with TransferMate’s global payments platform automates the execution of multi-currency payments from the MineralTree platform. Foreign exchange (FX) rates are locked when payments are initiated, assuring predictability and reducing risk to currency fluctuations. In addition, users save hard costs on wire fees versus traditional methods.‘

As members of the CEP service will know, we have cross-border as a major sub-theme for the 2020 outlook, recently releasing a Viewpoint on that very topic. In that paper we point out that more than 80% of cross-border funds transfer fall into the B2B category, where a number of innovations are underway to make experiences easier for corporates. This is particularly important for SMEs, especially as one moves down the revenue scale, since liquidity shortfalls are an existential threat, therefore easier and faster financial processing improves working capital. With economies in recession and world trade expected to be greatly curtailed during 2020, modern advancements are available and now more likely to be adopted after the great pandemic wake up call.

“The ability to manage both domestic and international invoices through the same AP automation platform creates enormous operational advantages for our finance team,” said Lucrezia Bickerton, Controller at Hourglass Cosmetics, an early user of the MineralTree multi-currency capability. “It enhances the visibility and control we have over the financial aspects of our business and especially over our cash flow, which is increasingly important in the current environment.” 

Overview provided by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post MineralTree Targets SMEs in Expansion of International Invoice Acceptance appeared first on PaymentsJournal.

With three months of the novel coronavirus pandemic behind us, CardFlight sees the outlook for small businesses beginning to brighten. Much of the country has reopened, Americans appear to be adjusting to public health guidelines designed to limit the virus’ spread, and businesses are continuing to adapt to the impact of social distancing measures. However, even as we see certain markers begin to make their way back to pre-COVID-19 levels, it is clear that this experience has permanently changed small businesses in several crucial ways. Based on the data and insights we have gathered in working with our partners to serve small businesses, here are some of the lasting changes that we predict in the payments industry:

Acceleration of Payment Acceptance Trends

As COVID-19 confined consumers to their homes and made them wary of potentially infectious surfaces, previously available contactless payment acceptance methods which merchants had been slow to adopt suddenly became the norm. After the World Health Organization officially declared the outbreak a pandemic , businesses felt uncomfortable handling customer cards and began to encourage the use of the most obvious of these methods – tap to pay – for the safety of their customers and employees. Between the rapid change of consumer behaviors and what we expect to be long-term caution around  infection risks, we believe that contactless is here to stay, even within in-person payment environments.

Of course, the greatest form of “contactless” is when cards aren’t present at all. As states begin to reopen nationwide, we expect to see small businesses who previously relied on “card present” transactions adding card-not-present options to their payment system. In some of these cases, goods and services may still be delivered in person—for example, with curbside pickup of food or books, or on-site services such as lawn and pool care. Regardless of service delivery method, though, the payment transaction will take place virtually, through a variety of methods including phone orders; e-commerce or in-app orders; or an invoice, subscription or other scheduled charges to a customer’s card. All small businesses will need to equip themselves to handle payment methods that enable their customers and staff to reduce contact wherever possible.

Other ways in which the physical aspects of checkout will be removed include an almost complete elimination of cash in daily transactions, and the reprogramming of payment terminals to remove signature requirements or limit them to high-ticket transactions. We will also see the role of cloud-based and software-led payment solutions become crucial for small businesses’ ability to make these changes and offer a wide range of payment options as they reopen and recover.

Our industry initially expected these shifts to occur over the next decade, but we believe the pandemic has pushed this timeline up by 1-3 years, if not sooner.

Increased Use of Delivery Services

As restaurants pivoted to accommodate government bans on dining in, many shifted to curbside and delivery services, online ordering, and subscription models for high use items like breakfast and coffee. Produce boxes, meal-prep kits, and similar services have also increased during shutdown as merchants looked for new revenue streams to make up for lost in-store gains. We expect these added services will continue augmenting food service providers’ revenue streams as restaurants reopen with restricted capacity. Increased consumer comfort levels, the newfound convenience factor, and customer “stickiness” make this shift a win-win for consumers and merchants.

Small Business Loyalty Here to Stay

Shutdowns unfortunately led many businesses to close their doors and lay off or furlough their employees. Unlike previous downturns, many merchants chose to share these painful choices with their communities rather than conceal them. In response, communities stepped in and stepped up, supporting local small businesses through fundraising, pre-purchasing gift cards, donations and more, aiding unemployed staff and keeping merchants afloat.

The support for small businesses was a much-needed dose of good news in an environment sorely lacking in that department. As businesses start to reopen, we expect community support for local establishments and jobs will remain strong beyond just conventional purchasing habits. In turn, small businesses will work to maintain integrity and brand consistency, supporting both their employees and suppliers.

As we continue to watch how these predictions for our industry’s future play out, we invite you to follow along via CardFlight’s weekly Small Business Impact Report, an analysis of payment transactions sourced from the more than 60,000 U.S. small businesses using CardFlight’s SwipeSimple payment acceptance technology.

The post The Post-COVID Outlook for Small Businesses appeared first on PaymentsJournal.

Banking Circle study of online SME merchants reveals banking gaps that Payments businesses can fill

London, 27th May 2020 – Europe-wide research commissioned by innovative financial infrastructure provider Banking Circle has found that nearly two thirds (64.6%) of online merchants have needed extra finance in the past two years (excluding borrowing due to the current COVID-19 crisis). Nearly a quarter (23%) needed the additional funding to cover payroll, and a further 26.5% to cover regular business costs. Whilst needing to access extra funds is a fact of life for many businesses, the Banking Circle research highlights the serious gap in how easily and quickly funding can be accessed – which will be all the more crucial in the current climate.

Just under a quarter of respondents had to wait between three and four weeks to receive the cash they needed to cover essential costs, yet 26.4% felt that without access to new cash they would be forced to let employees go. And almost a quarter (24.4%) believe their business would ultimately fail if they were unable to access new finance.

With a whole new set of pressures on businesses of all sizes, but small businesses in particular, Banking Circle’s latest white paper, ‘Mind the Gap: How payments providers can fill a banking gap for online merchants’ highlights the continued issue of financial exclusion for SMEs – and the opportunities for payments providers.  These organisations are already connected to online merchants – and can play a crucial role in providing wider banking services, as well as access to funding.

Key findings:

Cross border banking is a challenge

• Across EMEA an average of 19.2% of online merchants have separate banking relationships in every country in which they operate – adding to their costs and resources to manage
• 17.2% of UK merchants have separate banking relationships in every country in which their business trades
• 44% of UK merchants work with just one bank for all the countries in which the business trades
• 26.2% of businesses in the Nordics are the most likely to work with separate banks in each jurisdiction
• 13.9% of French merchants work with multiple banks
• 20.3% of Netherlands firms work with multiple banks
   

Banking services used by online merchants

• Around half of online merchants surveyed said they use short-term loans (47.8%), overdrafts (49.1%), and finance agreements for specific purposes (48.8%)
• 43.2% access settlement accounts for cross border payments (43.2%) from their main bank
• 35% use their bank for foreign exchange (FX) services (35%)
• ​German merchants are least likely to access solutions to help with cross border trade, with the lowest proportion of all respondents accessing settlement accounts (38.8%) and FX (16.8%)

Accessing finance – how long does it take?

• Online merchants reported that accessing business finance had taken them as much as 6 months:
  • 18.8% said it took 1-2 weeks
  • 24.6% – 3-4 weeks
  • 21.7% – 1-2 months
  • 16% – 3-4 months
  • 6% – 5-6 months

The Opportunities for FinTechs and Payments businesses

• 87.3% feel their business is well served by their current banking partners; German merchants are the least satisfied at 82.9%
• 42.6% of the dissatisfied businesses felt their business is not a priority for their bank, and 41.5% gave high fees as a reason
• Approximately one in four respondents dissatisfied with their bank gave each of the following reasons for their dissatisfaction:
  – poor quality and inconsistent service (28.7%)
  – slow response times (28.7%)
  – poor FX rates (24.5%)

Commenting on the findings of the study, Anders la Cour, Co-founder and Chief Executive Officer of Banking Circle said: “The world of digital commerce is a rapidly growing sector; but it is also a sector where entrants face multiple barriers to operate because established financial institutions have a fear of the unknown.

“Opening a bank account – fundamental for most enterprises – can feel like taking an exam. And access to short-term funding, whether to fill a cashflow gap or to underpin growth plans, can involve multiple hurdles often just too steep to get over. However, payments providers already supporting the online merchant space can deliver a genuine added value by providing their merchant customers with banking services including access to funding. And in the current climate that support is going to be more valued than ever – indeed, for payments providers that demonstrate a real understanding of SME needs there could be a significant long-term gain.”

Anders continued: “Banking Circle has always been committed to improving financial inclusion for smaller businesses, and this study helps us and the wider industry to identify – and therefore help to fill – gaps in the current offering.”

The full white paper, ‘Mind the Gap: How payments providers can fill a banking gap for online merchants’, is available to download for free at https://www.bankingcircle.com/whitepapers/how-payments-providers-fill-finance-gap-online-merchants

The research was conducted by Censuswide between 30th March 2020 and 7th April 2020, amongst 1,514 respondents from merchants that trade online and respondents who work in the finance department in companies that sell digitally. The SME merchants surveyed were based in the UK, Germany, France, the Netherlands and the Nordics.

For further information, please click on the link below:
Mind the Gap white paper for media review only.

The post QUARTER OF SME MERCHANTS WERE BORROWING FUNDS TO PAY BUSINESS COSTS OR SALARIES – EVEN BEFORE COVID-19 appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Financing Commercial Trade: The Search for Liquidity.

Nonbank Online Lenders Are a Growing Source of Credit for Small Businesses: 

• In 2018, 32% of small businesses that applied for credit did so with an online lender.
• Online lending to small businesses is a growing trend: 2016 – 19%, 2017 – 24%, 2018 – 32%. 
• Small businesses have a high rate of approval with online lenders: 82% approved.
• That’s a higher credit approval rate than small businesses get with small banks (71%) or large banks (58%). 
• However, small businesses are least satisfied with online lenders: Net satisfaction – 33%.
• That’s a lower satisfaction level than with small banks (73%) or large banks (55%).
• Prior to COVID-19, Mercator estimates that U.S. SME funding was likely in the range of $100 billion.

About Report

Mercator Advisory Group’s latest research report, Financing Commercial Trade: The Search for Liquidity, provides a direct view into the latest trends in technology and tools in the trade finance space. Traditional trade finance remains a primary method for managing risk and creating liquidity, especially for international commercial merchandise exports and imports. There are now more methods than ever before to access liquidity and promote both domestic and international flows of goods and services.

“One of the interesting things we discovered during discussions with industry participants has been a marked uptick in the recognition of working capital management effectiveness, particularly as the coronavirus sledgehammer policies hit businesses,” commented Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service, author of the report, “so expectations for the adoption of these and other digital solutions have greatly increased.”

The post Nonbank Online Lenders Are a Growing Source of Credit for Small Businesses: appeared first on PaymentsJournal.

Big change yields big opportunity. While the current climate brings high levels of uncertainty and adversity, times like these can also foster innovation and positive changes for the payments experience.

For example, consider the payments experience. Currently, nearly every state has mandated that non-essential businesses close their doors to customers and shift to pick-up or delivery models — a big adjustment for businesses, but an even bigger opportunity.

Many consumers want to help small businesses survive this crisis. But to support their local SMBs, consumers require safe, easy payment options. And that creates an opportunity. It’s time to determine whether your payments experience aligns with your customers’ changing payments expectations.

Today’s small businesses require omnichannel payments that support frictionless customer experiences

For small businesses offering delivery and pickup options, online and mobile payments are essential to purchase routines when physical storefronts are off limits. However, strategic online selling hinges on customers who engage with your business and come back for more — across all available channels. An omnichannel customer relationship requires a payment solution that enables a frictionless customer experience, making it easy for customers to buy and engage with your business now and after the pandemic is over.

This could be new territory if you rely on older point-of-sale (POS) terminals that lack flexibility and interactive functionality. But in a time of rapid change and uncertainty, you should consider how investing in modern, integrated payment technology could help make up lost revenue now and compete with enterprises in the years ahead.

The good news is that many of today’s e-commerce tools are cloud-based. They are easy to implement and easy for customers to use, and they help make enrollment a near-instant, automatic and part of the checkout process. With cloud-based e-commerce tools, you can conveniently offer an emailed receipt option or collect an email and password in exchange for a discount.

For example, SpotOn, an intelligent payments solution company, recently rolled out integrated online ordering and curbside pickup for its restaurant customers, waiving the setup and monthly fee until January of 2021. And Arryved, a POS system for the craft beverage industry, pulled together an online ordering system so their customers could continue to sell while remaining physically closed to the public. This includes a mobile pay app to support contactless payment for walk ups as well as future on-premise sales The system is free for current customers, fully integrated and easy to set up — customers are going live with their online stores within days, allowing them to quickly supplement lost revenue. In the long run, these businesses now have the ability to follow their customers across multiple channels and deliver personalized experiences post-pandemic.

Don’t forget about the power of contactless payments

The World Health Organization recommends the use of contactless payments to reduce the need for touching a payment terminal or physically exchanging cash, removing another potential touchpoint for infection. This has inspired increased usage in the UK and Europe, where the method was already popular, as well as an increase in the contactless spending limits.

The U.S. has a higher spending limit of $100 on contactless payments, which will help support an influx of contactless payments on everyday purchases. However, as a whole, the country has fallen far behind Europe when it comes to contactless payment adoption, both in mobile users for Apple Pay or Samsung Pay and in contactless cards. This is a good time for small businesses to embrace the trend and support the use of this safe payment method, which given its ease-of-use, will likely increase over the long term.

Innovating payments can save small businesses now — and guarantee success in the future

As a small business, the current crisis presents an opportunity to rethink the way you do business. By experimenting with new ordering and payment options, you can not only provide the speed, convenience and good hygiene consumers currently need, but also create a more robust payment ecosystem for future sales.

With up-to-date, omnichannel and frictionless payment experiences, small businesses gain the ability to combine the advanced features of an enterprise-level retailer with the personalized experience of a small business, which allows you to compete with bigger enterprises moving forward and more securely weather the coronavirus storm.

The post Business has changed. Use the opportunity to innovate your payments experience appeared first on PaymentsJournal.

Small businesses are among the hardest hit sectors during the Covid-19 shutdown. Unlike many national chains and big box stores that have remained open, while also experiencing a surge in online sales, small merchants have seen a staggering loss of business. Many small retailers may never re-open. But E-commerce can be a lifeline for small businesses as the recovery begins. So Facebook is launching its Shops platform to make it easier for businesses to list and sell products on Facebook and Instagram. Facebook also announced that Shops will partner with existing web marketplace platforms including Shopify, BigCommerce, and WooCommerce. How this will work from a competitive standpoint remains to be seen. But with the current and future spike in E-commerce sales, there should be enough business to go around.

The following TechCrunch article reports more on this topic which is excerpted below:

Starting today, you’ll be able to browse and buy products directly from a business’ Facebook  Page or Instagram profile. Both Facebook and Instagram  already supported a degree of e-commerce — for example, Facebook has its Marketplace and will likely make a bigger push through its Libra cryptocurrency initiative, while Instagram allows users to buy products featured in posts and ads. But the company’s new tools go further, enabling businesses to create a full-fledged Facebook Shop.

After all, the pandemic has probably made consumers even more likely to treat Facebook and Instagram profiles as the go-to source of information on local restaurants and stores — if your favorite store has changed their hours, or switched to online delivery/curbside pickup, they’ve almost certainly posted about it on Facebook or Instagram. So why not allow visitors to make purchases without having to leave the Facebook and Instagram apps?

It’s also worth remembering that the pandemic’s economic fallout is already hurting and killing off many small businesses — businesses that post and advertise on Facebook. So the company has a stake in helping those businesses survive in any way it can.

Overview provided by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group.

The post Facebook Aims To Boost Small Business E-commerce Sales appeared first on PaymentsJournal.

Over 1,500 businesses have leveraged the SpotOn platform to access CARES Act loan programs

SAN FRANCISCO, CA — May 5, 2020 — SpotOn Transact, Inc (“SpotOn”), a leading software and payments company, announced today its partnership with SoFi, an online personal finance company which leverages technology to bring financial products that help people get their money right. The partnership helps by bypassing the big-name lenders that were overrun with applications and provides merchants direct and easy access to lenders who can help them immediately.

Due to the unprecedented COVID-19 pandemic, SpotOn moved quickly to create solutions facilitating much needed access to capital. “Our clients, and businesses nationwide, need immediate access to financial support,” said RJ Horsley, President of SpotOn. “We felt SoFi was the perfect partner to not only create a seamless process for connecting our clients with Small Business Administration lenders, but also to present all possible credit options.”

The company leveraged its proprietary SpotOn platform to serve as an information source and guide to apply for the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP). These federal programs were initially created in March and comprised almost $350 billion of the $2 trillion CARES Act stimulus package. Congress recently committed an additional $370 billion to these two programs due to the massive demand. 

“SoFi is committed to doing its part to find creative solutions to support those in need throughout this crisis,” said Jennifer Nuckles, Executive Vice President of SoFi. “Working with SpotOn allows us to immediately connect tens of thousands of businesses with a large network of lenders and get capital into needed hands, fast.”

The EIDL and PPP funding programs are for businesses with less than 500 employees, SpotOn’s core customer segment, and are intended to help businesses pay their bills and retain their employees by providing low-interest or forgivable loans.

The post SpotOn and SoFi Partner to Connect SMBs with Federal Stimulus Loan Programs appeared first on PaymentsJournal.

Remember, it’s still all about cash flow.

We are living through an unprecedented health and economic crisis, and small businesses, many of which often struggle with cash flow to cover rent and payroll even during the best of times, are especially vulnerable now. As of press time, the Small Business Administration’s $349 billion emergency paycheck protection lending program for small businesses ran out of money, and Congress had yet to map out a way to further enhance the program. Underscoring the gravity of the situation, a recent Goldman Sachs survey of 1,500 small businesses found that 51 percent have enough cash to operate for zero to three months. Here are three suggestions to help build the resilience of your small business during these times.

One: Rationalize your cash flow

Consider your cash flow, both expenses and income, as economic conditions during the pandemic evolve. It’s safe to assume that this pandemic will have lasting consequences. Planning for the future will allow you to stay ahead of potential problems. Start by creating a cash-flow forecast that takes into account the anticipated needs of your company, in the short-, medium-, and long-terms. Ask yourself things like, what do you truly need now? What expenses can be cut and/or extended? What receivables can be accelerated or renegotiated? For example, bringing in $100 now might be better than $101 tomorrow, depending on the circumstances of your small business.

Be sure to think holistically about the answers. For example, if you feel like it’s unlikely that you will lose your office or store, you may consider negotiating with your landlord. Or, if you work with key suppliers who you simply could not do without once your business is operating more normally again, check in with them now to see how they’re faring, and be sensitive to their cash flow needs in the process. This sensitivity and humanity will enhance communications and instill the kind of goodwill that you may need reciprocated one day. 

Two: Turn to suppliers for credit, if necessary

If you find your business in need of additional credit, you may want to consider turning to your suppliers as a first source of additional credit. Not only will this most likely be the most affordable option, but since suppliers already have a financial stake in your business continuing to be an ongoing concern, they may be more likely to extend credit with favorable terms and/or be flexible with partial or delayed payments. This by no means implies you should take advantage of your supplier relationships. Suppliers are vulnerable right now as well. Now is the time to join together and foster even stronger relationships with your value chain.

Three: Avoid using personal credit cards for your business needs

Using personal credit cards as a source of business credit may seem like an easy, available solution—and it is—however, doing so can come at extraordinary cost. Many small business owners rely heavily on personal credit cards for a variety of reasons, such as earning points, cash back, or other rewards. But be careful to carry a zero or manageable balance as credit card financing charges can accelerate rapidly, and before you know it, you could be in a much deeper hole.

As we all know, in business cash is king. The COVID-19 pandemic has put a strain on liquidity across the value chain. Those businesses that will be most successful will be the ones who are capable of rationalizing their cash flow in the most efficient and sustainable manner.

The post Three Considerations for Small Businesses Navigating the Pandemic appeared first on PaymentsJournal.

The coronavirus is unlike anything the world has experienced in generations and is still continuing to spread despite most countries going into lockdown. While many countries are looking to regain control of the situation, businesses of all sizes are needing to review their capabilities in managing assets, staff, supply and facilities and embrace the current situation in the best possible way.

It’s essential to have the right intelligence in place and implement the best operations in order to keep your staff and customer base safe as well as trying to keep your business running to get through the current situation. Here’s a look at how intelligence can help in mitigating the current COVID-19 circumstances.

Communication

A few emails a week isn’t enough in these trying times, regardless of the size of your business, there should be a couple of meetings a week for updates as the current circumstances are changing on a daily basis. While some businesses are just trying to ride it out, communication is key to learning and adapting, get your staff to meet virtually and discuss new ideas to help the business survive.

Decision Making

Going on from how some businesses are just pausing their plans until this is over it’s not something everyone can do. This could all be over in a month but it could go on to be the whole year, we don’t know. Making key business decisions is just as important as communication, you need to make changes that suit the business if this continues for an extended period.

Training & Education

Furlough is unavoidable for many businesses, it gives you that ability to cut costs when you’re business doesn’t have cash flow. But furlough is an opportunity to improve your staff, for when they return to work. If you can develop a training programme this is completely recommended by the government, as long as you company isn’t generating revenue by a member of staff on furlough, you can still give them training and exercises to complete. This way, your employees stay fresh and might even return to their career with more insight into the industry.

Remote Working

By now most businesses have recommended their employees work from home if possible. But for some companies, it’s not as simple as turning a laptop on and getting on with it. Make sure your staff have all the facilities they need to work from home. Check-in with your staff and ensure they have computer security, a good connection, and hardware that can work to the right specification.

It’s also essential to keep your team’s spirits up during their remote working time. While meetings are essential to talk about industry updates, it’s a good idea to think about fun activities to keep the team happy during this uncertain time.

Wellness

Keeping your team’s spirits up is one thing, but you should also recommend how to stay well at home. Being sat at a computer at home all day isn’t ideal so mentioning exercises, mental breaks, probiotic supplements and stretches can really help with your employees mental and physical health.

Mitigating Risk & Workload With Technology

Currently, there’s an influx of enquiries on customer service based roles as customers are uncertain at this time. So using technology to help with the workload and even mitigate risk is welcome.

Chatbots

Using chatbots to help your customer service staff deal with enquiries will really help during this time. Working from home can be difficult and it’s likely that most employees in this role don’t have the same resources from home. So creating chatbots to reduce the workload is important for helping your staff refocus on the more complex enquiries.

AI Tracking

With everything being reported in the news it can be hard to keep up so you might want to consider tools that can help you stay on track. AI tracking tools are available to businesses that keep track of the latest virus news and identify what you need to consider to help your particular business.

The post How to Mitigate Risk of COVID-19 Impacts In Your Business appeared first on PaymentsJournal.

American Express has a long-standing commitment to small businesses (SME), with an array of cards that compete head-on with Bank of America, Chase, and Citi. The American Express small business volumes almost equal the sum of all branded network small business cards when measured by transactions (See this recent Mercator Research Report).

With more than $600 billion in small business spend, and a tremendous opportunity to grow, there are plenty of reasons to focus on the market.

 American Express’s new coalition, intended to focus on providing value-added services for the small business market, is clever and well designed.  It is also perfectly timed.

And, at a time where small businesses contend with backlogs in SBA loans, it is a refreshing strategy to help position SMEs for rebuilding after the current crisis.

AMEX announced the offering on their website. Coalition partners are global brands that offer a wide array of services.

The coalition includes some of world’s leading brands including Adobe, Amazon, American Express, AT&T Business, Avis, Bain & Company, BigCommerce, Bill.com, BJ’s Wholesale Club, BlueSnap, Budget, Dell Technologies, Deluxe, Dentsu Aegis Network, DocuSign, eBay Inc., Facebook, FedEx, GoDaddy, Google, Grainger, Hertz, IBM, iHeartMedia, Justworks, LinkedIn, Melio, Menlo Security, Microsoft, Next Insurance, Paychex, Inc., Pilot, Salesforce, Sam’s Club, SAP, Signifyd, Staples, SurePayroll, Trulioo, Uber, UPS, Verizon Communications Inc., and Zoro.

Stephen Squeri, Chairman and CEO of American Express, announced:

“The companies joining Stand for Small all have legacies of supporting the more than 30 million small businesses in the U.S., and collectively, our goal is to provide them with valuable resources so that we can come out stronger together once this crisis ends.”

Verizon, a participating member, linked their involvement as a component of helping small businesses through the crisis.

Today, Verizon announced its participation in the American Express ‘Stand for Small’ program, which is a coalition of more than 40 companies across media, technology, consumer goods and professional services, and many other industries, that have come together to provide meaningful support to small businesses as they navigate the impacts of COVID-19.

This is an excellent effort and gets you thinking about what will be like after the COVID-19 crisis.  Financial help from the SBA surely helps, but there is more to the solution than throwing billions of dollars against it.  People’s habits will change, and business practices will adapt.

This is not American Express’s first effort in the field, for sure.  Small Business Saturday, which typically falls around Black Friday and is scheduled for November 28, 2020, is in its tenth year and has become a shopping holiday. Last year’s sales generated a record $19.6 billion in sales, with a focus on merchants on Main Street, rather than national brands.  The theme is “Shop Local.”  And, here is a collection of educational resources compiled by American Express for Small Business Owners navigating COVID-19.

Getting through COVID-19 is one thing.  Thinking about how SME’s will reposition afterward is another, just as important.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group.

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Having just released member research on the subject of B2B cross-border payments, I figured it is good timing to comment on this posted blog in Finextra.  The piece was written by a member of Form3, a 2016 startup based in London that offers payments solutions. The point is made in the first paragraph.

‘The economic scale of the SME market is substantial, contributing £2.0 trillion (52%) a year to the UK economy alone and growing. But for SMEs wanting to trade internationally, they’re met with highly complex infrastructure and a myriad of lenders, brokers, FIs, processes and systems in place that lack sufficient integration or none at all.’

The piece goes on to point out that the traditional methods of making cross-border payments do not work for SMEs (it’s not great for almost all business sizes, by the way) given the lack of speed, transparency, and relatively high cost.  Although most cross-border payments are initiated as wires, which have a relatively high unit cost, smaller businesses make smaller payments, so the cost to value ratio is much higher.  For example, if you need to make a $1 million payment and the wire costs $30, your ratio is 0.003% versus a 0.12% ratio for a $25,000 payment.  Such marginal costs can make a big difference annually to an SMEs bottom line.

‘There is a stream of new products or partnerships being publicised by financial institutions to improve the user experience across both domestic and international payments…One common theme rings true, the existing system is failing to meet the demands and realities of cross-border payments, especially for SMEs. In a market that continues to grow and now worth over $22 trillion [1], the challenge is to make international payments more accessible to businesses and set a new standard of trading without borders…What businesses are screaming for is faster access to data, fewer intermediaries, transparent transaction times and most importantly, reasonable fees.’

However, the author goes on to suggest that banks can ease the burden on SME clients by collaborating with fintechs for not just payments, but other portions of international trade services, including cash management, risk, FX and trade  finance. All good points and worth a quick read.

‘Financial institutions can embed this capability into their existing customer channels and mobile apps. Once connected, financial institutions will then be able to provide services that traditionally only global organisations and specialist Fintechs could offer to their SME customers.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

The post Traditional Cross-border Payment Methods Don’t Work for SMEs appeared first on PaymentsJournal.

While e-commerce has become a merchant’s lifeline channel during COVID-19, that doesn’t mean that sales are booming. Many small businesses are hurting due to an overall drop in consumer spending. So Shopify is giving a hand to its Canadian merchant clients by offering cash advances. Shopify sees purchase transaction activity for these businesses, so they do have history with them to determine the advance amounts. Good to see the big players like Shopify doing what they can in this time of need.

The following Financial Post article reports more on this topic which is excerpted below: