Transaction Trends

Digital payments like bankcards and mobile wallets can have significant positive impacts on small and medium businesses (SMBS) because they are cheaper to process than other payment types, enable increased marketing capability, and are preferred by consumers, a new study from ETA member Visa says.

According to SMB estimates cited in the study, digital payments acceptance costs 57 percent less than other payment types like cash, checks and money orders for SMBs. Risks and losses from inaccurate cash handling, cash fraud, theft, and procedural costs and labor expenses significantly exceed the costs and time associated with accepting digital payments, like fees, chargebacks and systems installation, the study said.

The time savings of processing and handling digital payments versus non-digital payments can be significant for SMBs as well. On average, SMBs surveyed by Visa estimated that it takes 542 hours to process $100,000 in non-digital compared to only 189 hours to process $100,000 in digital payments.

Further, digital payments can help SMBs be competitive and boost sales through enhanced marketing and customer experience capabilities like eCommerce, loyalty programs and online ordering.

When asked which benefits or services would motivate consumers to shop at businesses, across verticals, over 80 percent mention digital-related benefits like loyalty programs, birthday emails with discounts, and fast responses to inquiries. In fact, the survey found that 92 percent of consumers consistently look for loyalty programs at retail stores when deciding where to spend, 80 percent look for online order ahead for pickup, and 91 percent look for both in-store and online shopping options. For restaurants, 87 percent say using and tipping with a card is a top consideration, and 79 percent said order food ahead via web is an important capability.

For SMBs that offer loyalty programs – a value-adds that digital payments can enable – Visa says 85 percent of SMB owners reported that the program has a big impact on driving repeat business, where 80 percent say they increase average ticket size and 74 percent reported increases in revenue. Even still, there is room to grow. According to Visa, only 2 in 10 SMBs offer loyalty programs. And though eCommerce represents a major share of consumer spending, only 16 percent of SMB business is currently done online, the study said.

Digital payments acceptance also drives revenue by increasing consumer spending, the Visa report found. SMBs reported eight percent increases in sales as a result of accepting digital payments, with medium-sized businesses reporting 17 percent increases, which makes sense given that 78 percent of consumers rank digital payments as their most preferred payment option. Further, two in three SMBs told Visa that customers spend more when using a card versus cash, the report said.