Digitally transforming consumer payments for SME merchants

digital transformation

PUBLISHED: 14 FEBRUARY 2020
AUTHOR: FINTECH CIRCLE

Paytech innovation has brought financial services to individuals and the types of businesses that previously would have found it difficult to receive money digitally whether from a lack of access to the necessary technology or prohibitively high fees.

Payments as a service (PaaS) and banking as a service (BaaS) is transforming the way banks and fintech startups deliver products to the payments market with cloud-based API architectures and new regulations such as PSD2 levelling the playing field for new competition. Consumers now have more control and ownership over their banking data so direct account to account payments can be instant with no fees, fewer intermediaries and a more secure environment especially for high ticket item purchases.

Larger merchants have taken payments to where their customers already are with omnichannel selling made possible by technological advances providing multiple payment methods preferred by customers. A connected customer experience from online to in-store, while tracking data to offer personalisation and segmented audience promotions, have until recently been the realm of big business but is now available and being adopted by smaller companies.

What is the future of SME payments? Do smaller businesses need to start planning for cryptocurrencies and will cash phased out? The City Council of New York recently passed new legislation that bans stores, restaurants and other retail outlets from refusing to accept cash and it’s now widely accepted that cash plays a vital role in the global economy. While smaller companies are more likely to be cash only, adopting digital forms of payment will become part of their integrated sales network rather than becoming cashless.

It is now possible to pay for a flight and hotel using cryptocurrency and high street behemoth Burger King has accepted Bitcoin for payment with Starbucks not far behind with a crypto payment app to be launched this year. In this context the unstable nature of cryptocurrency points towards a marketing opportunity and perhaps a way forward for companies to stay ahead of this game changing technology. An SME cryptocurrency point of sale is yet to hit the mainstream however all eyes will be on the global brands who are starting to experiment with this as a form of payment.

In some regions the mass adoption of mobile payments both online and in-store has paved the way for leap frogging the banking system with mobile being the primary access to the internet for a growing audience. Thanks to paytech SME’s can now accept payments from visitors travelling in from all over the world wanting to use their preferred methods of payments. Alipay plans to support 10 million SMEs in Europe with new payment innovations and partner programmes. Mobile wallet adoption in the U.K. was comparatively slow but with Apple Pay reported to be on track to be taking 10% of all global card transactions, small to medium sized businesses will soon need to provide all options for mobile payments.

From POS card payments to more recent eCommerce pay later innovations new paytech services and products have historically been first adopted by larger companies able to afford new technologies. This first wave of disruption is often followed by a second as these new services are transformed once again making them more accessible for smaller businesses. This isn’t always the case as seen with mPesa and bitcoin showing that some of the most disruptive payment technologies are coming from directly from the needs of peer to peer and small businesses needing make transactions.


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