By: Jairo Riveros, chief strategy officer and managing director of the U.S. and LatAm at Paysend
During the COVID-19 pandemic, the lives of many shifted and small business owners were hit particularly hard as lockdowns and quarantine mandates forced many to close their brick-and-mortars. To combat business loss, some innovative entrepreneurs turned
to digital opportunities to keep their businesses afloat -- with global online sales growing 11% in Q3 of 2021 over the year previous. For example, clothing boutiques built up their presence online, restaurants turned to digital take-out options and grocery
stores encouraged shoppers to utilize digital shopping carts to avoid the physical exchange of money.
While some small business owners found this pandemic-prompted shift challenging, 90% of SMB owners believe that their survival through the pandemic was due to increased efforts to sell via e-commerce with more than half of their revenue coming through online
channels over the past three months.
Consumer Trends Push SMBs to Digitize
Although the pandemic played a pivotal role in pushing SMBs to digitize, this shift to digital tools can be largely attributed to consumers’ growing preference for such options in the last few years. Through digital payments, consumers are more empowered
due to greater convenience, control and value received from their financial services. In fact, 71% of global consumers now use digital banking channels weekly.
As consumer preferences continue to move towards mobile financial services, small business owners are turning to digital payments to enable their businesses to reach their customers around the world. Additionally, with consumers growing increasingly comfortable
in making foreign purchases, 50% of SMBs plan to increase cross-border sales in 2022 by turning to digital payments to drive growth.
Benefits of Digital Financial Tools to Streamline SMB Processes & Success
Consumers that have been slower to adopt digital options noted security being a top challenge. As more fintech startups enter the payments space, security has been a key focus to succeed among consumers. The digital payments industry is highly regulated
with fintech companies needing to meet governmental regulations to ensure digital money transactions are completed securely with anti-fraud measurements in place, financial institution verifications and more.
In addition to improving security in payments, digital financial tools are also accelerating small business success. Here are three key factors contributing to this.
1. Online payments enable owners to focus on building their business instead of the hassles of transactions. With digital payments, SMBs can streamline invoicing and billing -- which can be particularly beneficial for businesses that provide regular interval
services.
2. Small businesses can drive growth by opening additional corridors previously not explored with traditional brick-and-mortar shops. Small businesses are using digital opportunities to expand beyond local shoppers to remain competitive in increasingly crowded
markets and the challenging economic landscape.
3. Today’s world is becoming increasingly cashless. In fact, when shopping in brick-and-mortar stores, 41% of consumers noted having abandoned a purchase because digital payment options weren’t available. The pandemic changed a lot about how we all interact
and even make purchasing decisions. Additionally, according to Discover Financial Services, digital wallets are expected to handle more than $10 trillion in global transaction volume by 2025.
As the popularity of mobile banking continues to increase among consumers, SMBs will need a strategy to meet customers' evolving preferences. By embracing digital payments, SMBs will be able to remove barriers associated with customer acquisitions globally
and succeed.
About Author:
Jairo is the Managing Director for the Americas and Global Head of Strategy at Paysend, a global Fintech company born in 2017, based in the UK and regulated by the FCA, servicing over 6 million customers in 60+ countries.