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what do SME merchants really want from payments?

Payments as the Building Block for Small and Medium Businesses

Small and medium-sized enterprises are increasingly present in the global market, looking to offer the best services and products possible as well as to attract and retain customers with a great and frictionless experience. Payments are what can often make or break an SME. Payment service providers have therefore become paramount to an enterprises' survival in a fiercely competitive environment.

The Meaning of Small and Medium Sized

The European Commission has, for the purposes of the EU market, defined an SME as a business or a company with 250 employees or fewer and either an annual turnover not exceeding 50 million euros or an annual balance-sheet total not exceeding 43 million euros. SMEs are, generally speaking, for the most part, focused on providing digital innovations, a direct reaction to the needs of the "global village" brought on by the Information age.

As the number of SMEs grows so does their offer expand, both in response to new market demands as well as their competitors' innovations? But it's not enough to just offer new and (or) better products and services.


The digital revolution has also kicked off a massive transformation in payments, completely turning the traditional payments landscape on its head: it brought in speed, new features and a variety of options.
Below we dig into some of these transformations and just what it is SMEs need and want when it comes to payments.

Convenient and Quick

Where customers once had just a few choices and that was it, now they can pick and choose from a plethora of payment options - which provides merchants with an opportunity to brand themselves both via offerings as well as payment acceptance choices. In fact, payments are now crucial to an SME seeking to ensure customer loyalty and draw in new clients.

Real-world examples of smart payments choices abound. Self-ordering kiosks have become a staple of quick-serve restaurants several years ago. If you've recently been to a big convenience store, chances are you encountered or even used a cashierless checkout. This reduces hiring needs, which is a big factor in SMEs, among whom 9 out of 10 are micro companies of up to 10 employees.

The choice regarding payment acceptance that an SME makes today will significantly impact its future. But what is it that an SME should consider - and change in the way the view payments?

Well, a first step would be to stop seeing payments as simply the process of receiving customer money. For an SME desiring to expand its brand, payments can do wonders, with the right approach. 

The sixth annual Mobile Payments and Fraud Survey conducted in 2018 by Kount found that that 37% of the merchants that participated already supported mobile payments at the Point of Sale (i.e. via NFC, Mobile Web, Mobile Wallets, etc.) and 31.4% planned to add to this feature or increase it. (MerchantSavvy)

Smart SMEs now consider how, when and where their customers could make payments, taking into account tender type, channel, and device, as well as focusing on payments safety and security. Many SMEs have joined mobile wallet programs offered by Apple, Google, Samsung or Youtap, while others have invested in developing their own solutions.

Swipe, Select, Tap, Execute

These four steps are all a customer is interested in. Complex checkouts have been the death of many a retailer, with over 80% of online shoppers abandoning their carts because of them, and over half taking their business elsewhere, permanently. Bespoke solutions are becoming increasingly asked for and a thriving ecosystem of such solution providers has emerged to tailor payments options for everyone, including SMEs. 


Payment providers are looking to expand their offers into previously unconsidered areas. An example is Square, who after purchasing Weebly began offering new online store features to SMEs, including making sales using social networks such as Instagram. 

One Size Does Not Fit All

But while SMEs can now have their pick of payments providers, some integrated solutions that will work for one SME may not work for another due to anything from geography and channels present to tender type. But while there is not a single perfect solution that will work for all SMEs, the variety of choice does allow an SME to pick and choose and build their own solution, which will often involve multiple vendors whose capabilities overlap. The aim is simple: get the best but keep in mind that your solution must make a customer's experience simple and pleasant.

E-commerce Can be the Right Path For SMEs

And finally, SMEs should not disregard the "global" part of the "global market". E-commerce has significantly reduced the various barriers to international expansion for everyone including SMEs and for years now trade has made up over two-thirds of global GDP. 

Supply and demand chains have gone global and so did payment acceptance. SMEs can now offer their products and services to virtually anyone anywhere - and providing an easy, seamless payments experience to each and every customer is vital. 

According to Monetate’s eCommerce Quarterly Report for Q3 2018, while mobile sales top eCommerce sales in terms of quantity, desktop sales are still worth significantly more on average.

This, however, requires a payment infrastructure that can tackle hundreds of tender types and a virtually countless number of devices and channels - not an easy feat by any stretch of the imagination but necessary for an SME looking to expand and thrive. 

As the market continues to expand and new technologies develop, the future certainly belongs to SMEs who continue riding the crest of the digital payments wave, upgrading existing and providing new options in order to create a seamless experience for their customers.

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For a better insight into the German SME market, we have talked with Anja Traum, Member of the Board CPG Sales GmbH. 

Can you share with us the main payments insights from the German market?
Even though Germany was a “cash country” for a long time, the payment culture is changing rapidly. With the card payments overtaking cash last year and with the e-commerce market predicted to increase by 9% this year, the near future seems digital. This change is driven by the growing awareness of consumers about the convenience of the non-cash payment methods.

Currently, 52% of them prefer cashless payments and in the case of higher amounts of money transfer, this number rises to 76%. The numbers are slightly different when it comes to mobile payments.

But although only 10% of Smart Consumers (the technology-and-smartphone-savvy users) regularly use smartphone-based payments at the POS, there is still a lot of potential for this in Germany and we are very determined to take part in changing this. 

What about the SME sector? Are they different in the sense that they are going faster to the cashless society or do they still rely on cash?
Small and medium businesses are quickly rising to this digital occasion. They have also recognized the customers’ needs and thus the potential of digital payment methods. Now, 37% of them accept contactless payments and 53% believe that the availability of cashless payment methods has a positive impact on sales.

What are the main concerns of SMEs in Germany regarding cashless payments?
Many SMEs are not sufficiently informed about the possibilities of contactless payments. Only one-third of the companies surveyed state that they accept contactless payments. Many of them are unaware that their card readers have already equipped with Near Field Communication (NFC) technology, which enables contactless payments.

What are the main things SMEs want from their payment provider?
From our experience, SMEs mainly want to have equipment that is easy to use both by them and by consumers. They also want a payment provider that is easy to get in touch with and to have constantly available help or service from them. Finally, but not least important SMEs are very price-wary so they want good pricing models.

Why do you think that every SME should go for non-cash solutions?
The study we have done with ECC Köln “Better cashless than less cash - the potential of digital payment methods for SMEs” shows the living examples of how these new methods truly benefit SMEs. By offering cashless payment methods, all of the surveyed SMEs assessed that it had an extremely positive influence on sales (53%), and share of new customers (51%).

In addition, 43% of the retailers, restaurateurs, and hoteliers surveyed reported an increase in bill size due to cashless payments. Cashless payment methods save time and money in the back office.

The time required to process cash is 45% higher than for cashless payments. This was confirmed by 52% of SMEs saying said that contactless payment enables faster checkout. Finally, customers tend to pay more if they pay with non-cash methods.

SMEs that are considering expanding their payment services should concentrate on contactless payment by card as a first step.