Payment Methods

How SMBs Can Get Smart About Payments

In today's payments ecosystem, it isn't just about moving fast, it's about moving and thinking smart.

But how can companies get smarter about payments? And more importantly, why are they? Those are the core questions driving the recent research paper from Sage on the steps SMB owners can take to optimize cash flow in order to keep pace with changing customer payment preferences.

'Cash Flow Confident' 

As any SMB knows, Sage points out: "Cash flow is the lifeblood of any business."

That means having better control over cash flow, and visibility to that flow, regardless of which direction it's moving. Which is why one major concept in payments is particularly relevant when managing cash flow: real-time visibility.

What's also important for SMBs is that they match their customers' payment preferences, particularly since consumers are flooded with a multitude of options for where to spend their money, and have the ability to spend that cash anytime, anywhere — across both physical and digital channels.

Which is why the concept of mobile apps, the mobile web and mobile payments comes into the mix.

In a flat and very competitive world, where consumers can buy virtually any product or service at any time and from anywhere, the ability to accept mobile payments is quickly morphing from an advantage to a necessity.

“You’ve got to meet your customer in the channel where he or she wants to be, so the ability to accept payments anywhere, anytime is very important,” said Paul Bridgewater, CEO of Sage Payment Solutions.

Simplifying The Mobile Payments Equation

For SMBs not on board with the concept of mobile payments, they're already late to the party. And being late to that party comes with an opportunity cost.

“With the emergence of Apple Pay and other mobile payments, customers are becoming even more addicted to convenience," Linda Coven, a senior payments analyst with consulting firm Aite Group, wrote in Sage's report. “Convenient payments are becoming almost as important to consumers as the products and services a business offers, so even if your product or service is superior to others, you may lose out if you don’t offer the most convenient, frictionless way to do business.”

Streamlining Integrated Payments

It's easy for SMBs to think: "there aren't enough hours in the day," Sage points out in its report. But solving for a better payments solution often results in a faster SMB experience.

"Integration involves creating a seamless payments experience for the small business owner,” Bridgewater said. “When transactions are automatically posted into an accounting or enterprise resource planning (ERP) software, entrepreneurs and employees are freed up for other valuable tasks.”

According to Sage, integrated payment solutions enables SMBs to:

  • Create economies of scale: Provides a single source that manages cash flow and delivers the data for managing business solutions.
  • Built confidence in data integrity: Manual data can lead to errors; posting transactions automatically into an accounting or ERP system, it can increase the data accuracy.
  • Increase simplicity in business functionality: According to Coven: "An integrated payments system translates into electronic reconciliation that becomes simpler and easier for a small business, saving time in terms of payments and invoicing."
  • Provide transaction transparency: integrated payment solutions enables SMBs to know who a product or service was sold to — and when. This can increase knowledge of customer loyalty.
  • Delivery real-time intelligence: Real-time data lets SMBs know when payments have been credited and show what payments are outstanding.

Where Security Fits In

As SMBs rush into adopting new payment methods, there's one key thing to keep in mind: “Security shouldn’t be an afterthought,” says Chris Wuhrer, Sage's VP of product development.

In order for SMBs to keep up with this, Sage points to the widely adopted PCI Security Standard for credit card processing. Sage also recommends credit-card accepting SMBs consider the following security concepts: encryption, tokenization and hardware level encryption.

Keeping Up With Customers

“For a payment solution to build customer loyalty, it has to be easy; it has to be compelling, it has to work the first time and it has to provide real-time fulfillment,” Bridgewater said.

Like the number of players entering the payments market, the number of payments solutions are increasing as rapidly.

As such, customers expect more out of their payment experience, particularly because there are more options that enable a better, faster experience.

“Customers expect a click-to-pay experience wherever they shop or do business, so small businesses that innovate in payments have a great chance to capture consumers in that buying mode,” said Patty Fisher, VP of product marketing at Sage.

“You don’t want anything to come between the decision to buy and executing the sale,” Fisher adds.

This means staying ahead of the curve and moving beyond the outdated, traditional payment methods that won't attract new customers.

And the market analysts agree.

“Businesses that fail to offer the latest payment types like Apple Pay stand to lose customers, who want to pay with the latest technologies,” reports Patty Hines, a senior analyst with financial consulting firm Celent, pointing toward the importance of the adoption of new payment types as conveying that a business is innovative.

And being innovative in today's fast-paced, tech-driven payments world is all about getting and staying smart about payment options available in the market.

Especially with SMBs who are racing to keep up with the rest of the commerce ecosystem.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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