Payment Methods

PayPal, Small Businesses And The Ongoing Fight Against Friction

At the end of the day, small businesses want to do the thing they went into business to do. Shoe stores want to sell shoes, accountants want to file taxes, contractors want to rearrange kitchens and restaurants want to serve food.

The don’t want to be in the security business, they don’t want to become payment experts or technologists – or really anything other than their original entrepreneurial quest.

“Merchants want to make it drop-dead simple for the customer to find what they want in their store and to buy it from them,” PayPal COO Bill Ready noted in an interview with PYMNTS earlier this year.

Which is why, he noted, the most common modus operandi for PayPal merchants is to have several shingles set out in three, four or five channels. They have physical stores, they have online sites, they sell on various platforms. The goal, Ready said, is pretty simple – and to merchants, it is pretty unremarkable. They want to sell goods and services, which means they need to be where the people who want to buy those goods and services are.

“Those merchants don’t view it as remarkable, nor do they even call it ‘omnichannel’ – they just say, ‘Of course I am selling in four or five places – that’s where my customers are,” Ready said.

But therein lies the challenge, particularly for small businesses. They want and need to be represented across channels, and to be able to take payments smoothly and seamlessly, which means merchants can’t just decide to not “do” payments if they are really serious about doing business in the digital age. PayPal’s push – particularly in the last year or so – has been to fill that gap so merchants can do everything they need to do with payments for their customers, without getting lost in the weeds with all that entails.

“[PayPal’s] interest is to democratize sophisticated eCommerce capabilities so they aren’t in the realm of a few massively scaled, super sophisticated commerce providers,” Ready explained.

In recent months, that has included efforts like the rollout of PayPal Checkout with Smart Payment Buttons, designed to streamline how merchants present payment options at checkout. Smart Payment Buttons dynamically present the payment methods that individual consumers will find most relevant, without requiring a complex merchant integration or having to cram the checkout page full of every conceivable payment option. Smart Payment Buttons support each of those options as part of their existing payments workflow.

“When you look at the data, merchants see a boost in conversions when five, maybe six, options are presented to them at checkout,” Ready noted, adding that making a customer wade through 20 payment options – when only five might be relevant for them – can drag down sales. “Customers don’t want to hunt around for the method they want. Smart Payment Buttons keeps that from happening.”

The fight, Ready noted, is always the same when it comes to entrepreneurs running small businesses: friction. Merchants want solutions that can fight it on multiple fronts on both the front and backend.

And as payments is the cause of – and the solution for – so many frictive points in a transaction, it’s a solid place to start the fight. The SMBs, according to Ready, will still have plenty to do – it’s up to them to find the right value proposition, the right logistics offering and the right goods and services set to reach consumers.

But paying out and getting paid shouldn’t be a stumbling block and eliminator out of the gate, Ready noted – and the future of serving small businesses will be driven by making sure SMBs can keep moving forward, without being held in place by payments-related frictions.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.