08/30/2022

Small Business Top Trends And Digital Payments

Insights

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While digital payment options are preferred by consumers, nearly one in five small businesses doesn’t offer contactless payment options like PayPal. Small businesses need to find a digital payment option that suits their customers’ needs.

Both consumers and businesses are increasingly using digital payment platforms like Venmo or Apple Pay.

Due to COVID-19, online payment apps, cashless transactions and contactless payments have seen an increase in popularity.       

In an effort to stop the spread of the virus through monetary transactions, the Chinese government collected, quarantined, and sterilized physical bills.

The World Health Organization (WHO), also recommended that people use contactless payment methods in order to prevent the spread of germs.

These suggestions indicate that online payment apps as well as cashless payment methods have grown in popularity.

Our research revealed that small businesses are increasingly using digital payment platforms as an alternative to traditional payment methods. However, they are still looking for the best ways to integrate digital payment platforms into their businesses.

Also, we found that 19% of small businesses refuse to accept digital payments. This report will explain how to adopt digital payment methods in order to satisfy the needs of consumers and maintain growth during this global pandemic.

Our findings

  • 81% of small businesses are open to digital payments, reflecting consumer preferences. Nearly one in five businesses (19%) refuse to accept digital payments. This could be due to their perceived difficulty in integrating digital payments into their business.
  • PayPal is the most used app across all age groups and sizes.
  • Square (32%), the second most popular digital payment platform, is used by all sizes of companies and all ages of small business owners. It has a simple interface that is easy to use and appeals to users.
  • Venmo (22%) is a popular choice for small-business managers. Its unique interface, inspired by social media, is what makes it appealing to younger generations.
  • A mobile app is 18% more likely for small businesses to accept Apple Pay and Google Pay. These payment methods can be connected directly to smartphone providers, which encourages adoption.
  • Only 3% of small businesses that were surveyed accepted cryptocurrency. This is due to market volatility that cryptocurrencies can bring.
  1. Small businesses should be more easily accessible to consumers
  2. Customers will appreciate the convenience and ease of use
  3. Simple, clear interfaces are available for customers and businesses
  4. Social media can be leveraged to your advantage
  5. Compatible with smartphones
  6. Increase business efficiency

Contactless Payment Options Make Small Businesses More Accessible to Consumers

Customers can make digital payments easily.

Surprisingly though, nearly one fifth of small businesses (19%) don’t accept digital payments.

Customers are limited in their choices when it comes to shopping if they refuse to accept digital payments. This is particularly true when consumers are reluctant to spread germs via cash or credit cards during the COVID-19 epidemic.

Jennifer Jancosek is principal attorney at Jancosek Law. This estate planning firm in California believes small businesses must meet their customers at the point they are with digital payments.

Jancosek stated that business owners need to think about making the process as simple for the consumer as possible in order to remain competitive. “Those who don’t adapt to the current environment may be left behind when consumers move to businesses that are more responsive.”

Jancosek Law, a small business, offers several cashless payment options to its customers. All customers can pay in this way, regardless of how they want to pay.

Why don’t businesses use digital and cashless payment methods?

It can be difficult for small businesses to change their payment methods. Small businesses may not have the resources to make large technical or operational changes.

Lydia McConnell is the creative director of Le Chic Miami and an accessory retailer. She has experienced this hesitation firsthand. After helping a small business owner who was reluctant to set up digital payment options, McConnell noticed a trend.

McConnell stated that “It seems that small businesses that don’t use electronic payments might have misconceptions about how difficult and technical changes are required to make it work.”

Although integrating new payment technology may not be something that is well-known, there are many resources available to assist small businesses.

Although it may not be difficult for small businesses to accept digital payments, many people aren’t sure where to start.

Small businesses need to first assess their goals and determine the benefits of digital payments before they dive into technical and hardware requirements.

They’ll be better equipped to choose the best platform for them once they have a clear understanding of the pros and cons of each option.

PayPal and Square are easy to use and convenient

Small businesses prefer Square and PayPal to all other digital payment options.

63% of small businesses in America accept PayPal, while 32% accept Square.

Because of their simplicity and familiarity, PayPal and Square are clear favourites for small businesses.

PayPal wins due to age and convenience

PayPal’s market credibility and convenience appeals to customers as well as businesses. PayPal is the preferred digital payment option for all demographics.

Experts attribute this popularity to PayPal’s early days of e-commerce.

PayPal was established in 1998 long before any other platforms. PayPal was used by many early e-commerce platforms. It has remained the same over the years.

It was eBay’s primary payment processor from 2018. Managers and consumers are familiar with the platform.

Robert Livingstone, president and CEO of PerfectCost.com, an online financial services company, stated that “anyone who used eBay to buy or sell” had probably had a PayPal account. They are trusted and so it was only natural that they would be the most popular contactless payment method.

Dan Riggs, the owner of tree care company Valley Tree trimmers uses PayPal to help him run his business. Riggs never thought of other digital payment options because PayPal has always been able to fulfill his needs.

Riggs stated that PayPal would not meet the needs of customers or businesses if it didn’t provide adequate services. We will continue to use PayPal as long as they keep their processing fees below 3% for small businesses such as ours.

“If PayPal was not meeting the needs of our customers or our business, we would look into options like Square and Venmo. “

PayPal’s market presence for so many years gives it credibility that is hard to match by other platforms.

Consumers can use new payment apps fairly easily, but small businesses need to learn how to implement a new system.

This is a win-win situation for PayPal. To avoid having to adapt to a new platform, long-term clients will likely stay with PayPal’s services.

Square Benefits from a Clear and Simple Interface

Square is another popular and reliable digital payment option. PayPal is still the most preferred method of payment across all age groups. It is second only to PayPal in popularity across all generations and sizes of companies.

McConnell used PayPal to start her business, but she switched to Square because it is so easy to use.

McConnell stated that Square… is my primary electronic payment method. I switched from PayPal to Square due to their UI/UX. It was easier to use for sales purposes and it was clearer.

Small businesses like McConnell’s love Square because it is simple to use. It offers a simple interface for both mobile and point-of-sale sales.

Square is a popular payment option for small businesses due to its simplicity and clear UX. The mobile hardware makes it easy to take payments anywhere you are.

PayPal’s reliability and longevity make it the most popular option, but Square’s simplicity makes it an attractive alternative.

Venmo’s innovative, social media-like interface engages customers

Venmo is gaining popularity among consumers. It is used by small business owners as an alternate payment method rather than a primary one.

Presently, only 22% of small businesses accept Venmo payments.

Although Venmo is considered a supplementary payment option by some, Venmo has caught the attention of smaller business owners.

Venmo is a favorite of small business owners aged 18 to 34. 38% have adopted Venmo for their company.

Venmo is a social media-based approach to digital payments. This will likely attract younger business owners who are more active on social media.

Venmo accepts and processes payments. However, the app also allows users to connect with their contacts. This allows them to see their friends’ purchases and what they are buying.       

Venmo offers a global feed which allows users to see transactions that are happening outside of their network. Transactions can be liked and commented on by individuals, giving it a social media experience.

While this information is fun for consumers, where does small business fit in?

Venmo engagements can be viewed by companies as small opportunities to build their brand. Small businesses can also engage their customers through payments via the app.

Venmo Tips for Brand Building

Small businesses can make Venmo’s social media components more effective by:

  • Use a unique, identifiable username to match the business name
  • Make sure to include clear and fun captions in your charges and transactions
  • Comment and like customers’ payments to your business        

Venmo’s customer engagement feature is crucial for businesses that want to make the most of it. Venmo’s app allows businesses to accept payments, but it also engages, retains and expands customers. You can also hire a digital agency if you have trouble engaging customers.

Why small businesses should avoid venmo

Venmo is still relatively new. Venmo is simple and credible, but older small business owners might feel it doesn’t have the value to justify the effort of adopting it.

Venmo may be a good option for small businesses due to its unique payment system. The app does not require any hardware. Digital money is sent between accounts.

This means that users must manually transfer funds from their profile to a bank account. This additional step can make transactions a little more difficult, which could be detrimental to its appeal for business owners.

Companies are using the platform mainly as an alternative to traditional payment methods. Venmo’s social media-inspired cashless payment approach has many benefits.

Apple Pay and Google Pay are appealing to younger generations

Mobile Connectivity Apple Pay is gaining popularity among digitally-focused small businesses.

Companies with a mobile application are more likely to support these payment methods. Mobile apps are 18% more likely for companies to accept Apple Pay and Google Pay.

These payment systems are available for many apps and smartphones. Mobile-oriented small businesses should adopt digital payment options through app developers to increase connectivity and offer a seamless payment solution.

“The majority of local consumers are either Android, or Apple smartphone users, and may forget their wallet or purse, but their phone is always there,” Caterina Bidni (owner and designer of Bidinis Bags), a leather handbag business. “Google Pay or Apple Pay allow consumers to purchase on-the-go with ease”

51% of Americans have cash but not consistently or never. Businesses can reach customers that aren’t dependent on their wallets by using a payment method built into smartphones.

“Our young customers kept asking for them… so we reacted to their needs. “

These platforms, despite the obvious advantage of being compatible with smartphones digital wallets, are still very new. This is why younger managers and owners of small businesses are more inclined to use Apple Pay or Google Pay for their business.

Older business owners are being encouraged to increase their digital payment options by younger generations.

Dawn Kelly, CEO at Nourish spot, a New York-based restaurant that focuses on health, said, “My children informed me that these applications were of the future.” “Our young customers kept asking for them… so we adapted to their requests.”

Because of their interconnectivity with consumers and the demand for Apple Pay and Google Pay, companies are more open to using them. These platforms may not be able to replace traditional options but they can appeal to younger generations.

Cryptocurrency’s Perceived Volatility Causes Some Loss in Cryptocurrency Benefits

Small businesses are reluctant to embrace cryptocurrency despite all the excitement.

Only 3% of small businesses currently accept cryptocurrency.

Although cryptocurrency is being touted as the next big thing for digital payments, it’s not yet adopted by small businesses.

  • Market volatility
  • Insufficient consumer demand

Market Volatility Limits Cryptocurrency Usage

December 2018: Bitcoin dropped to $3,100. It soared to $11,000 in just seven months. This was a good thing for crypto investors. However, extreme drops in value can happen. This is a major turnoff for small businesses that are trying to achieve stability.

Tristan Swanwick, CEO, Swanwick Sleep (blue light protection company), said, “The volatility of valuation puts me off.

Insufficient consumer demand to pay with cryptocurrency

Customers are not interested in cryptocurrency payments.

If customers aren’t asking for it, it doesn’t make sense to offer a new payment option. McConnell says that McConnell is unable to consider cryptocurrency because of this major obstacle.

McConnell stated, “We have not had a customer ask us if we accept crypto.” “I would be open to trying it and adapting if there were a need in my business.”

The lack of interest in cryptocurrency could be due to common misconceptions about its use.

People associate cryptocurrency with illegal drugs and buying of illegal goods. Both consumers and businesses may feel this is a reason to keep cryptocurrency separate.

“We haven’t had any customers ask us if we accept cryptocurrency. If there were a need in my business, I would be open to trying it out and adapting. “

Small businesses often seek simple digital payment solutions that are easy to integrate into their existing operations. This could be possible with the assistance of an app development company.

The niche nature of cryptocurrency may make it difficult for average consumers to understand its value. However, the community is very passionate about it. Small businesses that are interested in cryptocurrency should be aware of market fluctuations and customer misconceptions.

Contactless payments are efficient and credible

Online payment apps and cashless alternatives are gaining popularity among consumers.

PayPal is the most trusted and convenient cashless payment option. It is trusted by its large user base.

Square is another popular digital payment option, and it is largely preferred by those who want a simple, clean UX.

Venmo’s interface integrates elements of social media making it ideal for companies looking to grow their brand. Its popularity among younger generations shows its potential for widespread adoption.

Apple Pay and Google Pay are very popular among consumers, as they can be connected to their smartphones directly. By integrating these payment systems into their existing processes, small businesses can show their commitment to customer demand.

Although many cashless payment options have been well received by small businesses, cryptocurrency remains volatile and has not seen much consumer demand. Once they are certain of their reliability, ease of use, small businesses will not accept cryptocurrency payments.

Small businesses can take advantage of digital payments because they have the ability to choose the best option for them.

About the author

Kobe Digital is a unified team of performance marketing, design, and video production experts. Our mastery of these disciplines is what makes us effective. Our ability to integrate them seamlessly is what makes us unique.