New Report Analyzes Benefits of Digital Transformation for SMBs

Visa and a consortium of key industry organizations recently produced a report that provides an in-depth look at the opportunities and challenges small and midsize business (SMBs) face in an increasingly digital world. Digital Transformation of SMBs: The Future of Commerce, offers a snapshot into how SMBs can generate online sales and move to more technology-focused processes. Developed with leading SMB advocates, the report also offers actionable tips for technology and digital upgrades that business owners can easily implement to grow their businesses.

In this interview with Total Retail, Nicole Carroll, senior vice president, global payment experience and solutions, Visa, highlights some of the key findings from the report, as well as the implications for SMB retailers.

Nicole Carroll, Senior Vice President, Global Payment Experience and Solutions, Visa

Total Retail: What are a few of the key findings to emerge from Visa's new report, Digital Transformation of SMBs: The Future of Commerce?
Nicole Carroll: There are a lot of interesting findings in the Digital Transformation of SMBs report. We, alongside a consortium of 20 other organizations, set out to really understand the current state of the small business and how their customers — including potential customers — view them. As we dove in, we found some gaps between what small businesses are doing and what consumers want. For example, as the world becomes increasingly digital, consumers today are heavily reliant on the ease and convenience technology has granted them. Today, more than half of consumers (51 percent) wish they could shop exclusively online. However, only 46 percent of SMBs surveyed have an online presence. This creates a disconnect for SMBs trying to compete and attract customers in this digital revolution.

TR: What are some of the misconceptions that exist, particularly among SMBs, in regards to the cost of processing digital transactions?
NC: Perhaps the most common misconception stems around the cost of accepting cash. Some small businesses think accepting cash is free, as there's no line item at the end of the month for cash acceptance. Spoiler alert — there's a cost to cash! Moving, storing and securing cash, checks and money orders consume valuable employee time and are subject to fees and losses. In fact, based on survey responses, Visa found that a SMB’s average cost of processing digital payments is 57 percent less than that of nondigital payments. These savings can make a substantial difference to these businesses’ bottom lines.

TR: What are some tips for SMBs to make them better equipped to accept and process digital transactions?
NC: The good news is it’s not too late. We recommend that small businesses look to expand their accepted payments to include digital transactions — both online and in-store. The first step for SMBs is to choose a payment provider. A payment provider can enable digital transactions in-store, online or on mobile devices, and deposit the funds automatically into your merchant account. With so many options out there, it's important to consider a few key factors when selecting a payment provider, including PCI compliance, fraud prevention technology (e.g., contact-less EMV), and point-of-sale options such as mobile.

TR: How have changing consumer behaviors impacted the urgency for retailers to provide a more seamless online shopping experience?
NC: If you think about your own shopping patterns and how they've changed, it’s likely you’ve made at least one online or digital purchase in the last week. Consumers are increasingly relying on digital channels and payment methods. Over 80 percent of consumers surveyed mentioned digital-related benefits such as loyalty programs, birthday emails with special discounts, and fast responses back to inquiries as motivating factors when deciding where to shop. Furthermore, 78 percent of consumers rank a digital payment method as their No. 1 preferred payment option. These preferences are hard to ignore. It's important for SMBs to address these consumer expectations.

TR: How does the presence of a loyalty program, or lack thereof, impact consumer purchase decisions?
NC: Loyalty programs are a significant consideration for consumers. Seventy-eight percent of the consumers surveyed say they're more likely to choose a business that offers a loyalty program over one that does not. When we asked what kind of loyalty program they prefer, 90 percent of consumers said a digitally based loyalty program. However, only one in five of the surveyed SMBs offer loyalty programs. Yet, of the SMBs that do, close to 80 percent said it has a positive impact on their average ticket size, repeat customers and revenue. These findings highlight a substantial gap between consumer expectations and current SMB practices.