The Impact of COVID on the SMB Market: A Deep Dive
2020 was the first year where online sales surpassed in-person sales for small to midsize businesses (SMBs). Despite that, the trend isn't set to continue, and 2021 and 2022 projections show online sales will flatten out to slightly equal in-person sales.
As far as face-to-face vs. online sales, the kind of industry where a small business works matters when it comes to how their customers like to operate. For instance, medical care and restaurants saw face-to-face sales percentages increase, while organizations in personal services and retail acquired somewhat more income from online as opposed to in-person interactions.
The good news is practically all businesses detailed finding one "silver lining" during the pandemic. Most organizations adjusted to the COVID-19 pandemic by changing the manner in which they do business, speeding up advanced change and adoption of payment innovation. COVID had a huge impact and acted as a catalyst for contactless and mobile payments across the U.S. Adaptable organizations saw flexible payments as a vital aspect for expanding and keeping customer loyalty. Those able to be agile and adapt would come out on top.
While credit/debit cards are the main form of payment used by small businesses, the utilization of frictionless payment choices have expanded since last year's FIS SMB PACE study. Clever small businesses utilized payments deliberately to build their income and benefit. Small business leaders that utilize payments to make cunning advantages will keep investing into and offer contactless payments and other innovative payment advances.
As of 2021, 66 percent of U.S. small businesses use mobile payments, with an additional 22 percent of them considering implementing them. Fifty-eight percent of small businesses use contactless payments, with another 28 percent considering implementing, and 46 percent use e-commerce website builders, with an additional 31 percent planning to use one in the future.
In the future, we see the increase in frictionless payments as turning out to be more imperative to businesses development, particularly for organizations that take into account a more youthful segment. Small businesses with vision will require help addressing contactless payment technology to assist them with fulfilling current and future need.
While small businesses sold somewhat more online in 2020, U.S. small business owners expect moving marginally to more face-to-face sales in 2021 and 2022. The size of the small business matters. Exploration shows small businesses with sales between $5 million to $10 million are essentially bound to have a higher income share online vs. face-to-face sales in 2022 than are smaller entities.
Within the last year, virtually all small businesses have taken on new advancements or updated existing technology because of the pandemic. Online marketing and videoconferencing are the two most popular areas of investment, with over half of U.S. small businesses investing in those communication-centric technologies.
As far as payments patterns, Worldpay identified that the top payment types accepted by small businesses in 2021 are credit cards, cash, mobile, and digital wallet, while credit and debit cards remain the most favored payment method for customers.
More than two out of three businesses in the U.S. concur that accepting new payment types has been critical to their endurance. In any case, selling through different channels and social media have been nearly as important to them.
Credit and debit cards are the most accepted type of payment at 84 percent. Cash actually comes next at 80 percent, with mobile or digital wallets making strides with 66 percent of small businesses tolerating and 22 percent of small businesses considering this payment type.
Organizations getting ready to better serve small businesses should offer to assist them with making a move and take advantage of these payment opportunities. Utilizing the fitting payment technologies is critical to sustainable success for a small business.
Gary Schofield is senior vice president and general manager, SMB merchant solutions at FIS, a global leader in financial services technology.
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