Diversifying payment offerings crucial to future of North American in-store SMBs

21 October 2020
(PRESS RELEASE) -- Four fifths (80%) of North American in-store small and medium-sized businesses (SMBs) that have diversified online or enhanced their card-present payment offerings during the COVID-19 pandemic have seen a positive impact, according to research from Paysafe, a leading specialized payments platform. The data released today suggests the SMB space’s future will be dependent on omnichannel payments and technology.
Paysafe’s latest ‘Lost in Transaction’ research, which surveyed in-store retailers as well as dentists, vets, hairdressers, restaurants and other service providers in the U.S. and Canada between 9 and 18 September 2020, revealed that a large majority of businesses (88%) made at least one change to their checkouts during the pandemic. As a result, 39% reported that their volume of business had actually increased during COVID-19. This business uplift was attributed to online sales through either a new or existing offering by 64% of SMBs.
COVID-19 has served as a catalyst for SMBs diversifying online, with almost a quarter (23%) launching an online, card-not-present (CNP) checkout for the first time during the pandemic, adding to the 50% of businesses that already have one. Of the minority without an online presence, 17% plan to add an online checkout in the near future, with only 10% having no such plans.
In terms of limiting physical interactions, SMBs have also focused on enhancing their card-present checkouts, with 44% adding the acceptance of contactless payment on delivery and 44% adding card payment on delivery. Curbside ordering and pickup has also been adopted by 35% of SMBs.
Other innovations included launching an app to enable payments without staff contact (28%) and launching subscription services (18%). Overall, over a third of SMBs (35%) have integrated a completely new payment method due to COVID-19.
Against the backdrop of payment innovation and contagion concerns, acceptance of cash has declined significantly, with 21% of SMBs still not accepting it as an in-store payment method. However, two thirds (64%) of currently cash-free businesses plan to reaccept it in future.
Despite considerable diversification in the North American in-store SMB payments space, many businesses are still facing significant recovery challenges. As a result of the pandemic, 44% of SMBs said their business volumes had decreased, and 93% of these reported that volumes were yet to rebound to pre-COVID-19 levels.
Nonetheless, overall North American SMBs retained a positive outlook, with 76% of businesses stating that they were optimistic about the future of in-store retail and service businesses. However, for the foreseeable future merchants are prioritizing online transactions. Over half (58%) reported that COVID-19 has forced them to refocus their businesses towards online sales and 40% stated they are considering closing their store entirely and becoming online-only businesses.
Afshin Yazdian, CEO of U.S. Acquiring at Paysafe, said: “COVID-19 has had a huge impact on how North American in-store retail and service SMBs view payments technology, and as a result we’re seeing checkouts skyrocket as a business priority. With the rapid growth in online sales methods, as well as the expansion of in-store payment options, the need for diverse, secure, and frictionless payment solutions is stronger than ever.”
He added: “Our research shows that having an online checkout, as well as diverse payments infrastructure, is crucial to allowing in-store SMBs to thrive amidst the pandemic and actually grow in this unprecedented environment. Using technology to maximize opportunities for revenue has never been more pressing for these businesses as they look to navigate a challenging Q4.”