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5 Potential Opportunities for Financial Institutions in Small Business Debit:

By PaymentsJournal
April 29, 2019
in Credit, Debit, Merchant, Truth In Data
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Small businesses are increasingly turning to debit products as a practical tool for managing cash flow, controlling expenses, and separating personal and business finances. Research from Mercator Advisory Group highlights how debit solutions can offer SMBs greater transaction visibility, lower processing costs, and improved spending oversight compared to traditional paper checks. As business-to-business payments continue shifting toward digital channels, debit products are becoming an important financial management tool for small businesses seeking better operational control without relying heavily on credit.

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Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Supplier Enablement: Get More Flexible and Technical

  1. SMBs can use debit where transaction clarity is needed, but credit is not
  2. Improved tracking and lower cost make debit a better small busiess tool than checks
  3. Debit improves control and insight into cash flow – the primary reason small businesses fail
  4. Reduce comingling of personal payment funds with business funds
  5. Employee fraud will not affect personal credit of business owner

About this report

The revolution in electronic payments has been underway for quite some time but has been much more visible in consumer payments than in the more complicated use cases associated with business-to-business (B2B) payments. Recent advancements include faster speed of payment, increasing options for cross-border solutions, and greater choices for access to such solutions.

In a new research report, Supplier Enablement: Get More Flexible and Technical, Mercator Advisory Group reviews how banks enabling suppliers to accept card payments and other forms of e-payment need to change their thinking and technology and adapt to the suppliers’ point of view. Not doing so will result in missing a large potential opportunity to capture a portion of the trillions of shifting payments volumes moving away from paper.

“The annual growth in B2B noncash payments globally is estimated at about 6.5%, and Mercator Advisory Group believes that the e-payments portion of that growth is about two percentage points higher due to the decline of checks. This varies by region, in particular North America, where the U.S. has been lagging in the elimination of paper process and payments versus some other areas of the world”, commented Steve Murphy, Director of Mercator Advisory Group’s Commercial and Enterprise Payments Advisory Service, author of the report. “ When it comes to the cards business, the enablement challenges have been steeper, both because of the change involved for suppliers and the friction of perceived acceptance costs. The industry has pursued best practice attempts to gain wider acceptance with modest success and now needs to try something new.”

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Tags: DebitSmall Business

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