As digital commerce continues to reshape the payments landscape, small businesses are expanding the payment methods they accept to meet evolving customer expectations. Younger business owners, in particular, are leading the shift by embracing mobile wallets, modern payment technologies, and new payment service providers.
Mercator Advisory Group’s research highlights how business demographics influence payment acceptance strategies. From digital wallets to merchant services, today’s small businesses are prioritizing flexibility, speed, and value as they adapt to an increasingly digital payments ecosystem.
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Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Payment Acceptance as Digital Channels Expand
- When it comes to small business and payments the age of the company owner often dictates the types of payments accepted
- In fact, 18-24 year old business owners are more likely to accept a broader range of payment methods than their older counterparts
- They are also more likely to accept mobile wallets.
- Further, they are more likely to have switched payment providers in the last 12 months
- These facts are true for younger companies and, to a lesser degree
About this report
Mercator Advisory Group’s most recent Insight Summary Report, Payment Acceptance as Digital Channels Expand, based on the company’s annual Small Business Payments and Banking Survey conducted in 2018, reveals that 46% of U.S. small businesses that accept payment cards consider acquiring or merchant banks as their primary payment processing provider compared to 42% who consider any other third-party supplier (excluding Square or PayPal) to be a primary provider. Acquiring banks collectively are a clear leader compared to the next most common types of primary provider—a point-of-sale terminal provider (considered primary by 16% of respondents) and card processor such as First Data or Vantiv, now WorldPay (considered primary by 12%). But when the responses are aggregated, more card-accepting small businesses surveyed consider any type of third-party card processing provider (54%) to be primary than consider an acquiring/merchant bank to be their primary payment processing provider (42%), and more say so than last year.
The survey findings show that 1 in 5 small businesses that accept payment cards switched primary card processing providers within the previous two years. Lower cost was the primary reason for the switch, but better reporting, ease and speed of setup, and better service are the next most common reasons for those who switched providers.
Many third-party providers offer smaller merchants ancillary services they need aside from core processing services and many businesses are migrating to third-party providers for online and mobile services, often designed for their business verticals.
Payment Acceptance as Digital Channels Expand is the first of three reports summarizing the results of the 2018 Small Business Payments and Banking Survey, the third annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,047 U.S. small businesses (between $500,000 and $10 million annual sales) regarding their use of payments and banking services.
The survey contained questions on current business sentiment, payment acceptance services, business-to-business (B2B) payments, and banking depository and loan services. Forthcoming companion reports summarize the survey’s findings on business-to-business payments and business banking services.
