Mastercard study reveals COVID-19 a catalyst for digital B2B payments adoption
By Pavithra R
A new small business study conducted by Mastercard across North America revealed that over one third (38%) of small business owners in the U.S. and Canada are experiencing cash flow issues associated with late payments and slow processing times for cash and checks.
As COVID-19 continues to stress SMBs financially and operationally, SMB owners across North America are turning to digital services to bolster cash flow and modernize their payments ecosystems. While the challenges of physical payments existed before the pandemic it has magnified by widespread lockdowns and social distancing measures. Nearly half (48%) of small business owners say their business is one missed payment away from going under.
Key findings from the study show that:
- Shift to digital business payments: With the majority of small businesses citing security and speed and transparency as top priorities, 82% say they’ve changed how their business sends and receives payments with 51% transitioning their clients to digital methods. Online card payments experience the most tremendous increase at 60%, while the use of checks (24%) and cash (34%) and decreased more than any other payment types during the pandemic.
- Digital payoff: 67% of the small business owners agrees that the pandemic has resulted in their upgrade to digital/e-pay solutions, which 81% say has improved customer satisfaction levels.
- Digital is the new normal: The study received positive sentiments from small businesses in sticking with digital business payments, even after the pandemic. 70% of those surveyed are willing to invest in the technology to advance their payment systems and 73% say digital payments are the new normal for their business.
“The pandemic has made it painfully clear how labor-intensive current business payment processes are, especially for small and medium-sized businesses. With cash flow more critical than ever, we’re seeing an accelerated shift to digital B2B payments as businesses of all sizes look to safeguard their operations today and prepare for the future,” said Ron Shultz, executive vice president, New Payments Business, North America at Mastercard.
While the new Mastercard study focused on the changing behaviors of small business owners, the trend towards digital business payments is visible across all business types, including large organizations. The survey data shows that a majority (77%) of small business have adopted a digital service such as electronic invoicing (26%) and payment collection (50%) to modernize business payments.
“IDC research shows that consumers have reduced their use of physical currency to half of what it was before the pandemic, as they increasingly look towards contactless forms of commerce, whether e-commerce, local delivery, and/or “buy online and pickup in-store” (BOPIS). At the same time, the business world is jumping into the Next Normal by embracing digital payments and e-commerce in their existing B2B workflows, as well as expanding into direct to consumer (D2C) channels. In IDC’s view, these aren’t temporary changes, this is the evolution of business going forward,” said Nigel Wallis, IDC research vice president.
Recently, Ally Lending announced entry to retail financing with Mastercard Vyze partnership.
Established since 1966, Mastercard is a global technology company in the payments industry. The firm is committed to building a more inclusive digital economy that works for everyone. The firm is also making Environmental, Social, and Governance (ESG) central to its business model.
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