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When To Consider Digital Payments As A Small Business

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Parts of this text had been drafted utilizing an in-house pure language technology platform. The article was reviewed, fact-checked and edited by our editorial workers.

Key takeaways

  • Digital funds are a necessity for small companies trying to keep aggressive in at this time’s market
  • Digital funds provide advantages similar to improved money movement, elevated gross sales and improved buyer expertise
  • When selecting a digital fee service supplier, companies ought to contemplate components similar to value, multi-state and world attain and information safety

As a small enterprise proprietor, you’re at all times in search of methods to streamline your operations, enhance money movement and broaden your buyer base. One technique you may contemplate is adopting digital funds to offer your prospects quite a lot of fee choices.

In line with Visa’s 2022 digital fee examine, 41 % of shoppers have deserted their buying in shops as a result of the shop didn’t take a digital fee. Equally, McKinsey & Firm’s 2023 Digital Funds Client Survey discovered that 9 out of 10 prospects have used some type of digital fee previously 12 months. Digital funds have gotten a necessity for small companies wanting to remain aggressive.

However deciding to go digital together with your funds means you’ll have to understand how your prospects want to pay, your corporation’s wants and the benefits and drawbacks of providing digital funds.

What’s a digital fee?

A digital fee is any fee technique permitting you to buy an merchandise with no bodily card or money. Digital funds can embody on-line buying, in-app funds, digital or cell wallets and digital foreign money.

You may even contemplate contactless funds. Contactless funds can help you faucet your card, telephone or perhaps a specialised ring or bracelet, just like the Quontic Financial institution ring or Apple Watch, to pay.

Digital funds statistics

  • 73% of small companies say that digital funds are an important a part of their development (Visa 2022 Again to Enterprise World Examine)
  • 41% of shoppers mentioned they plan to make use of solely digital funds inside the subsequent two years or are already cashless. (Visa)
  • 59% of small companies mentioned they plan to make use of solely digital funds inside the subsequent two years or are already cashless. (Visa)
  • 73% of shoppers pay on-line, whereas one other 58% make in-app funds. (McKinsey & Firm Digital Funds Client Survey)
  • 31% of consumers mentioned they’d depend on one cell pockets in 2023 versus 21% in 2021. (McKinsey & Firm)
  • 29% of consumers have used purchase now, pay later within the final 12 months. (McKinsey & Firm)
  • 76% of adults globally now have a checking account as of 2022, versus 68% in 2017. (The World Financial institution)
  • Over 40% of adults in low- to mid-range economies used digital funds for the primary time throughout the pandemic. (The World Financial institution)

Why contemplate digital funds as a small enterprise?

The most important motive to contemplate digital funds is that the majority prospects use them every day. If in case you have the flexibility to take digital funds or provide on-line buying, you appeal to prospects who solely use this technique or a mixture of digital and bodily funds.

In line with McKinsey & Firm, 73 % of consumers use on-line buying, 58 % use in-app buying and 25 % use digital funds in-store. In-store digital funds have grown from 16 % in 2022. And 44 % of consumers use peer-to-peer funds, like Zelle or Venmo.

As you undertake these well-liked fee strategies, you’ll keep forward of different small companies that could be sluggish to undertake new traits. This makes your corporation resilient and helps you pivot to cater to your prospects.

Bankrate perception

In line with Visa’s Digital Transformation of SMBs, small companies took 542 hours to course of $100,000 in non-digital funds versus 189 hours in digital funds. These are tangible, cost-saving outcomes for any small enterprise.

What are the professionals and cons of digital funds?

Digital funds provide an a variety of benefits over bodily transactions, like money or checks. You’ll be able to automate gross sales with on-line and in-app buying and monitor transactions extra effectively than bodily cash.

However digital funds additionally current challenges, similar to compliance points and the necessity for stable fraud safety insurance policies. Let’s have a look at the principle advantages and challenges of utilizing digital funds in your small enterprise.


  • Helps with money and enterprise movement. While you undertake digital funds, prospects pays rapidly with the faucet of a card, pay forward utilizing an app or purchase totally on-line. That effectivity could translate into potential financial savings in staffing.
  • Helps you keep aggressive. For those who provide digital funds, you’ll keep forward of different small companies that solely settle for conventional types of fee.
  • Can result in increased transaction quantities and extra gross sales. As individuals develop extra comfy with digital funds, they’re more and more keen to make giant funds digitally. By adopting digital funds, you might be able to appeal to high-value prospects preferring the comfort and safety of cashless transactions.
  • Improves buyer expertise. Clients admire the comfort of cashless or cardless transactions, which might enhance buyer satisfaction and gross sales.
  • Reduces the price of money transactions. Non-digital fee strategies, like money and paper checks, can take days or even weeks to course of. However digital funds don’t require the identical bodily processing, serving to you deposit transactions seamlessly.


  • Cost supplier charges. Whereas digital funds can streamline operations and scale back prices, companies ought to concentrate on potential hidden prices. These could embody assertion charges, Cost Card Business (PCI) compliance charges, chargeback charges, termination charges, batch processing charges and extra service charges for options like digital terminals, recurring billing or fraud safety.
  • Could encounter technical points. While you undertake digital types of fee, you must plan for technical issues which may maintain your prospects from utilizing them. For instance, your web site may go down, or contactless funds may not at all times work.
  • Requires tight safety practices. Companies want sturdy safety measures to safeguard buyer information and shield the enterprise’s popularity. This contains steady exercise monitoring, a well-defined incident response plan, firewall and community safety options and common safety updates and patches.
  • Adopting digital funds might not be price it. Relying in your buyer base, you may not see a direct correlation between digital funds and profitability in your corporation.

Bankrate perception

The FDIC discovered that roughly 4.5 %  — 5.9 million — of U.S. households had been unbanked in 2021, which means nobody within the family had a checking or financial savings account.

Moreover, using nonbank on-line companies, similar to PayPal or Venmo, by unbanked households was solely 18 % in comparison with nearly 48 % for banked households. When deciding whether or not to undertake digital funds or go cashless, contemplate that it might danger isolating unbanked prospects.

How to decide on a digital fee service supplier

Selecting a digital fee service supplier is a important choice that may influence your corporation operations. It requires cautious consideration of quite a lot of components, from prices and world protection to fee card trade (PCI) compliance and platform integration. The digital fee service can also be known as a fee gateway.

When selecting a fee gateway, it’s necessary to contemplate:

  • Whole value, together with any hidden charges. Weigh the price of the service supplier and per-transaction charges in opposition to any cost-savings or elevated gross sales you might need.
  • Nationwide attain. The supplier ought to have the ability to course of funds throughout completely different states in the event you promote nationally.
  • PCI compliance. It’s additionally important to make sure that the gateway complies with PCI DSS stage 1 necessities for information safety. These necessities set requirements to assist companies course of a considerable amount of card transactions securely.
  • Efficiency. The gateway ought to carry out nicely on completely different working techniques and platforms and provide round the clock buyer help in the event you run into technical issues.
  • Straightforward integration into your present enterprise. The fee gateway ought to be appropriate together with your present enterprise techniques and platforms. If the combination course of is advanced or requires important sources, you’ll must weigh the professionals and cons of the service.

Bankrate perception

You’ll be able to consider the profitability of utilizing digital funds by trying on the prices of the service. Then, examine it with how the digital fee technique will both improve gross sales or scale back prices.

Backside line

In at this time’s market, small companies want to contemplate digital funds to remain aggressive and appeal to prospects. Regardless of some drawbacks, the advantages of adopting digital fee choices, similar to improved money movement and buyer expertise, could outweigh the challenges.

When selecting a digital fee service supplier, companies ought to contemplate components similar to value, world attain and safety measures. Finally, when small companies embrace digital funds, it might probably improve gross sales and effectivity.

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