A new Visa study has found that digital accounts for 38% of consumer retail purchases, but when it comes to small- and medium-sized businesses (SMBs), only 15% of their sales are conducted via eCommerce. That signals opportunity for smart, nimble merchants that can get ahead of the curve — or potential disaster for retailers that cannot.
Consumers Prefer eCommerce
Visa’s survey found that 51% of consumers want to shop online exclusively, but only 46% of SMBs have a digital presence via online marketplaces or eCommerce websites. The survey also found that “61% of consumers plan to increase their online purchases in the next five years”. That’s not something SMB merchants can afford to ignore – meaning businesses that fail to focus on enhancing their digital payments run the risk of losing consumers.
Digital Payments Mean Lower Costs for SMBs
The Visa study found that 78% of consumers list their top payment option as a digital method, such as a credit card or mobile device. And 65% of SMBs agree that “customers spend more when they use cards versus cash” which translates to more products purchased but also extends to services rendered. For example, in the restaurant industry, larger tips factor into business owners retaining good employees according to Steven Leitman, vice president of Global Payment Experience and Solutions for Visa.
Even with all this evidence, SMBs often resist moving too fast or far away from cash. They are discouraged by the real or perceived costs of installing the latest payments hardware or software, or are slow to change because they fear data breaches involving their customers’ precious information.
However, digital payments come with an additional appeal: lower costs. According to pymnts.com, Visa estimated that the average costs of processing digital payments, including direct expenses and labor costs, are 57% lower than for non-digital payments. Digital costs are relatively straightforward (attributes such as interchange, chargebacks, and cost of POS gear), while the expense of cash can involve a longer list of costs that are not always as clear — for instance, armored car services, leakage, fraud, and robbery.
“We are not just talking payments, but commerce,” Leitman said.
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