Small businesses are putting a premium on predictability.
Across more than 6,000 small and medium-sized enterprises (SMEs) surveyed in 18 countries for Mastercard’s inaugural Dreamonomics report, 68% said they prioritize stability and predictability over fast growth. Fifty-four percent said they actively avoid unnecessary financial risk.
Mark Barnett, Mastercard’s global head of small and medium enterprises, sees the findings as a useful correction to the idea that every entrepreneur is pursuing scale.
“Stability is overtaking speed,” Barnett told PYMNTS in an interview in tandem with the research’s debut.
Barnett said the uncertain economic environment is contributing to that preference, but he was cautious about declaring it a permanent shift. Small business owners have different ambitions, he said, and those ambitions can determine what they expect from their financial providers.
He uses his own experience as an example. Barnett co-owns a winery in southern France. The company has financial targets and isn’t yet as large as its owners want it to be, but they have no ambition to grow without limit.
“I value stability, deep customer relationships over dramatic growth,” Barnett said. “We don’t want to be bigger than a certain size.”
The Dreamonomics findings suggest that stability reaches beyond the balance sheet.
Sixty-one percent of SMEs said they would rather develop deeper customer relationships than reach as many customers as possible.
“A deep customer relationship is a stable customer relationship,” Barnett noted.
The fact that owners of smaller firms prize consistency alters the context in which banks, payments companies and FinTechs compete for small business customers. Owners aren’t simply looking for more ways to spend, borrow or accept payments. They are also trying to make the financial side of the business easier to run.
The technology they already use doesn’t always accomplish that.
SMEs surveyed for Dreamonomics use five digital business tools on average, covering functions such as payments, accounting, payroll and expense management. Eighty-nine percent want more digital tools, but 78% say integration is critical.
Small Business Finance Remains Fragmented
“It’s a very fragmented world, the world of SMEs,” Barnett observed.
That fragmentation runs through both the companies themselves and the technology serving them.
Barnett said SMEs tend to rely on two primary destinations for managing their businesses: their bank and the business software they use. The latter is becoming more specialized, with platforms designed around individual industries and occupations rather than generic accounting or back-office functions.
“The one-stop shop is what our research says that the businesses want,” he said.
For financial providers, that can mean putting payments and other financial capabilities inside banking apps or the software an SME already uses.
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Barnett said providers including Brex, Ramp, Tide, Monzo and Revolut are building broader small business offerings that bring more financial functions together. Vertical software providers offer another route because they can occupy a central position in the daily operation of a particular kind of business.
The same need for specificity applies to banking products.
Barnett said only about a third of Mastercard issuers globally offer an SME product. A dedicated business product also needs to give an owner a reason to separate it from the consumer products he or she already uses.
“If you’re offering exactly the same as your consumer product to a business, then why bother?” Barnett said.
What constitutes a useful business product can change substantially by customer. Barnett pointed to financial products designed for creators as one example and agricultural cards structured around harvest cycles and purchases of seed and fertilizer as another.
Geography introduces another layer of variation.
Barnett rejected the idea that even a region can necessarily be treated as a single payments market. Brazil and Mexico provide a particularly stark example.
“Even in Latin America, if you go to Brazil, then digital payments are very highly penetrated,” he said. “But if you go to Mexico, it’s largely a cash economy.”
Dreamonomics found other regional differences. In North America, 51% of SMEs use business cards exclusively, compared with 46% globally. In Eastern Europe, the Middle East and Africa, SMEs report greater use of emerging payment methods, including cryptocurrency and stablecoins, while 43% use AI or machine learning for automation.
Europe presents another model, with international and domestic card networks operating alongside account-to-account payment systems.
Barnett said that variety can itself be valuable because businesses and consumers have multiple ways to pay and the payment system has redundancy.
The Dreamonomics findings therefore give financial providers two views of the SME market at once. Across countries, owners express common demands for stability, closer customer relationships and less fragmented technology. But the products and payment infrastructure that can deliver those things remain closely tied to the particular business and the market where it operates.
In other news, the company announced the Mastercard Collection for Business, a new, globally connected suite of growth, lifestyle and security benefits designed around the evolving needs of modern SMEs.
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