Many small to mid-sized businesses (SMBs) run on a patchwork of digital payment systems. These fragmented solutions can slow operations and add unnecessary hurdles to payment and cash flow management. However, these frustrations do not need to be the norm. A single, integrated system could help Main Street SMBs overcome persistent operational bottlenecks.
The desire for such a solution is strong. In fact, more than half of SMBs are ready to switch to a single, integrated system. However, some remain reluctant due to concerns about cost and security.
These are just some of the findings detailed in “SMBs Push for Integrated B2B Payment Systems to Streamline Operations,” a PYMNTS Intelligence and Priority collaboration. This report examines SMBs’ challenges in managing multiple payment systems and their desire for a single, integrated solution. It draws on insights from a survey of 553 SMBs conducted from Aug. 7 to Aug. 26.
SMBs Struggle With Fragmented B2B Payment Systems
Main Street SMBs use an average of 2.2 systems to manage daily operations, with nearly half needing multiple systems to handle business-to-business (B2B) payments. Smaller businesses display this reliance the most. Two in three SMBs generating less than $150,000 in revenue report they need different systems to meet different needs. By contrast, 35% of businesses generating revenues of $1 million or more experience the same level of fragmentation.
Smaller SMBs are more likely to cite multiple vendors as a reason for system fragmentation. In fact, 41% of SMBs generating revenues between $150,000 and $1 million report vendor fragmentation issues. This compares to just 31% of higher-revenue SMBs that face similar fragmentation challenges. Additionally, 35% of businesses generating less than $150,000 say they need different systems for different types of payments. This shows that smaller firms face more complexity in managing B2B transactions than larger firms.
Reliance on fragmented systems exacerbates inefficiencies for smaller firms. While smaller firms use fewer systems overall, they experience more operational challenges. For example, 43% of lower-revenue SMBs report that no single system meets all their needs. Juggling multiple systems wastes time and resources, driving up costs and leaving smaller businesses more vulnerable to operational challenges.
The Draw of Integrated B2B Payment Systems
More than half of Main Street SMBs are ready to switch to an integrated payments system. In fact, 81% of those using more than two systems express interest. Even businesses with just one system recognize its limitations. In fact, 80% of these SMBs say they are at least somewhat likely to switch if offered the right solution.
However, cost remains a significant barrier for some SMBs. This is especially true for those with lower revenues, with 36% stating cost would prevent them from making the switch.
Nonetheless, even SMBs satisfied with their current B2B payment platform face lingering inefficiencies. This provides an opportunity for savvy payment system providers. Those that can deliver a low-friction, secure platform at a relatively low cost could attract many SMBs.
SMBs Demand More From Integrated B2B Payment Systems
On average, SMBs report that their current B2B payments systems offer four features, but ideally, they want 5.4. This gap represents a 35% difference from what they have. Even SMBs that are somewhat satisfied with their systems still desire an average of six features or 71% more than they currently have. SMBs using multiple systems, with access to an average of 4.6 features, still find themselves wanting more. Despite having more features from the multiple systems, they still fall short of the 5.8 features they want.
Flexibility, security and speed are the top elements SMBs look for in an integrated solution. While only 38% of businesses report already having enhanced security features from their systems, 52% want them. Faster access to money or credit is also in demand. Just 33% of SMBs currently have this feature, but 49% want it.
Simplified payments, customer support and automation are additional areas where SMBs want improvements. For example, 45% desire integration with accounting software, but just 35% of systems currently in use offer this feature. Similarly, 39% of SMBs want payables automation, yet just 29% of systems in use support it.
The gaps between available and desired features reveal the need for B2B payment systems that address a wider range of SMB demands. Beyond flexibility, speed and security, SMBs also prioritize customer support, automated payments and the ability to handle any form of payment.
Frictions in Current B2B Systems Drive Demand for Integration
More than half of Main Street SMBs experience challenges with their current B2B payment systems. Overall, 61% of SMBs report facing issues when making payments. Even 55% of SMBs that say they are satisfied with their systems still encounter problems. High processing fees and vendors requiring specific payment methods are common friction points for SMBs using multiple systems. In fact, 67% of firms that use multiple systems report at least some challenges with their current systems.
SMBs believe integrated systems could relieve operational challenges and inefficiencies within the B2B payment process. Quicker access to funds was the most important expected benefit. The feature is even more crucial to lower-revenue businesses: 21% say this is their most desired payment system feature. Likewise, demand is strong among SMBs that depend on their day-to-day sales. For these SMBs with no access to financing and no cash reserves, 33% identify quick payment access as the most important benefit. Additionally, 19% of SMBs report high transaction costs associated with receiving payments, compounding the operational costs they face.
The benefits of integrated systems go beyond speeding up payments, however. Businesses also want greater security, with 44% of firms listing it as an expected benefit of an integrated B2B payments system. High-revenue firms are especially likely to want more security features. Roughly 2 in 10 say it is the most important feature they could gain. This underscores its importance to high-revenue SMBs and why payments providers must prioritize it.
Conclusion
Main Street SMBs face significant operational challenges due to fragmented B2B payment systems. More than half of these businesses would switch to an integrated solution to reduce friction. However, cost and security concerns remain potential barriers. SMBs desire more features like enhanced security and faster access to funds. This highlights the pressing needs that integrated B2B payment system providers should address to drive adoption. SMBs are likely to adopt systems that streamline operations to meet the growing demands for efficiency.
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Methodology
“SMB Growth: SMBs Push for Integrated B2B Payment Systems to Streamline Operations,” a PYMNTS Intelligence and Priority collaboration, is based on a survey conducted from Aug. 7 to Aug. 26. The report examines the operational challenges SMBs face when managing multiple payment systems and their desire for a single, integrated solution. The survey collected insights from 553 SMBs across various industries and revenue levels, capturing how these businesses handle inefficiencies, system fragmentation, and their demand for more advanced, integrated payment features to improve operations.
