SMBs On Payment Technology: What’s In It For Me?

Small and medium businesses (SMBs) are the backbone of the American economy. They account for almost half of payroll (48%) and have created about 60% of new jobs since 2009. Given the rapid growth of technology solutions that can help these businesses thrive, not to mention get an edge with their customers, PYMNTS.com and Sage set out to measure the rate of adoption of these technologies for SMBs across the U.S. How quickly are businesses adopting these technologies, and which ones? And how does that vary across B2Cs and B2Bs and other ways of slicing and dicing small and medium sized firms?

The SMB Technology Adoption Index is a quarterly report released jointly by Sage, the market leader for integrated accounting, payroll and payment systems, and PYMNTS.com, the premier source of news and commentary on innovation in payments. The Index looks at business and technology trends impacting U.S. small and medium businesses.

Conducted in January 2016, this quarter’s Index finds that almost half (49 percent) of businesses that said they do not yet accept EMV chip cards also have no plans to accept them in the future. Of the SMBs saying they have no plans to accept EMV, the majority were business-to-business (B2B) companies that either saw no benefit to initiating the process of EMV integration or do not have enough volume to make implementation worthwhile.

“Owners of small and medium businesses face incredible challenges as they try to grow their businesses, so their payment systems are often the last thing on their minds,” said Paul Bridgewater, CEO of Sage Payment Solutions, the payments division for Sage North America. “I think what you’re really seeing with this research is a gap in understanding just what the EMV mandate means for businesses. It’s on industry leaders to make sure small businesses can access all of the tools they need to get educated and stay current on EMV in a way that works for them.”

Other key takeaways from SMB Technology Adoption Index for first quarter 2016 include:

An overwhelming majority of SMBs say they implemented EMV technology for one of two reasons — either because it is required by a processor or because of safety concerns.

While SMBs say their biggest concern is getting paid on time, only 19 percent of them have a completely or very automated invoice process.

Mobile pay adoption remains low, as Apple Pay and/or Android Pay are accepted by only 1 percent of SMBs.

One problem this quarter’s Index seems to bring to light is a lack of awareness by small businesses of how much ground they have to make up when it comes to adopting technology. In fact, 56 percent of customer-facing businesses (B2C) rate themselves between 7 and 10 (on a scale of 1-10) when it comes to how integrated their company is in terms of using technology to manage their cash flow.

“Small and medium businesses make up nearly half of the private sector payroll in the U.S., so their influence on the economy is significant,” said Karen Webster, CEO of PYMNTS.com. “What we’re seeing in the SMB Technology Adoption Index, though, is that far too many of these types of businesses are not taking advantage of all of the advancements in technology that are available to them. As we continue to better our understanding of how small businesses are evolving, we hope to watch these numbers improve as time goes on.”