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SMBs Going Digital to Beat the Coronavirus Disruption

September 9, 2020

Jonathan Kriegel

CEO

Small and micro businesses (SMBs) have been hard hit by the economic disruption caused by global Coronavirus lockdown restrictions, leaving many looking for new ways to attract new customers. That includes further expansion into digital, online commerce and the adoption of contactless and mobile payment methods, though many are unsure they have the knowledge and expertise to do it.

But while SMBs anticipate there being at least six to ten more challenging months ahead of them before sales return to pre-COVID levels, 75% are optimistic for the future as they do what they can to remain fully operational. A survey sponsored by Visa and carried out by Wakefield Research in June 2020 found two thirds (67%) have already tried a fresh approach to keeping their commercial activities on track since the onset of the pandemic. Almost half of the businesses responding to the Visa Back to Business Study (46%) expressed concerns about attracting new customers and 52% fear they will lose revenue.

Contactless payments to reassure customers

One way to counter those problems could rest on better support for contactless payments to meet customer demand. Almost three quarters (78%) of 4,500 consumers in eight countries surveyed by Wakefield Research in tandem reported that they have adjusted the way they pay for items due to Coronavirus safety concerns. Nearly two thirds (63%) indicated they would switch to a new business that installed contactless payment options, with 48% saying they are more likely to avoid shopping at a store that only offers payment methods that  require contact with a cashier or shared machine such as a card reader or point of sale (POS) terminal.

Consumer behaviour and requirements certainly appears to have changed in 2020 with 70% reporting that they had used some form of new shopping payment method for the first time since the start of the pandemic. That includes the adoption of tap to pay technology for in-store purchases (26%), shopping for groceries or household items online (34%), ordering food with restaurant pickup (28%) and buying online or using a smartphone app rather than visiting a store.

Where new payment methods have been adopted, they appear to have been at the expense of cash transactions – 62% of consumers who have not been using cash more often since the start of lockdown restrictions have reduced their reliance on cash, and 12% have stopped using it altogether. Debit and credit card usage too has changed due to health concerns, with two-thirds of those using them taking measures to keep their cards clean that includes wiping them with disinfectant (33%), wearing gloves (23%) and cleaning it on their clothing after use (22%).

Digital doubts persist

Some, but not all, SMBs have reacted accordingly to meet customer demand. A third of those surveyed (33%) have either accepted less or stopped accepting cash completely since the onset of the pandemic (more so amongst businesses run by younger owners in the 25-40yr age category). But still, only 20% of SMBs surveyed by Wakefield Research across all eight countries on aggregate had allowed contactless payments like mobile or tapping a card. 

Enthusiasm for contactless payments amongst SMBs does appear to vary according to the age of the business owner, however. Those run by millennials (born between 1981 and 1996) are almost twice as likely (41%) to have accepted less or stopped accepting cash than baby boomers (born between 1946 and 1964, 21%) for example, with 31% of Gen X owners (1965 to 1980) doing the same.

Some SMBs see the advantage of shifting to a digital orientated business and have taken appropriate measures. More than a quarter (28%) of SMBs have tried targeting advertising on social media or sold products or services online (27%), found the study. But the majority (74%) still harbour some form of doubt about establishing or increasing their online presence. Common concerns involve data privacy and security (32%), the prospect of having less personal connections with their customers (31%), and the cost of the required digital infrastructure investment (28%). 

Regional variations highlight geographical impact

SMBs and consumers in different countries are also moving at a different pace in terms of changing their behaviour and digital infrastructure provision, seemingly dependent on their starting point, the severity of pandemic related disruption and local government response.

Larger numbers of SMBs in the UAE (94%) and Hong Kong (87%) for example have tried a new approach to keep their businesses on track since the start of the pandemic (compared to 67% globally), almost certainly because they are more scared about attracting new customers. In the UAE 90% said they would switch to a new store that installed contactless payments, with the equivalent figure for Hong Kong was 73% (the global average across all eight countries was 63%).

The territory has also seen a much higher percentage of SMBs allowing contactless payments (26%), while 40% said they had either reduced the volume of cash payments they accept or stopped accepting cash altogether. It was a similar story in Singapore where 46% of SMBs said they had done the same, with 67% saying they would switch to a new store that installed contactless payment systems.

Greater numbers of SMBs in Brazil (50%) have switched to selling products or services online than elsewhere, and have also proved more enthusiastic about using targeted advertising on social media (50% vs 28% globally), offering home delivery (33% vs 20% globally) and allowing contactless payments like mobile or tapping a card (30%). The results may reflect Brazil’s formerly lower participation in eCommerce compared to the other countries surveyed, however, and its continuing high reliance on cash transactions (read DOCOMO Digital VP for Europe & Latin America Luisa Muneratti’s blog on the Brazilian e-commerce market and mobile payment adoption here).

Brazil also has the second-highest rate of COVID-19 infections and fatalities in the world behind the US according to Worldometer calculations, which helps explain why 57% of Brazilians surveyed identified contactless payments as one of the most important safety measures they considered that stores could offer (the global average was 46%). Nearly three-quarters of consumers (73%) have made changes to the way they pay for items due to COVID-19, including shopping online whenever possible (56%), using contactless payments (43%) and not using cash as much (42%).

Help with payments, data protection and finding new customers

The Visa Back to Business Study is important in providing statistical confirmation of anecdotal evidence that consumers in different parts of the world are changing their shopping behaviour, particularly when it comes to fostering e-commerce engagement, the adoption of contactless payment methods and a shift away from handling physical cash. 

Its findings also highlight that while some SMBs are stepping up their efforts to accommodate those behavioural changes, many are holding back. In some cases that reticence is fuelled by the belief that the world’s economy will return to its previous form once the Coronavirus pandemic has been completely eradicated, in others because SMBs lack the resources required to set up appropriate e-commerce, billing and data security platforms needed to facilitate a digital business..

Those concerns can be alleviated to a certain extent by outsourcing responsibility to specialist third party providers, however, particularly those like DOCOMO Digital with previous experience of bringing thousands of merchants’ commercial propositions to a wider audience. By partnering DOCOMO digital, the 46% of SMBs which are worried about finding new customers could expand their client base through direct carrier billing (DCB) arrangements which give them access to millions of telco and mobile network operator (MNO) subscribers across multiple countries simultaneously for example. 

More than half (53%) of SMBs on aggregate also said they were likely to purchase a fraud management tool or solution to protect sensitive data pertaining to their business and customers from being lost, corrupted or stolen as they move online, for example, a statistic highest among millennial SMB owners (63%) more familiar with the risks. As well as helping SMBs set up e-commerce payment solutions, DOCOMO Digital’s platform ensures compliance with the data protection regulation unique to different countries of the world and delivers sophisticated fraud detection tools to minimise failed transactions.

SMBs are often called the lifeblood of the global economy, the consistent source of business innovation that keeps the wheels of international commerce turning. The Coronavirus pandemic has made life hard for many, but it also presents new opportunities for those willing and able to change their market approach to reach new customers.

The Visa Back to Business Study was conducted by Wakefield Research in June 2020, polling 2000 small business owners from companies with less than 100 employees (250 in each country) across the US, Germany, Canada, Ireland, Hong Kong, Singapore, Brazil and the United Arab Emirates (UAE). The consumer segment of the survey questioned 1,000 adults in the US and 500 adults in each of Germany, Canada, Ireland, Hong Kong, Singapore, Brazil and the UAE.

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