Mobile technology is revolutionising the way SMEs get paid
March 15th, 2017 – We all know cash is fast becoming a thing of the past, and as the world becomes increasingly ‘digital’, it’s not surprising that people are buying goods and services a lot more through mobile devices. It’s therefore no surprise that mobile technology has driven advancements in the payments industry, making it easier for consumers to make purchases on-the-spot. This has created opportunities for retailers like never before — for example there are digital apps that allow customers to order and pay for their morning coffee while still on the commute to work.
So you would think it would be safe to assume there would be a growing trend in the number of small businesses adopting mobile payment methods for customers; however, that’s not the case.
In a recent Westpac Customer Panel, which surveyed 222 Small and Medium Enterprises (SMEs), 87 per cent reported that their business did not use a mobile payment system. This figure is consistent across Westpac SME Bank’s customer base with around a quarter currently using mobile devices and tablets to process payments, with an estimated 14 million transactions valued at $22.8 billion made in 2016. With an increasing number of customers shifting their purchase habits to mobile, this is truly a missed opportunity for many SMEs.
When we asked our Customer Panel why they hadn’t adopted a Mobile Payment System, SME owners said they had no use for it (43 per cent) or that their business was too small (31 per cent). However, after learning more about mobile payment solutions, almost half of the surveyed group perceived it to be extremely or very appealing and 18 per cent claim they would likely use it; interestingly, the uptake increased to 32 per cent for businesses with an average monthly turnover of between $5,000 and $30,000.
The perceived barriers seem to be that mobile technology is expensive and time consuming to install, which only benefits fast-paced retailers. However, this is a misconception. A mobile payment system is a feasible and cost-effective tool, with most providers offering businesses the option of a single monthly fee or the flexibility of Pay-As-You-Go (PAYG), so SME owners can predict expenses and remain in control of the business’s finances.
There are a number of benefits to using new payment solutions, particularly for time poor SMEs impacted by fluctuating cashflow. Mobile Payment Systems are designed to help small businesses get paid by collecting payments on-the-go rather than waiting for an invoice to be sent and paid. The use of mobile technology for transactions could reduce the strain of chasing invoices felt by many businesses, that wait on average, up to 45 days for payment, which can cut into valuable resources and already limited capital. Whether customers prefer to pay by card or direct deposit via a banking app, mobile technology can ensure the exchange of money and goods or services are simultaneous.
Another benefit is its ability to help SMEs keep track of payments, which can also be valuable at the end-of-financial-year. And we know this is a time when SMEs need support, with over 30 per cent increasing their working hours and one in five spending over 40 per cent of their time on administration. Shifting to mobile payments not only houses the business’s transactions in one digital hub, it equips business owners with a convenient and efficient way to gather intel on purchasing behaviour, which can assist with forecasting and budgeting, ensuring effective management of the business.
From speaking with SMEs all over Australia there seems to be a common thread between the ones that embrace technology successfully; planning is the key. The ones that are considering technologies that have a positive impact on customer service are the ones that are leading the charge. Incorporating fast, effective and innovative systems will streamline business activity, highlight focus areas for potential growth, and help improve customer service.
As I meet with business owners, one key thing that stands out is that they are often wearing many hats at once, including managing accounts while focusing on keeping customers satisfied, meaning many business owners feel under-resourced. Many SMEs also put themselves under stress by not implementing the technology and processes that could save time. The less time businesses spend waiting to receive and process payments, the faster they can move on with the part of the business that they are most passionate about.
When speaking with customers, many seem hesitant to incorporate new products and systems into their business due to limited resources, funding and time, which can be major barriers to innovating. However, Westpac’s research highlights that when businesses make the time to learn more about new systems, they can find it incredibly rewarding and appreciate that adoption is necessary to remain competitive.
The most recent Westpac-Melbourne Institute SME Index, which examines the economic health of Australian small and medium sized enterprises, revealed business confidence remains steady following significant improvement at the end of last year. With businesses feeling relatively optimistic and in control, 2017 is ripe with opportunity for SMEs to take payments and transactions to the next level by adopting new technologies, which is a vital way for businesses to get paid faster with less effort, and continue to meet the rising expectations of their customers.
Written by The Australian
Photo: Momentumpr
Related Post
COP29 can ensure SMEs thrive in...
The transition to a just, resilient, net-zero future is not possible without small and medium-sized businesses, known as SMEs. They are the ...
Financing SMEs and Entrepreneurs 2024
Since 2020, a series of shocks to the global economy has had significant impacts on small and medium-sized enterprises (SMEs) and entreprene...
SMEs can benefit from integrating growth...
Accounting for about 30% of global greenhouse gas emissions, the industrial sector is accelerating its efforts to achieve net zero by 2050 ...
