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Caitlin Mullen|Source: www.paymentsdive.com, January 2022
Dive Brief:
- An 82% majority of small and micro businesses responding to an annual outlook survey by Visa said they will accept digital payment options this year, according to a Wednesday press release from the card network company. About 46% of consumers polled said they’ll turn to digital payments more frequently in 2022.
- Nearly 60% of the businesses said they’re only accepting digital payments, or plan to accept only such payments within the next two years. Close to one-fifth said they’re already cashless. Reflecting the buzz around cryptocurrency and its use as a form of payment, 24% of businesses surveyed told Visa they plan to accept digital currencies like Bitcoin this year.
- Among consumers, 16% are already exclusively using digital payment methods, and 25% believe they’ll make this transition over the next two years.
Dive Insight:
Visa’s study underscores how the digital payments revolution isn’t limited to large businesses. The San Francisco-based card giant polled 2,250 small business owners and 1,500 consumers across the U.S. and in eight other countries in December.
Of course, Visa is in the business of helping merchants move in the direction of increasing their digital payment options, giving them a slew of card-related tools to process payments digitally.
The COVID-19 pandemic propelled the move toward faster, contactless payments, leading many consumers to use innovations like mobile wallets for the first time. The Federal Reserve expects some of these pandemic-induced behavioral changes in payments could stick.
Many entrepreneurs say these adaptations are crucial: About three-quarters of small businesses told Visa they believe accepting new forms of digital payment is essential to their growth in 2022.
Visa’s global head of merchant sales and acquiring, Jeni Mundy, said having the right payment scheme goes beyond making the sale. “It’s about creating a simple and secure experience that reflects one’s brand across channels and provides utility to both the business and its customer,” Mundy explained in the release. “The digital capabilities that small businesses built up during the pandemic – from contactless to e-commerce – helped them pivot and survive.”
Nine in 10 small businesses with an online presence said pivoting to e-commerce helped them survive the pandemic, Visa reported. On average, 52% of their revenue came through online channels over the past three months.
Still, pandemic pivots haven’t been easy to execute and small business owners called the COVID-prompted shift in consumer habits a top challenge in 2022, according to the press release for another recent survey from banking behemoth JPMorgan Chase. About a quarter of small businesses have implemented more contactless payment options to keep up with consumer preferences, according to that survey released Jan. 5.
Businesses “now have a stronger sense of how to remain competitive in the current economic landscape,” said Jim Glassman, head economist for JPMorgan’s commercial banking division, per the news release.
When shopping in brick-and-mortar stores, 41% of consumers have abandoned a purchase because digital payment options weren’t available; this was even more common among younger consumers, Visa discovered.
More than one-third of consumers named digital payment acceptance as one of the top five factors, excluding price, that would influence their merchant choice. Consumers see the shift to heavier reliance on digital payments resulting in easier online shopping (47%), reduced risk of robbery (38%) and convenience (37%), Visa said.
As these changes pick up steam, digital wallets are expected to handle more than $10 trillion in global transaction volume by 2025, recent research from rival Discover Financial Services indicated.
Businesses in other countries were more likely to say they’d take digital currencies as payment this year, with 19% of U.S. small businesses planning to do so, according to a report this month from the news outlet Reuters, compared to more than 30% in markets like Hong Kong or Brazil.
Visa and its Purchase, New York-based rival Mastercard have each bolstered their efforts to enable merchants to accept cryptocurrencies. Stephen Pair, CEO of crypto payments processor BitPay, told PYMNTS the number of businesses using such tools to take crypto payments is small but on the rise, and “there could be an inflection point in 2022 where it becomes more ubiquitous.”
Ultimately, though, not all are willing to drop cash: 16% of small business owners told Visa they’ll never switch to digital payments only, and even more consumers (23%) said the same.
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