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Merchant Scope: How to Bank On SME Merchants

Nitin Sumangali |

If there was one dominant statistic from our recent Merchant Scope study “Small-To-Mid Sized Merchants Seek Competitive Technology in an Omni-Channel World” it was this: 90 percent of small-to-medium-sized merchants have an eCommerce presence. Only 20 percent can take live orders and process payments. It is a daunting gap, especially when stacked against the technology profile of uber-retailers that cross borders and platforms.

That 90-20 gap speaks volumes about the difference between eCommerce presence and actual revenue. It speaks volumes about the gap between eCommerce setup technology and payments capabilities. If it persists small retailers will have an increasingly difficult time competing for consumers who expect everything all the time. Part of the fix is in the attitudes of SMEs; part of the fix is financial. The biggest part is in knowledge and it is here that strategies for closing the gap reside. Financial institutions and technology providers can play a lead role.

Small merchants rely on banks and other service providers for their information security needs as well as to look out for their money. They are key constituents of the global economy — according to the World Bank’s International Finance Corporation, small and medium enterprises account for 90 percent of businesses and 50 percent of employment worldwide. Banks can help merchants roll together the solutions they need in a way that runs their business better, and thereby make them better customers. For example, Quicken and Intuit package themselves and use that approach to make it easy for small merchants to understand what’s needed for them to upgrade their technology. Similar approaches make banks stand out from competition and position them as real partners in business growth.

They also rely on technology providers. Small merchants are focused on running and growing their businesses, and they’re not professional experts in technology. This means that it’s crucial for providers to position offerings as simple means for merchants to improve their business. “Lite” versions of technology to introduce product concept and functionality to merchants who find technology daunting can extend reach and utility.

Both categories have skin in the game. For technology companies small merchants can become a growing customer base and a source for new product innovations. They can fill the need for merchants to understand and meet the evolving expectations of more informed and digitally connected consumers. These expectations center on convenience, an innovative shopping experience and personalized customer support. In the new retail environment, the consumer shopping experience starts long before entering a store, and includes the ability for the merchant to be present in different devices and channels. For banks, small merchants are a link to local communities and a source of the kind of complete data set that makes customer analytics complete and actionable.

Topics: Economic Outlook, Inclusion, Payments Strategy, Retail Trends

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