Introduction
Despite their prominent role within the economy, many small and medium enterprises (SMEs) struggle to access the right financial services to support their growth. In fact, 85% of SMEs report using financial products made for consumers, according to a global study by Mastercard.
Today, digital technologies are enabling new financial value propositions and fundamentally changing how businesses and consumers interact with their banks.
Financial service providers (FSPs) can help SMEs address productivity and operational challenges and remain competitive, by enabling fully digital payment capabilities. These capabilities allow SMEs to:
- Access financial products instantly
- Leverage innovative and integrated business payment products
- Get paid easily using the tools they already have access to
- Integrate these seamlessly into their business processes
The ‘Empowering SMEs with digital capabilities’ report explores some of the key digital capabilities and payment journeys that FSPs should consider for SME customers.
Key digital capabilities for SMEs
Control payments and streamline accounting processes
Without the right tools, SMEs can struggle to keep track of business payments and employee expenses, and to enforce spending policies.
Currently, many SMEs manage payments and expenses by using personal cards. Even though business owners can expense relevant spending to the business, they are reluctant to provide their employees with business cards that have high spending.
This approach lacks proper controls and visibility and relies on cumbersome manual payment and expense reporting processes. This is not only time-consuming, but also prone to errors, delays and lost receipts, leading to inaccurate financial records and difficulty in tracking and controlling expenses.
Digital expense management solutions enable SMEs to:
- Adopt spending controls
- Streamline accounting processes
- Give managers full visibility of payments
- Improve employee experience
Key expense management use cases
Keep SMEs engaged with a personalized loyalty program
FSPs are increasingly offering personalized loyalty schemes to their retail customers but not their SME clients.
By offering exclusive benefits, discounts, rewards and personalized experiences, FSPs can increase SME satisfaction and encourage usage of their business cards. This facilitates retention, enables cross-selling opportunities and helps build long-term relationships.
Digital solutions can improve SME loyalty schemes by introducing new features and personalizing the experience, including:
- access to a personalized loyalty dashboard with an overview of their loyalty tier, accumulated points, and the ability to manage preferences
- gamification elements, which allow business cardholders to earn bonus points and rewards
- personalized benefits and offers based on user profiles and transaction data
Reduce working capital needs through tap-on-phone and QR codes
Point-of-sale (PoS) devices are familiar, reliable and secure acceptance solutions with diverse functionality. Although they are set to remain the dominant form of in-store payment acceptance, adoption of new and innovative asset-light solutions is growing rapidly in the SME segment.
Tap-on-phone and QR code payments are alternative payment acceptance options that enable quick and easy digital payments, while reducing working capital requirements, collection costs and risk of client defaults.
These technologies offer several key benefits to SMEs:
- Cost-effective payment acceptance
- eliminates the need for expensive and dedicated POS terminals
- reduces upfront hardware and maintenance costs
- Increased flexibility
- allows payment acceptance anywhere and with any supported mobile device
- enables versatile payment acceptance through near-field communication (NFC) or scanning QR code with the camera of a supported mobile device
- Enhanced customer payment experience
- supports contactless payments
- reduces checkout times
- Streamlined operations and record-keeping
- integrates with existing POS systems and accounting software
- automatically records transactions and generates receipts
- Increased security and compliance
- NFC and QR code payments can be designed to
- use secure payment processing technologies, including tokenization and encryption
- comply with international standards including PCI DSS
Working with Mastercard
Mastercard’s Digital First solution can help FSPs innovate and define challenges faced by their SME clients. Regardless of specific needs, business stage, industry and knowledge, FSPs can get help to develop solutions that fulfil the needs of SMEs, while facilitating their growth and contribution to global economies.
Read the full report, “Empowering SMEs through digital capabilities: A new era of SME enablement,” on Mastercard Market Trends to find out more about the key digital trends and payment journeys that financial service providers should consider when working with SMEs.
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