The top five payments methods every SME needs to be aware of

In the last two years the digital payments landscape has experienced rapid evolution, which has largely been driven by the Covid-19 pandemic. Now that the UK economy begins to recover from the last two years, it’s evident that consumer expectations around the ease and choice of payment options have changed permanently, and it is essential that SMEs are aware of their demands.

Against the backdrop of rising inflation, and with consumers looking for ways to make their money work harder, customer retention should be a key focus for small businesses who are looking to maximise their sales. Offering the right payment options is a crucial part of this.

To help, Barclaycard Payments has launched a new report that uncovers the latest trends in payments and ways in which businesses can harness them.

Here are five ways that can help SMEs level up their payment infrastructures and navigate the constantly evolving digital payments landscape.

  1. Offer an omni-channel experience

Providing an omni-channel experience for customers essentially combines the highlights of face-to-face shopping with the ease and convenience of eCommerce. Merchants must offer their customers multiple channels through which to do business with them, both online and in store, tailored to their individual needs.

  1. Balance face-to-face vs eCommerce payments

During the national lockdowns, eCommerce payments boomed; however, face-to-face payments are now making a comeback. The Barclaycard Payments report identifies that, in general, SMEs have a higher dependence on face-to-face sales than larger corporates. In fact, only 56 per cent of SMEs have an eCommerce capability. In an increasingly digital world, it’s imperative that SMEs work on enhancing their digital footprints to complement their physical operations.

  1. The rise of digital wallets and virtual cards

Digital wallets have increased in popularity over the last couple of years as they give users greater flexibility and convenience, offer better security, and are easy to use. However, according to the Barclaycard Payments report, whilst corporates now accept digital wallets, many SMEs are still waiting to be convinced of their merits. 17 per cent of £250k-£1m businesses and 12 per cent of £1.1m-£6.4m businesses still do not accept them, meaning there’s a possibility for lost sales for these groups. Other exciting digital payment methods are on the horizon too, including virtual cards. Juniper research predicts that digital card transactions will increase by 370 per cent globally in five years due to their simplicity, so it’s worth SMEs bearing this in mind when reviewing the payment options.

  1. Strong Customer Authentication

New mandatory Strong Customer Authentication (SCA) regulations were introduced in March this year, and mean that all online transactions over £25 are now subject to additional identity checks to help combat fraud. On the 14th April, one month on from the mandatory compliance date, transactions worth £4.3m million a day were still being declined as a result of businesses not updating their payments systems. This has huge ramifications for businesses’ sales.

SMEs therefore need to ensure they understand and are compliant with the changes. It’s also worth investigating products such as Barclaycard’s Transact suite of tools, which can help businesses take advantage of strategic SCA exemptions and keep their checkout processes light on friction.

  1. Choosing regulated Buy Now Pay Later options

Buy Now Pay Later (BNPL) finance options are becoming increasingly common and some customers, particularly younger demographics, use them frequently. However, SME owners may be unaware that many forms of BNPL are not subject to the same stringent regulation as others. For example, some BNPL products don’t require a full credit check for consumers to access finance, increasing the risk that they get into unmanageable debt.

When choosing a point-of-sale finance partner, it can be very tempting for SMEs to focus solely on the commercials, filtering providers by highest acceptance rates or lowest fees. However, in the long term this approach is counter-productive, because it overlooks a vital part of the lending process – ensuring that the lending is right for each customer, and that the amount they’re borrowing is affordable.

Overall, when it comes to payment methods, small changes can have a big impact on sales volumes for SMEs. During a period of economic turbulence, creating smart, cost-effective payments solutions that keep the customer experience high while safeguarding security and trust is crucial for growing businesses.