Small Businesses Leading Digital Payment Revolution

E RADAR's Will Roebuck discusses the opportunities around mobile enterprise and demonstrates that small and medium sized organisations are leading the way in digital payment.

The $5.5 trillion retail-transaction market is expected to undergo big changes during the next few years, and small businesses may be at the forefront of the movement.

Data collected by Deloitte reported that mobile payments increased from 6.8 percent of all payments in 2009 to more than 21 percent in 2012. So, is 'mobile' the way forward for UK SMEs trying to get competitive and collaborative advantage online? Or is this just another technology fad to be wary of?

Consumers are ready

Consumers of all ages have already joined the shift to digital banking, reports the Federal Reserve. Although the phrase "digital wallet" may not mean anything to most consumers, they are already part of the change. Nearly 21 percent of mobile phone users already do some of their banking on their phones. Ninety percent of them have checked their balances via phone in the last month, almost half of them have transferred money between accounts, while about a quarter of them have paid a bill using their phones.

Mobile payments in 'brick and mortar' stores

Coffee retail giant Starbucks leads the pack of companies already processing mobile payments in their brick and mortar stores. Numerous companies already have mobile payment options available on their websites, but Starbucks has aggressively optimized this trend in their stores. Its success in the world of mobile payments derives largely from the loyalty of its client base, but the company fosters this loyalty by giving clients free gift certificates and incentives for using mobile payments.

Weekly, Starbucks processes almost 4 million mobile payments, representing 10 percent of all of its business, reports Mobile Commerce Daily. This may seem insignificant to the owner of a hotdog stand or to a bed-and-breakfast owner, but Starbucks' efforts may help small business owners learn how to navigate this road. Watching what the coffee giant does could present an incredible learning opportunity for small business owners.

Streamline the checkout process

Mastercard reminds small business owners that the checkout process is not always about the point of sale. This is especially true for online transactions. Consumers are interested in an easy and seamless buying experience. If small business owners can provide this to their clients, whether they are shopping with a small business credit card from American Express or with a digital account like Paypal, it has the potential to boost their sales.

Blazing a path

Square and Intuit are blazing a path for small business owners. Charging roughly the same as banks to process credit card transactions, these companies give small business owners and tradesmen a way to process payments without the hassle of bounced checks or dealing with large sums of cash, explains the Economist. Even the Salvation Army has used these programs to accept credit cards at their iconic red Christmas buckets.

While Square has increased the number of credit card readers in the country by nearly a sixth, the movement is not just about allowing businesses to more easily take credit card payments. Instead, it is about how the digital revolution will change commerce for small business owners and shoppers. The technology exists, and small business owners have the opportunity to determine what is right for their business, jump on it, and move the trends forward.