Digital payments are opening a window of opportunity for small businesses in Spain
In early 2023, Eduardo Prieto - Country Manager of Visa Spain - was interviewed by local business title El Economista. The interview focused on the shifting consumer behaviours in Spain, reflected across Europe, that are driving demand for digital payments - and the impact of these changes on small and medium businesses.
Digital payments will continue to grow in 2023
Prieto points to data from the Bank of Spain showing transactions growing at a rate of 30%, with cardholder purchases also growing at double digits. He attributes this to several factors: “The past two years have been an exercise in transition.”
He adds, "Firstly, borders have opened, which is critical as Spain receives a lot of tourists and Spaniards travel abroad regularly. Second, there has been an explosion in eCommerce, and thirdly, many innovative products and services are improving the users’ payment experience – like mobile payments, contactless technology, and wearables.”
Despite current economic uncertainty, he sees further opportunities for digital payments to increase. “In Spain, people traditionally use cash more than those in other European countries such as France, Portugal, the United Kingdom, not to mention the Nordic countries. The shifts driven by the pandemic have shown the benefits of digital payments for individuals and small businesses, and we think that will continue to grow.”
Why is it so important to digitise small businesses?
Small and medium businesses (SMBs) make up 99% of the Spanish economy and more than a third today can’t accept digital payments.
Prieto explains: “We conducted a study of digitalised SMBs and 73% responded that digital payments have helped them to achieve their business plans. Digital payments helped many stay in business during the pandemic by moving to online and contactless payment. Visa has a long history of working with fintechs and others to advance and scale innovation in payments. Once a business can accept digital payments, they can benefit from the continuous innovation for smoother, faster, more secure transactions that make it easier for them to operate and easier to improve the experience for their customers.”
Digitisation and innovation provide customer choice
As more and more people prefer to pay digitally or electronically, it’s in the interests of a small business to accept payment beyond cash.
Prieto gives an example: “If I have a shop and I ask my customers for cash and they say ‘I don’t have any’, what is the alternative? And as we saw from our survey of Spanish SMBs last year, when entrepreneurs see the value of digitalising their business, they adopt it. We’re seeing more and more cases of businesses that only accept electronic means of payment for security, control and cash management and handling logistics. At the end of the day, managing cash has a cost.”
Fintech partnerships help Visa scale innovation quickly to benefit people and businesses
Visa partners with many companies to innovate and scale solutions that help people pay and be paid in the way they prefer, whatever their circumstances. Eduardo explains: “We partner with the Spanish fintech, Divilo, for example, to deliver Tap to Phone. This is a way for small merchants and sole traders to start accepting digital payment from their phones without the need for a point-of-sale machine.
“We also partner with Wipay, who offer different physical and online methods to accept payment – like unattended terminals at parking spaces, vending machines, or virtual payment gateways to accept online payment for councils, eCommerce or other industries.
“Although Spain has a lot of payment terminals, there are still plenty of areas where digital payment is limited. In Madrid or Barcelona, you can pay at the parking meter with a card, but when you go out of the main cities, you need cash. And similarly, in large city councils you can pay for many services through electronic banking or an electronic means of payment, but that’s not always the case, and Spain has more than 5,000 city councils.”
Eduardo continues: “Those different ways to pay help us to simplify infrastructure for urban mobility too, like electric vehicle charging. We are working towards uniform legislation for electric car charging and in a few years' time Spain will have to have many more electric charging stations to cope with the demand. It’s important there is a simple and consistent way for people to access and pay for those services that is as easy as buying a cup of coffee.”
Bringing businesses and governments together
“We have a responsibility to work with SMBs,” Prieto goes on, “Digital payments can help people, businesses and economies to thrive, and we started a programme called ‘Where You Shop Matters’ which Madrid City Council joined in order to help more than 1,000 small businesses by promoting local commerce, help SMBs understand how and why they can digitise their business, setting up eCommerce to grow and expand their customer base, and more.
“Alongside that we work with the Council, in this case, to create a sandbox to help the entire ecosystem, including banks and fintechs, in the development of smooth payments across the local economy.”
Eduardo explains that, despite examples of some verticals where digital payments are less developed, Spain and its banks present one of the more advanced markets in the world for electronic payments overall. “Institutions like BBVA, Santander and Caixa are world leaders in electronic payments because of the technology they use, and the penetration of mobile payments is among the highest in Europe,” he says.
He concludes: “We want to continue to be leaders in this evolution over the next five to ten years. Spain is a priority country for Visa and there are many opportunities to work with banks, fintechs and other partners to continue innovating and improving the simplicity, speed and security of payments to help people, businesses and economies to thrive.”
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