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April 2021


5 - 7 Minutes

How SMBs are re-inventing themselves and how the payments industry can help

Small and micro businesses (SMBs) are the backbone of the economy and many were devastated when COVID-19 hit. Facing an unrecognizable commercial environment, SMBs have had to re-imagine their business models to survive. In fact, 60 percent of SMBs in the U.S. said they pivoted and tried a new approach to keep their business afloat, according to Visa’s Back to Business Study.1

The SMBs that are pulling ahead are laser-focused on their customers and responding to the new ways they live, work, and buy.

As small businesses are transforming to meet their customers’ changing needs, there is a tremendous opportunity for issuers and acquirers to do the same and support their small business clients in creative new ways. To start, it helps to understand how SMBs are becoming agile in three key domains in order to survive and thrive in this new world.

What you sell

"Small businesses are always putting themselves in the shoes of their customers, looking at their needs and then finding new solutions," says Mary Kay Bowman, Global Head of Buyer and Seller Solutions at Visa. Early on during COVID-19, many small businesses in the hospitality industry, for example, reacted to the shutdowns by changing their offerings. Movie theaters transformed their parking lots into drive-in theaters and restaurants pivoted to all kinds of approaches – meal kits, curbside pick-up, and even selling grocery staples.

Small businesses that create experiences for customers changed too. Culinary Adventure Co. usually operates food tours in different neighborhoods of Toronto. During COVID-19, the company started offering ‘Food Tours in a box’, curated treats from a given neighborhood or favorite purveyor.2 Community support has been a lifeline for many SMBs. In Visa’s Back-to-Business study, 71 percent of SMB owners said support from their local community has been critical to their recovery efforts.3

"Issuers and acquirers can take a page from SMB’s playbooks and support their clients by thinking of their customers’ needs as they transform," according to Bowman. Questions to address include: Do SMBs need additional cash flow? Do their traditional checkout and point-of-sale tools match the new ways they are serving customers? If they are considering tap to pay, do they have the equipment and systems in place to do so? "By finding out what SMBs need and anticipating the new problems that are cropping up, issuers and acquirers can create the best solutions, tailored to their clients," she adds.

SMB Recovery By the Numbers:


SMBs account for 90 percent of global businesses8


60 percent of U.S. SMBs have tried a new approach to keep their business on track and meet shifting consumer demands since the onset of COVID-19.9


More than half of North American customers would switch to a new store that installed contactless payment systems. 10


Nearly four-in-five consumers have made changes to the way they pay for items during COVID-19.11


Over two-thirds of SMB owners say support from their local community has been crucial to their recovery efforts 12


Over 75 percent of SMBs in North America (82 percent in the U.S. and 77 percent in Canada) are optimistic about the future 13.


Where you sell and how you get paid

Prioritizing health and safety by implementing digital tools to better run their businesses has helped many SMBs rebound more quickly. Vancouver-based retailer Lilian Umurungi-Jung used to sell her bespoke nut butters for pregnant mothers at local markets. When COVID-19 arrived, those markets shut. With support from Visa’s Small Business Hub that helps companies go ‘digital-first’, Umurungi-Jung has expanded her digital presence, offering her nut butters online and doing deliveries. Business has surged.

Issuers and acquirers can provide critical support to SMBs during these times. For example, many personal service providers have become more mobile during COVID-19 as they bring their services into clients’ homes - so they may need to buy all their supplies before they travel to provide their service. "This might mean they need additional credit cards or lines of credit to enable greater flexibility," adds Bowman.

For sellers, it is important to think about how SMBs interact with consumers, especially in the final payment stages of a transaction. A small business used to helping customers that are standing in front of them may need support digitizing their payment process for consumers now shopping from their mobile phones or keyboards.

How you sell and to whom

As small businesses reconsider how and what they sell, many are exploring online seller platforms, finding entirely new customer segments and ways to market to these customers online. In Visa’s Back to Business Study, nearly a quarter (23 percent) of SMBs used targeted advertising on social media to reach those online customers.4

Cocktail Kingdom, a U.S. company that makes professional barware for restaurants and bars around the world, added an entirely new customer group during COVID-19. Instead of selling to professional bartenders, the company decided to market to home mixologists and found professional bartenders who were also social media influencers to help reach this audience. They also partnered with local wine and liquor shops to offer Zoom mixology classes which promote their barware.5

Issuers and acquirers can help their SMBs re-imagine their customer base. With more people working remotely, there is an opportunity for issuers to provide marketing services to help match up small businesses with more local customers.

They can also help SMBs find new customers they may never see face-to-face. Many small businesses offer highly specialized products; issuers and acquirers can help SMBs reach new niche markets for these products outside their neighborhoods and support them in transforming into international brands.

Thinking ahead – how to thrive in the post COVID-19 landscape

While referring to the past year as a tough year is an understatement, it is also an exciting time for SMBs. A large majority (82 percent) of SMBs in the U.S. are optimistic about the future.6 In fact, more people are creating new businesses in the U.S. than ever before.7

"Banks need to look beyond what they have typically provided their SMB customers, to identify the needs that are arising in these special times and find ways to solve these problems even if they go outside the traditional services offered," Bowman says. Sometimes that means looking at ways to cross-market and being open to partnering with technology partners who can bring composed solutions to SMBs. Or it may mean partnerships between the acquiring and issuing divisions of banks to help set up earned wage access accounts and treasury accounts, so SMBs are able to pay their employees faster and keep their best employees serving customers.

Many regions are going through another wave of lockdowns or tighter restrictions after they were eased last fall, making it critical to pivot to digital commerce solutions that enable for long-term sustained growth. Whether using contactless payments, new types of delivery, or tapping into new digital tools, SMBs and the issuers and acquirers that support them are getting creative as they weather the current environment and prepare to thrive in the post COVID-19 landscape.

1 The Visa Back to Business Study, June 2020, p.22, https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-back-to-business-study.pdf

2 https://www.culinaryadventureco.com/#

3 The Visa Back to Business Study, June 2020, p. 5., https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-back-to-business-study.pdf

4 The Visa Back to Business Study, p. 12. https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-back-to-business-study.pdf

5 A Barware Company for the Pros Adds Amateurs to the Mix," New York Times, June 12, 2020, https://www.nytimes.com/2020/06/12/business/cocktail-kingdom-barware-pandemic.html

6 The Visa Back to Business Study, June 2020, p. 22. https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-back-to-business-study.pdf

7 The number of new businesses in America is booming," The Economist, October 10, 2020, https://www.economist.com/united-states/2020/10/10/the-number-of-new-businesses-in-america-is-booming

8The World Bank, cited in The Visa Back to Business Study, p.4) https://www.worldbank.org/en/topic/smefinance

9 The Visa Back to Business Study, p. 22

10 The Visa Back to Business Study, p. 16 (Canada) and p. 22 (U.S.)

11 The Visa Back to Business Study, p. 16 (Canada) and p. 22 (U.S.)

12 The Visa Back to Business Study, p. 16 (Canada) and p. 22 (U.S.)

13 The Visa Back to Business Study, p. 16 (Canada) and p. 20 (U.S.)

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