A colleague of mine used to say that “smaller businesses don’t think of themselves as small, they just haven’t finished growing yet.” I was reminded of his words when I recently came across research by Worldpay that 1 in 10 of these nascent businesses in the UK miss out on a key catalyst for growth: the ability to accept card payments.
According to analysis from Expert Market, 1 in 4 UK consumers avoid cash only businesses, withholding critical revenues. In Poland, we found that nearly 60 percent of consumers have experienced a situation where they could not pay with their card because the business did not have a payment terminal.
So, how do we help make the process easier for both businesses and consumers? Industry reports cite the cost of point of sale (POS) devices as one of the top reasons why smaller businesses may be hesitant to accept card payments. Rather than adding more technology into their operations, sole traders and micro entrepreneurs are eager to get more out of their existing digital devices.
Mastercard has a vision and a plan to do just that.
Together with our acceptance partners, we are exploring a variety of solutions, including one where small businesses can use a mobile phone to accept contactless payments without the need for any peripheral device. These transactions can be made by a customer tapping their contactless card or smart phone (using a digital wallet, e.g. Masterpass) on the merchant’s device. In the UK, where we are working with Worldpay, and Poland, two markets with high contactless usage, we’ve selected a small group of businesses to test this proposition.
Small businesses participating in the pilots will download and install an app from their payment service provider, create an account and start accepting contactless transactions from their customers. It can’t get easier than this. As their business grows, these companies have an option to upgrade to use a mobile POS or regular POS terminal so that they can accept all other forms of payments.
Leveraging software-based payment solutions is key to enabling those businesses who previously relied on cash and checks to accept cards and other forms of digital payment. At the same time, we have the responsibility to balance any emerging solution with the highest security standards. To this end, Mastercard has developed specific security principles that need to be adopted by all pilot participants. Moving forward, our goal is to continue to work with our partners to develop industry standards for any new type of solution.
Making it easier for small and micro businesses to accept digital payments may spur additional growth for them and enable an additional 40 million of these merchants globally by 2021.