Small Businesses Are The Future For Digital Payment Players
As a result of the pandemic, small businesses have adapted to new ways of selling with many incorporating digital payment solutions. As we emerge from the pandemic, the biggest growth opportunity for digital payment players is to develop and deliver additional value add services for small businesses. Bernstein analyst Harshita Rawat estimates that this is a $4 trillion market with hundreds of small businesses still using legacy payment providers.
As the lines between online and offline have become increasingly blurry, digital payment players need to better serve the needs of small businesses by offering agnostic solutions. These payment solutions should integrate and be easy to use whether a business is performing a transaction at the counter in their physical store, walking around at the farmers market swiping cards with a phone, sharing their Venmo username for payment, or completing a transaction on their website.
Small businesses are increasingly relying on platforms such as Shopify and Etsy to help them digitize their sales and payments. Digital payment players should form partnerships with platforms that small businesses rely on, such as Shopify & Etsy, to power the payment work behind the scenes for those platforms.
The real growth opportunity for digital payment players will be the value add services on top of the payment solutions each player will offer to both buyers and sellers. For example, Square has a strategy to develop value add services such as web-building products and potentially provide services to stream music for artists. The success and future growth of digital payment players will depend on which value add services are provided to small businesses and which company is able capture the largest market share.
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