Responding to the stressful economic conditions brought on by the coronavirus pandemic, more than half (51%) of businesses in the U.S. and Canada have transitioned their customers to digital payment methods.
This is according to a new survey of small businesses from Mastercard, which looks into just how much the pandemic has driven B2B digital payments adoption.
Cash flow issues are a significant part of the reason many small businesses increased their usage of digital payments, according to a press release. More than one-third (38%) of respondents indicated that they are having issues with late payments and slow processing times for cash and checks. This delay is more crippling than ever in the current economic environment, with almost half of respondents agreeing that they are one missed payment away from losing their businesses.
These cash flow concerns have led almost two-thirds (64%) to steer customers away from cash and checks, the study said.
Unsurprisingly, based on this finding, most of the survey’s small business respondents (91%) cited speed and security as their top priority, with transparency a close second at 87%.
“The pandemic has made it painfully clear how labor-intensive current business payment processes are, especially for small and medium-sized businesses,” said Ron Shultz, executive vice president, New Payments Business, North America at Mastercard. “With cash flow more critical than ever, we’re seeing an accelerated shift to digital B2B payments as businesses of all sizes look to safeguard their operations today and prepare for the future.”
The study also indicated that small businesses are unlikely to change back to their previous payment methods once the current crisis has subsided. Almost three-fourths (73%) of the respondents said that digital payments have become the “new normal” for their businesses.
“IDC research shows that consumers have reduced their use of physical currency to half of what it was before the pandemic, as they increasingly look towards contactless forms of commerce, whether e-commerce, local delivery, and/or ‘buy online and pickup in-store’ (BOPIS),” the press release quoted Nigel Wallis, IDC research vice president, as saying.
“At the same time, the business world is jumping into the Next Normal by embracing digital payments and e-commerce in their existing B2B workflows, as well as expanding into direct to consumer (D2C) channels. In IDC’s view, these aren’t temporary changes, this is the evolution of business going forward.”