An increase in the cost of living has left some consumers with tighter budgets, with discretionary expenditure changing as a result. To attract and retain price-conscious customers, growing businesses must work hard to meet consumer demand and cater to their payment preferences.
Using findings from Paysafe’s research paper, Lost in transaction: The disposable income report, which surveyed 14,525 consumers across Europe and the Americas, we can share what people expect from small and midsized business payments. In addition to revealing how consumers want to pay smaller businesses, we’ll explore the steps businesses can take to convert shoppers at the checkout.
How consumers are shopping online
According to Paysafe’s research, 13% of consumers had bought from small, independent businesses more often than large businesses in the previous six months. There are regional differences – fewer people in the UK (8%) regularly shop with smaller businesses, while more do so in Argentina (18%). Nearly one-third (31%) of consumers reported buying in equal amounts from small and large businesses, suggesting many are open to purchasing from merchants of various sizes.
As part of the survey, consumers were asked what they like most about purchasing online from a larger business. 31% cited lower prices as their main reason for buying from bigger businesses, which is understandable when household budgets are tight. Also, a quarter of respondents consider a wider range of goods the greatest benefit of shopping with large businesses.
Yet small businesses make a vital contribution to the global economy. In the UK, small to midsized enterprises (SMEs) account for 99.9% of the business population (5.6 million businesses). While in the USA, small businesses employ 61.7 million Americans (46.4% of private sector employees).
What’s more, smaller businesses offer benefits that go beyond competitive price points and an extensive range of products. By taking a more personalized, bespoke approach to customer interactions, smaller businesses can deliver unique experiences consumers love.
Why do consumers love small and midsized businesses?
32% of consumers say the more personalized experience is their favorite thing about shopping online with smaller businesses. This is a more notable priority in South America than other regions – with Peru (43%), Chile (42%), and Ecuador (40%) particularly keen on the personal touch.
Meanwhile, 31% say it’s because their money stays in the community while supporting a local business. The locality of a small business, even when online, resonates – 29% of consumers like the fact they can get local customer support from a small business if they have an issue with an online purchase.
There is a sense of trust regarding quality, too. 29% cite more bespoke, or higher quality, goods as their favorite thing about shopping with smaller businesses. So it’s no surprise that 42% of consumers intended to shop more at local businesses this year.
However, while many consumers love shopping with local businesses, there are challenges to be overcome.
What do consumers expect when purchasing from small and midsized businesses?
Consumers are increasingly keen to ensure the security of their financial data when spending online. In fact, only 43% of consumers globally feel comfortable entering financial details online with small businesses – though this is significantly higher in the US, at 53%.
That said, security matters to consumers regardless of a business’s size. 68% feel more comfortable using a payment method that doesn’t require them to share financial details with businesses of any size online.
By allowing consumers to use alternative payment methods that don’t require them to enter personal information and card numbers, these security concerns can be overcome. eCash solutions such as Paysafecash and paysafecard, or digital wallets such as Skrill, don’t require consumers to share their financial details with merchants, helping customers to feel confident at the checkout. With over half of consumers expecting small businesses to offer all possible payment methods, choice is becoming increasingly important.
A smooth experience is essential, too – 63% of consumers say that if a checkout experience has delays and other complications during payment, they’re likely to abandon a purchase, regardless of the size of the online business. But by embracing payment options that address security concerns and satisfy consumers’ desire for choice, small businesses can gain and retain customers, offering a friction-free experience that fuels growth.
To find out more about consumer payment trends and small business payments, download Lost in transaction: The disposable income report.
