The payments puzzle: why we must help SMBs navigate the complex world of payments

The payments industry has become significantly more intricate over the last decade. Advancements in technology, the emergence of new payment methods, and changing regulations are just a handful of the reasons why the industry has become a complex and interconnected system that requires a great level of expertise to effectively navigate.

It’s little surprise that many small and medium sized businesses (SMBs) are struggling to keep up. Many simply do not have the resources or bandwidth to dedicate an entire job role to payments acceptance. As such, payment technology decisions at SMBs are often made by people without a payments specific background, particularly by those in operations, finance and marketing roles. When coupled with the jargon and lack of transparency from payment providers, we should all be worried about the negative impact this is having on SMBs.

We recently sought to understand how this intricacy is affecting SMBs researching the People Behind Payments. We found that despite almost three in four (72%) of those in charge of payments acceptance stating they understood how UK retail payments work, when asked to place the different parts of the payment value chain in the right order to show how a transaction is handled, 96% answered incorrectly. 

Addressing this lack of understanding must be a priority for merchant acquirers. Getting it wrong could see merchants maintain high outgoings and lower profits. Without understanding the numerous nuances and players involved in accepting a payment, it is difficult to identify which of the many solutions available is right for a particular business. For example, a rapidly growing business might need faster access to its funds in order to reinvest them into the company, whereas another business may want to prioritise an omnichannel payment solution.

Our research found that almost eight in 10 (78%) of those surveyed do not know how to switch payments provider, despite more than half (52%) wanting to do so. We must level the playing field; SMBs should be able to easily access clear information about payment providers and the different services they offer. I firmly believe that it is our job, as payment providers, to simplify payments and help SMBs to make informed decisions. We must strip back the jargon, overcomplication and complexity to grant the people behind payments a better understanding of how our industry operates.

There are three core ways in which this can be achieved:

1)   Remove all jargon

It's easy to fall into the jargon trap. In a bid to sell how good our products are we can forget who the end customer is, and their level of understanding.

How many times have you read a similar sentence to this? ‘Our innovative, futuristic payment solution offers a hyper-connected, omni-channel payment experience, leveraging advanced APIs, SDKs, and cloud-based SaaS technologies to enable seamless checkout conversion with high-performance real-time payment processing, seamless dynamic currency conversion, industry-leading advanced fraud detection and prevention, impenetrable PCI compliance, and cutting-edge 3D Secure authentication.’ We could boil this right down to ‘secure and seamless multi-channel payments’ - language every merchant will understand. 

Payments must be accessible. Our survey asked whether those responsible for payment acceptance enjoyed this part of their role. Shockingly, 100% of those in finance job functions who responded negatively stated that that their lack of enjoyment of managing payments acceptance was due to an inability to directly compare different payments providers. It’s obvious - they can’t directly compare providers because of the range of jargon being used across the industry.

2)   Transparent pricing 

In any other industry, smoke and mirrors around product pricing would be a huge point of contention, but in payments, many acquirers are not being transparent about their pricing upfront – and are getting away with it. For many, it seems as if transparency is simply a nice to have, not an essential. 

SMBs account for around three fifths (61%) of UK employment and 51% of total turnover in the UK private sector. They are the bedrock of our economy. As such, they deserve fairer treatment. Payment providers must equip them with the very best services aligned to the needs, wants and budget. As such, pricing must be fair, consistent, directly comparable, and - above all – accessible. 

3)   Educate customers

Payment providers must go above and beyond simplifying the language used and increasing the transparency of their pricing. When the industry is so complex, they must actively educate payment decision makers. As stated earlier, many decision makers are unaware of the widening knowledge gap – and justifiably so. 

As payment providers, it must be our job to actively take a step back and educate merchants. Almost eight in 10 (78%) of payment decision makers readily admit that they don’t know how to conduct a search for a new payment provider. This can – and will - result in SMBs being slow to adopt the emerging payment methods that their customers expect, or even lead them to pay over market value for a middle of the road solution. By providing impartial and unbiased educational resources, we as an industry can make a real difference to the people behind payments.

It’s been a challenging few years for British SMBs. But we have a golden opportunity to make a real difference to many, helping them to navigate what is undoubtedly a difficult sector. Transparency, education, and simplicity are the first steps towards making payments accessible to everyone.