Financial inclusion in SMEs is a topic of discussion for European governments, financial institutions, banking representatives, and small business associations. Everyone recognizes that SMEs are an important part of the region’s economy and agree that initiating and improving access to funding is a priority.

However, conversations with SMEs and service providers make it clear that this definition of financial inclusion is very narrow. The availability of financing and funding has certainly increased over the past few years, but this success — although valuable and necessary — can often mask dissatisfaction with the financial services available to SMEs.

As per SMB gauges referred to in the examination, computerized installment acknowledgment costs 57 percent not exactly other installment types like money, checks, and SMBs for cash orders. The study found that the risks and losses associated with improper cash management, cash fraud, theft, and procedural costs, and labor costs can significantly exceed the costs and time involved in accepting digital payments such as fees, chargebacks, and systems installation.

Besides, digital payments help SMBs stay competitive and increase sales through better marketing and customer experience capabilities such as e-commerce, loyalty programs, and online ordering. Google pay is one of the best payment services that provide quick and secured payments.

For SMBs offering loyalty programs — which add value to the ability to initiate digital payments — 85% of SMB owners report that the program has a big impact on repeat business, where 80% increase the average ticket size and 74% increase revenue. Still, there is room to grow. According to Visa, only 2 out of 10 SMBs offer loyalty programs. Although e-commerce represents a major share of consumer spending, only 16 percent of SMB business is currently conducted online, the study said.

Acceptance of digital payments can also increase revenue by increasing consumer spending, the Visa report found. As a result of accepting digital payments, SMBs reported an eight percent increase in sales, while medium-sized businesses reported a 17 percent increase, meaning that 78 percent of consumers ranked digital payments as their most preferred payment option. Furthermore, two of the three SMBs told Visa that customers would spend more when using cash along with the card.

E-Payments or Contactless-Payments

According to the Visa Survey, by June 2020, 44% of SMEs in the UAE began offering contactless payment transactions for the first time. Also, the similar ratio of SMEs is clear about their choice for the contactless payment mode they still use frequently. 73% of their total is confident of utilizing the minimum for the next three months. Although corona vaccines are readily available on the market, it is worth noting that more than four in five SMEs prefer their customers to contactless payment methods.

Let us understand what these payments are actually.

An e-payment account offers another approach to send and get cash on the web. More and more people are using e-payment companies because they can make it easy to transfer money and make purchases.

There are two main ways in which e-payment accounts work.

  1. Pay into your e-Money account using a payment card.
  2. Link your e-money account to your payment card.

Contactless payments

Contactless payment allows you to pay for goods with your credit or debit card without having to enter your PIN. All you have to do is wave your card directly at the yellow contactless payment card reader — or tap your card on the reader.

Meeting Consumers Where They Are

What is a good sign for a digital awakening? A significant 97 percent of SMEs in the UAE have undergone updated operations for contactless payment transactions in the last three months, compared to 94 percent in the summer of the previous year. Interestingly, these updates are needed to meet completely new demand in the digital payment segment!
Compared to 65% of customers worldwide, only 77% of customers in the UAE want to go for a contactless payment system only. They now prefer touchless commerce. In the last quarter of 2020, 62 percent of all consumers used digital payment for their needs. This number will redesign the priority that SMEs have for going for contactless payment to attract more customers.

It requires more than just an online presence to appeal to every customer’s desires, needs, and tastes. This requires large data collection and an understanding of what that data means. Only then can brands provide these dynamic insights powerfully — discovering complex patterns and responding to customers with the communication they want.

Fraud Handling

Small business loan fraud is a growing trend and it is an expensive trend. All types of lenders are affected — large banks, small banks, credit unions, and digital lenders. Small & medium businesses in the UAE are very concerned about fraudulent activities in the digital payment system. They prioritize this part overtaking it seriously to gain the trust of customers. Ninety-four percent of SMBs faced questions about fraud-scope and activity by users.

Lenders are focused on streamlining the loan process, but this will make it easier for fraudsters to defraud the system. There are some common profiles used by fraudsters, including legal and counterfeit businesses and combinations of real and fake business owners or customers.

Outsmarting fraudsters begins with a proper toolset and a multi-layered fraud strategy that supports a 360-degree view of the business and people associated with the business. In our study 94% of businesses are highly effective in preventing SMB loan fraud, participating in specialized fraud prevention programs.
Get the full results of our new SMB Lending Fraud study to see how your financial institution compares and how you can bridge any gaps.