How To Leverage Payment Solutions To Fuel SMB Relationships

The single biggest e-commerce purchase ever made is reported to be the $40MM paid by businessman Mark Cuban for a Gulfstream V business jet in 1999. The sheer scale of the transaction is remarkable, considering that digital payment security tools were in their infancy, and some had not even been developed yet. Two-factor authentication, for instance, did not become widespread until the mid-2000s. 3D Secure, which requires inputting a password or security code for credit card transactions online, was developed by Visa the same year that Mark Cuban made his record-breaking online purchase.In today’s increasingly digital economy, small and medium-sized businesses (SMBs) expect their primary financial institution (FI) to provide more than just traditional banking services. With payment technologies becoming a core part of business operations, SMBs are increasingly seeking intuitive, fast, and secure payment solutions that integrate seamlessly with their processes and help to meet their customers’ expectations — especially customers who may need to move large sums of money domestically or internationally. This presents a significant opportunity for community financial institutions (CFIs) that want to build stronger, longer-lasting relationships with SMB customers. Payment Solutions To Help Make Your Relationships with SMBs StickierHere are some of the payment strategies that CFIs can implement to appeal to new SMB customers, while also fostering loyalty with existing business customers and boosting deposit retention:1. Offer Omnichannel digital payment solutions. To meet the needs of their customers, SMBs want reliable, efficient, and integrated payment solutions that support payment processing across multiple channels — such as in-person point-of-sale payments, e-commerce and online transactions, real-time and instant payments, and mobile wallet payments. In fact, a recent Global Payments Inc. survey revealed that 82% of SMBs plan to increase their investment in embedded payments, with a similar number also testing or adopting digital wallet technology. The ability to process payments quickly is becoming a competitive advantage, and businesses are adopting faster payment systems such as real-time payments. CFIs may want to consider offering white-label software solutions that small businesses can integrate with their systems and use to embed payment functionalities into their existing applications — for example, their mobile apps or directly through their accounts payable systems.  2. Go beyond simple payments processing. As CFIs strive to build deeper relationships with their SMB clients, expanding their service offerings beyond basic payment processing can provide valuable differentiation. This includes offering tools to support cash flow tracking, inventory management, and payroll processing. According to a report by McKinsey & Company, more than half of SMBs say they would prefer to get all their tools from one financial institution. Integrating payments systems with invoicing and accounting software as well as these other tools can help SMBs overcome reconciliation challenges, streamline their financial processes, simplify supply chain finance, and save time, effort, and money. By offering these integrated platforms and solutions, CFIs can position themselves as a trusted partner to their business customers, helping them to manage their operations more effectively so they can focus on growing their business. 3. Prioritize fraud detection and prevention. As digital payments grow, so too does the risk of fraud. This is especially true for SMBs, as they often lack the resources required for comprehensive fraud prevention systems. To mitigate these risks, CFIs may consider supporting their SMB customers by using the likes of artificial intelligence and machine learning. Other options include tools such as payee verification; step-up authentication, which utilizes multi-factor authentication to provide a high assurance level in certain adaptive authentication environments; and real-time data integration to prioritize real-time fraud detection and prevention. Doing so will better enable SMBs to manage some of the risks associated with digital transactions and reduce the risk of financial losses while fostering trust and loyalty in their CFI. 4. Provide international banking capabilities. Given that 97% of US companies that export are SMBs, international payments solutions are a key consideration for CFIs. SMBs that look beyond local markets for growth opportunities want the ability to conduct cost-effective cross-border transactions and accept payments in different currencies. CFIs that offer global payments capabilities, including multi-currency accounts, international wire transfers, and foreign exchange services, can tap into this growing demand and potentially open new revenue streams.

5. Consider partnering with a third-party payments provider. To offer their business customers the all-in-one, cost-effective payment solutions they desire, CFIs may need to determine which services to develop in-house and when to partner with payments providers (such as PCBB) or fintechs. Partnering with specialists can allow institutions to tap into the expertise of these partners in areas like embedded finance, digital wallets, or fraud prevention, while they focus on their core banking and customer relationship strengths.CFIs can position themselves as trusted partners to new and existing SMB customers by offering flexible, integrated, and cost-effective payment solutions that meet these customers’ unique needs. CFIs should emphasize their strengths in terms of customer support, local expertise, and personalized service to augment their payments solutions and stay competitive.