Phoenix Synergistics: Evaluating the Small Business Payments Market

Dec 2017 | Cards, Checks, and Cash | Payment Innovations | Bill Payment and Invoicing

There is a great deal of activity in the small business payments market as new payment alternatives appear almost overnight. Digital services such as PayPal and Square are just a couple of the options. These new services give small businesses an array of payment choices to use in all types of situations. Traditional options such as checks and cash are frequently used and in some cases are the preferred payment alternatives. Payment cards, including credit and debit cards, are also available to meet the payment needs of small businesses. Small businesses can now offer their customers a number of payment options.

Online bill payment is common practice among small businesses. This activity is expected to gradually move to mobile devices. Remote deposit capture services have been available for a number of years. Providers can offer payment solutions in the areas of payroll, merchant processing and accounts receivable which are designed to make the day-to-day operations of the small business easier and more seamless.

Competition in the small business payments market is intense as Fintech and other non-traditional providers design and market new products and services. These companies are creative, agile and aggressive competitors. Traditional institutions need to be ready to face this competition with their own innovative payment products. In this environment, it is essential for providers to understand the payment needs of small businesses.


  • Profile the current payment behaviors and preferences of small businesses — including cash, checks, debit cards, credit cards, online payments, and mobile payments.  Determine if certain payment methods  are used for specific purposes.  Assess the motivations or reasons for using a particular payment method instead of others.
  • Identify immediate opportunities to shift payment patterns among small business customers.  Ascertain perceived problems with current payment methods.  Evaluate if payroll processing represents an opportunity for providers.  Assess the barriers to adopting direct deposit.
  • Explore how financial institutions can assist small business customers with their bill payment needs.  Determine how many bills are paid per month and what methods are used.  Determine the barriers that exist to further adoption of both online and mobile bill payment.
  • Measure the potential for further expansion of mobile payment activities among small businesses.  Examine current activity – including bill payment, transfers between accounts, loan or credit card payments, e-commerce, and point of sale payments.  Assess the viability of mobile B2B payments.
  • Evaluate how providers can help small business customers improve or streamline their methods of payment acceptance from customers.  Identify how payments are currently accepted and which methods are most prevalent.  Assess the potential for innovative options for accepting payments –  such as electronic invoicing, mobile RDC, and mobile processing of card transactions.
  • Assess the relationship implications related to adoption of certain payment methods – including such aspects as having a credit card from the main checking provider and conducting online bill payment at the FI’s site.  Determine if mobile payments are driven by apps downloaded from FIs.
  • Determine how new payment methods and options should be marketed to small businesses.  Evaluate the effectiveness of traditional segments – such as sales volume, industry classification, or number of employees.  Explore how current payment behavior relates to the potential for innovative payment alternatives.

Survey Topics

  • Environment
  • Current Account Usage
  • Credit Card Usage
  • Debit Card Usage
  • Cash Activity
  • Bill Payment Behavior
  • E-Commerce, Internet Activities, and Mobile Payments
  • Deposit Behavior and Accounts Receivable


National Internet Survey – The survey will include 800 online interviews with owners and executives of small businesses with annual sales of $50K to $5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

December 2017 – Project Report available.


Key Findings from the Report

Traditional checking holds its ground as innovative services grow in usage.

  • Eight in ten small businesses have checking accounts, writing a mean of 31.8 checks per month. Check writing activity is strongly related to sales volume. The large majority (87%) are likely to continue using checks as a payment method in the future.

  • Small business use of mobile card processors, such as Square and others, has increased significantly in the past 2 years.

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