How payment providers can give small businesses the power to transact online

Small businesses can represent a difficult paradox to payment providers.

In terms of future-proofing and diversification, the small business market is a huge and often untapped opportunity, numbering in the hundreds of millions around the world and encompassing all manner of ecommerce, from makers and crafters to trades and retailers.

With the right partnerships and integrations, it is possible to open the door much wider to attract more small business owners.

And some partners, such as banks, will actively be on the lookout for ways to help crack open this small business opportunity.

The size of the small business market opportunity 

One thing that’s worth pointing out when we talk about the opportunity represented by small businesses is that they may be small by name, they certainly aren’t small by nature.

It’s almost a cliche at this point to say that small businesses are the backbone of the global economy, but that’s only because it’s so true – SMEs account for over 95% of all global companies.

And it’s important to remember that the “small” part of the small business moniker only refers to their headcount, not their potential. While some small businesses might be local firms and small traders, there are plenty who see millions in revenue and have a global reach – and many who will become the big brands of the future.

The size of that small business opportunity will only continue to grow with time. For one, there is already a new wave of Gen Z entrepreneurs entering the small business market, with more following hot on their heels. According to a 2023 ZenBusiness survey of 1,000 Gen Z graduates, 75% said they aim to be entrepreneurs at some point in their career, while 93% say they have actively explored business ownership opportunities in some form.

Then there’s the fact that while we’re in an economic downturn at the moment, those adverse circumstances often lead to a boom in new small businesses forming rather than a slowing down of entrepreneurship. Whether it’s because their current job is at risk or because they’re rethinking their career and work/life balance, entrepreneurship is an attractive prospect to many looking for another way through the challenges ahead.

Take the pandemic, for example. In 2020, 726,000 new businesses were started in the UK, 90,000 more than were started prior to the pandemic in 2019. Meanwhile, the US saw a 27% increase in the number of new businesses formed in 2020 compared to 2019. If anything, that growth has only accelerated since then – the number of new US businesses has stayed above 5 million each year since 2021, despite the economic uncertainty around the world.

Small business owners will be loyal if you make their lives easier

In 2022 we conducted a survey of 500 UK small business owners to find out about their use of digital tools and found that when it came to websites, 62% were not very likely or not at all likely to change providers once they’d settled on one.

That loyalty is often born of a simple fact: small business owners are incredibly busy people. They’re often running their entire business by themselves or with a handful of employees, and don’t have time to shop around for marginally better deals once they find something they like.

If they find a payment provider who makes it easy to understand what they need and to get everything set up with their website and other systems, they’ll happily reward that simplicity with loyalty – and will likely shout about it to the other small business owners in their network, too.

How to package an ecommerce offering directly to small businesses

As we’ve already mentioned, offering payment solutions to small businesses is one thing – offering them in a way that’s efficient and profitable for payment providers is another entirely.

One way to reach the small business market sustainably is to work on packaging your payment tools together with more of the financial and ecommerce tools that your small business customers also need. For example, if they’re looking to take payments online they’ll also need to set up an online store, so integrating your payment tools with a white label store builder can be a way to add more value to your core offering without inflating your own costs.

Payment providers can solve an extra piece of the ecommerce puzzle for banks

This can also be a great way to package your offering when partnering with banks. A recent McKinsey study recommended that banks become a one-stop-shop for small business commercial tools – and a number of banks are already moving in this direction.

If you can offer an integrated ecommerce solution that delivers banks’ small business customers with a fully operational store, banks are more likely to want to partner with your brand. It’ll certainly be a more convenient starting point than talking to separate providers offering disparate components.

Whether you choose to work with banks or sell directly to small businesses, offering an ecommerce solution will differentiate your brand from other payment providers. You can market your offering as a highly attractive cradle-to-grave experience – one that fully supports small business owners in setting up, selling products online and receiving their well-earned income.

BaseKit’s goal is to be anything but a closed shop – we’re striving for tech democracy for small businesses, and the more options we can extend to them via our partnerships, the better.

We’re on a mission for tech democracy for small businesses. Request a demo of our software, or get in touch to discuss what a BaseKit partnership could look like.