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Small Business Payments Spotlight: How Shoppers Are Paying

Bank of America Merchant Services
Bank of America Merchant Services

The percent of shoppers using digital wallets like Apple Pay and Google Pay to make in-person purchases from small retailers has doubled in the past year to 10%. And they are increasingly using third-party payment methods like PayPal for online shopping – usage has grown from 11% in 2017 to 27% in 2019. That’s according to Bank of America Merchant Services’ third annual Small Business Payments Spotlight released this week.

Other key findings of the report:

  • Debit card usage is down across the board, though despite the decline, it still remains an important and widely accepted payment method.
  • 44% of consumers younger than 30 use their mobile device while shopping more often today than five years ago.
  • Nearly 30 percent of consumers indicated they would not shop at a small business that had experienced a data breach.
  • Half of consumers say they won’t shop at a small business if they have negative online reviews.
  • 70% of small businesses engage in ecommerce through a website, app or third-party market.
  • Top consumer concerns: shipping costs and speed.

Press release follows:

Bank of America Merchant Services, a leader in payments, eCommerce and security solutions, today released its third annual Small Business Payments Spotlight. The report is tailored to help small businesses navigate the complex world of payments through a wealth of timely, actionable information.

For this year’s Spotlight, Bank of America Merchant Services once again worked with Forrester Consulting to survey more than 500 small business owners and 500 consumers throughout the U.S.˟ The report, which highlights the latest payments-focused trends and behaviors, uncovered a number of thoughtful and informative findings, including:

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1) Consumers continue to hunt for convenience at check-out

Key finding: Digital wallets and third-party payments services both doubled in usage in two years, proving that increased convenience and services are starting to attract more consumers beyond the typical early adopters.

When shopping in-person at small businesses, the number of consumers choosing to pay with digital wallets like Apple Pay and Google Pay has doubled in the past two years – topping out at 10 percent. When it comes to online shopping, third-party payment methods, like PayPal, are gaining even more popularity, with usage jumping from 11 percent in 2017 to 27 percent in 2019.

“Today’s consumers are constantly looking for easier, faster and safer ways to shop – both in-store and online,” said Sydney Ivey, general manager for small business at Bank of America Merchant Services. “Our goal at Bank of America Merchant Services is to help our small business clients meet their customers’ evolving needs by providing market-leading payment, eCommerce and security solutions designed to help them improve efficiency and enhance the overall customer experience.”

2) The cost of data breaches continues to grow more costly – for both a small business’ bottom line and customer loyalty

Key finding: Nearly 30 percent of consumers indicated they would not shop at a small business that had experienced a data breach.

Since Bank of America Merchant Services’ first Small Business Payments Spotlight report in 2017, the number of small businesses paying over $50,000 to resolve issues related to data breaches has jumped from 31 to 41 percent. On top of that, the number of consumers who will never return to a small business that has had a data breach reached close to 30 percent in 2019. That’s up from almost 20 percent from 2017.

But small business owners are taking steps to secure cardholder data. EMV chip card acceptance has reached an all-time high of 80 percent among small businesses.

3) Small businesses continue to embrace eCommerce to stay competitive and grow sales

Key finding: 44% of consumers younger than 30 use their mobile device while shopping more often today than five years ago.

With 70 percent of small businesses engaging in eCommerce through a website, app or third-party market, small businesses are recognizing the need to take their business online. Unfortunately, they have to contend with increasingly stringent consumer demands. Top consumer concerns? Shipping costs and speed.

Some small businesses are also disconnected from the way consumers use the internet to research products and services. Since half of consumers say they won’t shop at a small business if they have negative online reviews, not considering the role reviews have in driving sales can be disastrous.

“When you compare the data from our last three Small Business Payments Spotlight reports, it’s plain to see that business owners are increasingly technology savvy and attuned to their customers’ changing expectations to stay competitive,” said Bank of America Merchant Services’ Chief Executive Officer Tim Tynan.

For additional information on how Bank of America Merchant Services can help your business, visit https://merch.bankofamerica.com. Find more tips tailored for small business owners at https://merch.bankofamerica.com or follow us on Facebook or LinkedIn.

About Bank of America Merchant Services
Bank of America Merchant Services brings together market-leading payment, eCommerce and security solutions to help businesses optimize global digital commerce and improve their customer’s purchase journey. We process 17.3 billion transactions at more than 700,000 merchant locations throughout the U.S., Canada and Europe, guiding businesses from the Fortune 50 to neighborhood establishments through the evolving world of payments.

SOURCE: Bank of America Press Release

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

4 thoughts on “Small Business Payments Spotlight: How Shoppers Are Paying”

  1. Shipping cost and speed is NEVER a concern of my clients.
    Ever.
    If it takes 3 weeks, they’re happy to wait…makes it special……
    So……

  2. “Half of consumers say they won’t shop at a small business if they have negative online reviews.”
    But they’ll go to Amazon and get the worst service possible? or another mega-corp that has horrendous reviews? Most reviews are opinions and not fact, keep that in mind.

    Small businesses must face up to the fact that American consumers are some of the worlds worse. Always exceeding the customers expectation is just one of many ways to combat this.

    1. I think that’s actually too broad a statement. They should have been more specific about how people rate a seller. I don’t buy from sellers with negative online reviews, either, but only if they have a high ratio of them compared to positive reviews — and what is high to me might not be high to someone else. It also depends on what is actually said in those reviews.

      For experienced shoppers, which are the ideal customer base in the eyes of most businesses, they know there are far too many variables to consider when choosing to do business with someone online.

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