Small to mid-sized businesses (SMBs) across the U.S. face struggles due to fragmented and inefficient business-to-business (B2B) payment systems. While many SMBs recognize the potential of integrated solutions to streamline operations, cost concerns and security challenges remain obstacles to adoption.
A PYMNTS Intelligence report, “More Than Half of SMBs Would Switch to an Integrated B2B Payment System,” in collaboration with Priority, highlights the demand for more cohesive payment systems and gaps in existing solutions.
Current operations for SMBs is one of inefficiency and complexity. On average, small businesses use 2.2 systems to manage day-to-day operations, with nearly half relying on multiple solutions for handling B2B payments. The fragmentation is largely seen in smaller firms, where 66% of businesses generating less than $150,000 in annual revenue report needing different systems to meet different needs. In contrast, just 35% of businesses with revenue more than $1 million deal with similar fragmentation issues.
These fragmented systems introduce various operational bottlenecks. Smaller SMBs are disproportionately impacted, as 43% report that no single system meets all their needs, leading to time-consuming workarounds and additional costs. Larger SMBs encounter fewer challenges managing these systems.
According to the report, 81% of SMBs using more than two systems are open to adopting an integrated payment solution, with more than half of all businesses expressing interest in switching. Even businesses with just one system recognize its limitations, with 80% stating they would consider switching to an integrated system if it were offered at the right price.
Cost, though, remains a barrier, especially for smaller firms. Approximately 36% of businesses earning under $150,000 report that the expense of an integrated system would prevent them from adopting it. This reveals the importance of cost-effective solutions for businesses that struggle with the financial strain of multiple payment systems.
Despite the dissatisfaction with fragmented systems, the features SMBs want from integrated payment systems are clear. On average, SMBs report that their current systems offer four features while they desire 5.4 features. The most in-demand attributes are flexibility, security and speed. Only 38% of SMBs benefit from enhanced security features, but 52% identify this as a key requirement. Similarly, while just 33% have access to faster payments, 49% see this as a key feature in an integrated solution.
Additional desired features include simplified payments, better customer support, and more automation. For example, 45% of SMBs want integration with accounting software, but only 35% of their current systems offer this. Payables automation is another priority, with 39% desiring it, but just 29% of systems provide this functionality.
Main Street SMBs are eager to embrace integrated B2B payment solutions to reduce friction and improve efficiency. But challenges like cost, security concerns, and system limitations slow adoption. Payment providers have an opportunity to meet SMB demands by offering solutions that simplify payments and deliver greater security, flexibility, and speed. As demand grows, SMBs are likely to adopt systems that meet these needs and streamline operations.
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