Payments innovations impacted small- to medium-sized businesses (SMBs) in 2024.
For years, SMBs lagged behind larger enterprises in adopting digital payment solutions, hindered by limited budgets, resources and expertise. To this day, many SMBs are operating in a hybrid payment environment, balancing legacy systems with incremental adoption of new technologies.
This slow but steady evolution has opened an opportunity for payment providers to deliver solutions that address key pain points: cost, complexity and scalability.
The PYMNTS Intelligence report “More Than Half of SMBs Would Switch to an Integrated B2B Payment System” found that 81% of SMBs are open to adopting integrated payment systems.
On average, SMBs 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.
As payment providers shift their focus to address SMBs’ specific needs, 2025 promises to be a pivotal year for innovation tailored to this underserved segment.
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The SMB segment has historically been difficult for payment providers to penetrate. Unlike large enterprises, SMBs often lack dedicated financial teams or advanced technological infrastructure, making it harder to implement complex payment systems. With approximately 33 million small businesses in the United States, there’s no one-size-fits-all solution. Despite these challenges, SMBs collectively represent a multibillion-dollar opportunity.
The secret to unlocking this potential could lie in creating solutions that are simple to use, affordable with transparent pricing models, and scalable enough to grow with SMBs as they expand.
Some potentially impactful innovations include digital wallets, which are evolving beyond consumer applications to become essential tools for SMBs. These wallets allow businesses to send, receive and manage money seamlessly while integrating with broader financial ecosystems. For example, embedded finance — financial services integrated directly into non-financial platforms — is enabling SMBs to access loans, insurance and payment processing within a single interface.
The PYMNTS Intelligence report “Embedded Lending: From the Lender’s Perspective” found that 37% of SMBs are highly interested in switching to providers that offer embedded lending options. However, while SMBs are highly interested in offering embedded lending to their customers, the same intelligence showed that one of the biggest opportunities for lenders may be the SMBs themselves.
As SMBs grapple with cash flow challenges, real-time payments could help. By reducing settlement times and improving liquidity, real-time payments systems enable SMBs to manage working capital more effectively. Moreover, the rise of open banking is making it easier for SMBs to integrate real-time payments into their operations.
“Eighty percent of small business owners say that having world-class, digital capabilities is extremely important and, frankly, expected from their bank,” Amount CEO Adam Hughes told PYMNTS in October, noting that when SMBs start looking for the right lending experience, digital is “table stakes at this point.”
See also: Lend, Don’t Break: How Mid-Size Banks Can Overcome Digital Lending Growing Pains
Investing in SMB-centric payment innovations isn’t just good business for payment providers; it’s essential for economic growth. When SMBs thrive, they create jobs, foster innovation, and contribute to local and global economies. Empowering SMBs with cutting-edge financial tools can unlock new efficiencies, reduce operational friction and enable faster scaling.
Marketplace innovations include this month’s launch by Loop of a corporate credit card solution for Canadian SMBs that manage cross-border purchasing, as well as the expansion of a partnership between United Kingdom payments technology firm PayPoint and Lloyds Bank to provide banking and payments services to roughly 60,000 U.K. SMBs.
Meanwhile, artificial intelligence is emerging for the SMB segment. The PYMNTS Intelligence report “New Report: SMBs Race to Critical Mass on AI Usage” found that 96% of SMBs that have used AI tools view AI as an effective way to streamline tasks.
SMBs with increasing revenues and those generating more than $1 million in revenue are twice as likely to use AI as ones with decreasing or stable revenues.
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The post Small Businesses Captured Outsized Gains From 2024’s Payments Innovations appeared first on PYMNTS.com.
