PFs and Financial Inclusion: How Payment Facilitators Help Drive Merchant Acceptance
All over the world, digital payments are experiencing a surge in growth. Ecommerce usage is up, and adoption of contactless payment methods is rising exponentially.
Much of the growth over the last few months is a result of pandemic concerns about handling cash and the need to obtain necessities during lockdowns. But those circumstances have only accelerated a trend that already existed.
In recent years, payments companies have joined with governments and other entities with a renewed focus on growing digital payments acceptance. There are multiple reasons for the interest. For many small and micromerchants, electronic payments are an inroad to inclusion in the broader financial system.
According to the Better Than Cash Alliance, enabling more people to accept digital payments saves money, increases transparency and security, and opens up more financial services for individuals, including access to credit and savings and insurance products. The organization argues that the cumulative effect of including these businesses in the financial system has the potential to lift entire economies.
Beyond of that noble goal, however, offering a choice of payment options to enable consumers to use their preferred methods can simply mean that business isn’t turned away. The pandemic has highlighted the need to give small businesses every available advantage as they work to stay afloat during challenging times.
But where do companies operating as payment facilitators fit in to this picture?
For years, major payment companies and acquiring banks have found small and micromerchants too difficult and expensive to reach considering what are often modest payment volumes. And for the businesses that have never accepted electronic payments, the cost to acquire payments infrastructure was traditionally steep and the process complicated. These factors combined to keep digital payments out of reach for many.
But now, payment facilitators provide a link between legacy providers and new entrants into the market. PFs entered the payments space to solve problems of access across a variety of industries and circumstances in creative and compliant ways.
Mastercard acknowledged this recently after announcing its own commitment to bringing 50 million micro and small businesses into the digital economy over the next five years. The company noted that PFs can serve as a key partner in its efforts to enable broader access by onboarding merchants that are otherwise difficult to reach.
By design, payment facilitators are able to focus on specific customer needs and provide localized solutions. And they’re comfortable with devising relevant, technology-based solutions that bridge the gap between merchants and traditional payment providers. The PF business model was built specifically to streamline underwriting, onboarding and customer service, making payments easy so merchants can focus on their business.
As digital payments usage expands into previously unserved markets, PFs’ customer focus and technology know-how will provide them with opportunity not only to grow their own businesses, but also to help small and micromerchants thrive.