Small and medium businesses (SMBs) are a vital lifeline of the global economy. Worldwide, they represent 90 per cent of businesses and 50 per cent of employment and are often the cornerstones of growth and innovation.
In Asia-Pacific, their impact is even bigger. SMBs account for over 97 per cent of all businesses and employ over half of the workforce across Asia Pacific Economic Cooperation economies. They contribute significantly to economic growth, with their share of gross domestic product ranging from 40 per cent to 60 per cent in most countries.
Asia Pacific’s micro-businesses are also on the rise, with a new generation of digital-first micro-businesses that includes millions of creative individuals in the fast-growing creator economy.
Small businesses have shifted firmly into growth mode. Increased digitisation in key areas like services, logistics and payments has enabled this segment to reach new audiences and improve efficiencies.
Such payment advancements have allowed small businesses to access markets and opportunities that were not previously possible.
Here are five reasons why 2024 is shaping up to be a huge year for small businesses:
Rise of social commerce and the creator economy
By 2025, social commerce is expected to reach US$1.2 trillion, including work driven by a new generation of digital-first online content creators.
This trend is further propelled by shoppable media and influencer content, empowering SMBs to engage consumers to make purchases directly through social media platforms or navigate to brand sites.
About 54 per cent of consumers are more likely to purchase from an SMB through social commerce than through traditional e-commerce, indicating a significant opportunity for SMBs to increase their sales through social commerce.
Growth through cross-border selling
Technology and globalisation have upended the SMB landscape by providing them unprecedented access to global audiences. In fact, 79 per cent of surveyed SMBs by Visa expressed a strategic focus on cross-border selling for their growth initiatives.
The proliferation of e-commerce platforms, particularly in the Asia-Pacific region, also plays a pivotal role.
With integrated payment systems seamlessly connecting buyers from Switzerland to sellers in Sri Lanka, the prospect of selling to consumers on the opposite side of the globe is no longer a distant aspiration for SMBs.
The accessibility offered by these platforms diminishes geographical barriers, expanding the horizons for micro businesses and fostering a more interconnected global marketplace.
Small businesses take flight with travel rebound
SMBs are vital to the travel industry, making up 80 per cent of businesses in the sector, and they directly benefit from the post-pandemic travel rebound.
With business travel expected to surpass pre-pandemic spending levels in 2024, SMBs across food and beverage, tour guides and home-share operators should be well-positioned to capitalise.
To fully harness the potential of this travel rebound, SMBs should not only focus on optimising their payment processes but also tailor their offerings to meet the evolving needs and preferences of the post-pandemic traveler.
This includes embracing digital payment methods favoured by modern travelers and implementing secure and efficient transaction systems.
Moreover, by ensuring their systems can accept payments from inbound tourists, businesses pave the way for the next crucial step in enhancing their financial capabilities – embracing payment interoperability.
Payment interoperability, acceptance are top priorities
In a landscape where user experience is king, SMBs must prioritise offering a seamless and secure consumer payments experience.
It is particularly critical to address potential points of friction in the payments process because users may abandon their online shopping cart if faced with difficulties in completing their purchase leading to missed opportunities that SMBs can ill-afford.
SMBs today have a multitude of options for receiving payments, ranging from digital wallets and cards to account-to-account transfers.
In order to thrive in this evolving ecosystem, SMBs must prioritise implementing a compelling and user-friendly checkout experience, and partner with banks and fintech providers that offer advanced technologies to do so.
In addition, ensuring the safety of transactions with technologies such as tokenisation, biometrics, EMV chips, and predictive analytics play a crucial role in fortifying security measures, providing SMBs with the necessary tools to safeguard their financial transactions and customer data.
Big tools no longer just for big businesses
While SMBs typically adopt a gradual approach to digitalisation, unlike larger companies who are pack leaders, this is set to change.
Over the next year, 91 per cent of SMBs said they are at least somewhat likely to consider available AI tools and services such as ChatGPT to help elevate their business against competitors.
This shift will not only help them reach new audiences but also improve their overall agility in streamlining their processes, enhance efficiency, and stay competitive.
The confluence of these trends signifies that 2024 is the opportune moment for small businesses to leverage digitalisation and payment innovations. Payments are no longer just transactional; they have become an integral part of every business’ strategy for success and resilience.
As small businesses embrace these transformative shifts, they are not merely adapting to change. They are positioned to thrive and redefine the future of commerce on a global scale.
The writer is Visa’s head of merchant sales and acquiring, Asia-Pacific.
Source: The Business Times. Link: Here
February 26, 2024
