While mobile payments providers are making inroads with some retail giants, the real battle shaping up will be for small businesses. These homegrown brick-and-mortar shops that line Main Street hold the key to broad-based mobile commerce. If small business fails to embrace these new commerce solutions, the current wave of innovation will stall. To be successful, banks, merchant acquirers and financial service providers need to devise solutions for this diverse, fragmented merchant base.

While small businesses can be overshadowed by megaretailers, their combined revenues account for roughly half of all retail spending. They generate an oversized amount of dynamic new ideas and drive a major portion of retail innovation and growth. Mobile commerce players like Square, Intuit, PayPal and American Express realize no digital wallet can reach ubiquity if it is limited to big-box stores. Winning mobile solutions have to percolate down at the local coffee shop as well, where they can become part of the customer's daily grind. The social-local-mobile (SoLoMo) wave hinges on local demand for offers, coupons and loyalty. As a result, local small business is critical to mobile commerce. Without them, opportunity (and a ton of venture capital) is toast.

There is encouraging news; however. McKinsey research indicates that small businesses are open to mobile commerce. They definitely see the mobile payments wave coming and expect it will be widespread at the POS in the next three to five years. Next, better marketing and customer communications are a priority for these businesses; more important than mobile payments alone. Moreover, half of the small businesses surveyed said they would be willing to experiment with tablet or phone-based POS systems, especially those that open platforms for new services, lower prices and added convenience.

In addition, the survey highlights that the business owner's profile matters. Younger owners (25-35 years old) and smartphone users are about twice as likely as the average business owner to embrace mobile commerce. Businesses that are already multichannel – using the store, Internet and other avenues to drive sales – believe mobile holds a key. As a result, mobile commerce providers need to recalibrate their positioning based on business demographics.

For banks, merchant acquirers and other providers, these shifts have major implications. It can cause businesses to demand new payment options, more transparency on fees and better integration with other small-business apps. It could also lead them to switch providers entirely. Players like First Data and VeriFone see this potential change and are moving toward more open platforms to facilitate mobile commerce solutions.

For all the excitement, however, doubt remains about mobile integration. Business owners worry about confused customers, frustrated patrons and lost sales. When asked which mobile payment solution would succeed at the POS, half of the survey respondents expressed confusion at the dizzying options. The other half, however, suggested the winners would provide simple solutions based on such existing systems as entering mobile phone numbers or QR codes.

Banks and other financial service providers looking to win in small-business commerce must heed their needs. To start, business owners are keen observers of customer behavior. If customers want mobile devices to search for products, compare prices and pay, many business owners will move to offer a platform that has these features. Business owners also expect mobile commerce applications to work at the cash register (or on an iPad) and are willing to pay a premium for new sales. Providers, therefore, need to show an increase in business is provided by mobile commerce. Next, providers must make new applications easy to deploy and deliver meaningful savings in time or money. Lastly, small businesses often look for trusted sources of advice from people that know their issues … other small-business owners. Winning providers will convert their customers into "prosumers" of mobile channels, boosting organic customer growth.  

The future of mobile commerce remains uncertain, but small-business adoption clearly holds the key to ubiquity. While small business is a turbulent market, entrepreneurs are hungry for effective new commerce tools. This makes it a fertile market for financial services providers to adapt and bring new commerce solutions. The shift to mobile commerce-enabled small business will challenge existing business models but also allow fast-moving providers to deepen their relationships and ultimately deliver a better experience to consumers.

Dan Ewing is a senior expert at the global consulting firm McKinsey & Co.