Consumers want digital, but still worry about safety

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A look at how payment processing will evolve in the next year shows retailers that don't consider consumers' evolving demand for digital payments and security concerns will be at risk.

We surveyed 1,110 decision makers at small-to-medium U.S. businesses and 1,062 U.S. consumers, and found three prominent trends. First, we can expect to see consumers continue to call the shots in new-technology adoption. Second, security and fraud prevention will remain paramount. Last, payment acceleration will be top of mind for businesses.

Consumers continue to drive adoption of new technology. Sage’s research shows that consumers see mobile as the future of payments, but the transition from cash and cards to smartphone transactions is likely to be slow and gradual.

More than three-quarters of consumers still carry credit and debit cards, and they’re still surprisingly more likely to use checks over mobile payments. However, consumers fully expect to be using their smartphones much more in a few years. In fact, 35% of consumers expect Apple Pay to be the most popular way to pay in 2020 and 28% believe Samsung Pay will be the favored method.

The focus on security will only intensify. With technology and new ways to pay on the increase, fraud prevention and security will continue to be of paramount concern to consumers and businesses alike.

According to Sage’s research, 78% of consumers have concerns about fraud when paying for goods or services online, and 65% of businesses are worried about cyber security. We’re seeing small-to-medium businesses increasingly focus on security, with the average amount spent on fraud prevention outstripping the average amount lost. For the foreseeable future, getting the balance right between how much a business spends to protect itself versus the amount invested in growth will be an increasingly difficult decision for businesses.

Cash-flow confidence and alternative funding continue to grow in importance
Two-thirds of the business owners we surveyed said that accelerating payments in and out is a priority, with many (29%) saying it’s a high priority.

In 2017 and beyond, any operating model, technology, or innovation that can help businesses get paid more quickly is absolutely critical. Closely related is the way a business is financed. Of the businesses we surveyed, 62% cited their bank as a source of finance over the last year, but crowdfunding is becoming popular: 53% of businesses say they’d consider alternative funding. Indeed, that figure could be set to grow, as 34% say banks aren’t doing enough to make capital available.