#AfricaLeads: Local SMEs introduce new payment methods
The pandemic resulted in local SMEs embracing innovative new payment methods to survive and meet customer needs, research from PayPal, FNB and World Wide Worx, found.
The pandemic resulted in local SMEs embracing innovative new payment methods to survive and meet customer needs. This was the finding of a local research study with PayPal, FNB and World Wide Worx.
The research released last week, was conducted by World Wide Worx on behalf of PayPal and FNB. It shows that South African SMEs went online in response to the pandemic; extended the number of payment methods they offer; and started looking to international customers. South African SMEs’ digital response to the pandemic, and the role of cross-border transactions features data and insights from some 400 local SMEs. The results show that online shopping is well-entrenched with local consumers, and that customers are comfortable with the payment options on offer.
- 64% of businesses have introduced more online payment methods in response to the pandemic.
- 79% report customers are more comfortable with online payments since the pandemic started.
- Nearly a third have started targeting international customers.
- During the pandemic, 9 out of 10 respondents established an online presence, with more intending to follow suit.
- Nearly half of small businesses in South Africa say the cost of delivery is too expensive to take on an online ecommerce channel.
- More than 4 in 5 businesses say their customers are generally comfortable when shopping from online stores; but this drops to under half when asking the same question about international stores.
- Nearly 3 in 4 (74%) businesses have started automating their business activities in response to the pandemic. A further 17% intend to make the shift.
Arthur Goldstuck, World Wide Worx CEO, who led the research, explained: “Nearly two thirds (64%) of businesses have introduced more online payment methods in response to the pandemic, enabling more customers to pay via the methods they want. Another 22% intend to introduce more methods.” This, commented Mark Mwongela Ngungi, PayPal sales development director, Africa, speaks to the maturing of the sector and businesses’ drive to provide their customers with the payment methods they prefer.
Automation aids customer service
Four of five businesses (79%) surveyed say their customers are comfortable shopping online and making online payments. Accepting orders through online shopping carts has had an overall business impact on 71% of responding businesses, showing the power of automation that ecommerce platforms can provide. In fact, 74% of businesses have started automating their activities in response to the pandemic, the survey shows. This is known to increase customer service and decrease costs, which is why a further 17% are intending to make the shift, Goldstuck added.
Almost a third of the businesses surveyed have also begun targeting international customers since the pandemic started. This is an encouraging statistic, given that four in five (79%) of South African businesses, currently, do not sell their products internationally.
Operating internationally can be challenging for small businesses, which lack education on market opportunities outside South Africa’s borders, aren’t familiar with fulfillment methods and need to become more comfortable with global payment methods, warned Ngungi. Factors causing hardship flagged by the respondents, include lower customer demand (46%); supplier issues (38%); and delivery to customers (35%). Connectivity, Goldstuck said, which has traditionally been a problem, was only mentioned by 4% of businesses.
PayPal has remained at the forefront of the digital payment revolution for more than 20 years. By leveraging technology to make financial services and commerce more convenient, affordable, and secure, the PayPal platform is empowering 429 million consumers and merchants in more than 200 markets to join and thrive in the global economy – including on the African continent.
Main image credit: Pixabay.com.
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