In a changing world disrupted by COVID-19, small to medium enterprises (SMEs) in South Africa have the opportunity to embrace many solutions presented by digital technology, or risk missing out on the future of business.
Contactless pay points, access to data and other accessible tech innovations have made business easier to manage for many during pandemic-era trading. Small to medium enterprises specifically stand to gain from the advancements made by easier cashless payment methods at the point of sale.
The way in which consumers are interacting with money has changed since the onset of the pandemic. According to a Visa South Africa survey earlier this year, 48% of consumers indicated that they did not want to shop at a store that has payment methods that require contact, while 59% of people prefer to engage in contactless money transactions in general.
The COVID-19 pandemic has accelerated the need for small businesses to get onboard the digital train to stay relevant in a changing marketplace. But the options to do so are also becoming easier and more accessible for all types of SMEs. We explore some of those here.
Going online and cashless systems
When it comes to going digital, not all SMEs are the same or will have the same needs. Many still require on-site service, while others can go completely remote. For the most part, all SMEs within the category have to consider their digital presence, with two main things to consider.
"The first is putting your business online. That is an absolute must in today’s world," says Karin Mathebula, Head of Product, Sales and Service Enablement at Relationship Banking at Absa.
"Even if you are still operating from your shop, to be online means that you reach a much bigger audience. The second is the utilisation of non-cash-based payments. As soon as you put your business online, there is the opportunity to enable customers to shop online. Even in your physical store context, it's really important to offer your customers the cheapest, safest way to pay for the goods or service that they are procuring, and certainly digital payments are the way to go."
An SME that has not considered cashless payment options, will miss out on an opportunity. Allowing customers to shop and pay online has proved to be a preference for many consumers during lockdown.
"Going digital means that people can buy your product and pay for it online or use cashless options such as tapping a bank card, or Apple Pay on their phone on site. But more importantly, everybody can see your business and it expands your customer base," says Mathebula.
Accepting non-cash-based payments also means that you don’t have the cost and risk of handling large amounts of cash on your premises.
Digitisation is ultimately about businesses using digital tools to analyse, learn and predict how things will be done in the future. It is a means of gaining as much information about your customer as possible and converting that into useable data.
For example, online shopping enables online payments – that information is turned into data that helps us to track the payment and the goods from that moment. Another example is paying with a card or a phone at a pay point. While the goods are physically exchanged, the payment linked to the goods becomes data immediately. Large corporations such as Amazon or Spotify have become experts in connecting buyers or listeners with sellers or producers.
"What’s important for SMEs, is to see the opportunity of being part of this big world of data – data about customer activity and the payments that they make, generate the ability to learn what else a customer likes or is interested in, how they pay for things, and offers the opportunity for other businesses to connect into each other’s value chains."
Overcoming hurdles – costs and digital literacy
There are naturally some hurdles to overcome in transitioning to digital, but solutions are becoming more widespread. For many small businesses, these hurdles include the cost of data, being able to maintain cashflow properly, as well as finding alternative distribution channels.
"Both of these have an impact on the ability to raise finance, which is the most commonly identified barrier to growth and success by SMEs. Fortunately, we are able to support SMEs with tools to improve their ability to easily manage cashflow and collect payments. These in turn enable us to proactively offer cashflow support," says Mathebula.
Banks such as Absa provide credit or cashflow financing. SMEs can use the data from their own bank account to create a cashflow statement using tools linked to their account, such as Absa’s Cashflow Manager. This helps to generate the sort of financial data on the basis of which credit decisions are made. It provides basic accounting information, can generate quotes and issue receipts.
SmartPay is a point-of-sale application that allows digital onboarding so that the customer does not have to physically go anywhere. A small business can have digital solutions, such as Absa’s Mobile Pay, this software turns your mobile phone into a Point of Sale (POS) device which allows merchants the ability to accept contactless payments on their smartphone.
These tools are ultimately a smarter way of doing business, which lowers costs and enables small businesses to produce more and focus on sales. This will help SMEs grow their share of the pie rather than just increase the number of slices.
For more information on Absa’s eCommerce solutions, go to absa.co.za or click here.
This post was sponsored by Absa and produced by BrandStudio24.