Payments are at the core of the global economy, powering businesses of every size. While multinational corporations dominate the flow, the world’s small and medium-sized enterprises (SMEs) play an essential role in global commerce. They contribute significantly to GDP and job creation. And they are hotbeds of innovation thanks to their agility and proximity to customers.
Despite this central role, SMEs remain underserved by banking and payment providers, with limited access to credit and a lack of tailored financial tools. These challenges are even more complex for small businesses that operate internationally. With around 400 million SMEs worldwide, there are vast untapped opportunities for innovative payments providers to fill the gap.
Difficulties faced by small businesses
SMEs account for 90% of businesses, create between 60% and 70% of jobs, and are responsible for approximately half of global GDP. However, their diversity in size, sector, revenue and geography makes them a challenging segment to serve.
Many SMEs also suffer due to limited access to capital. Lenders have little data with which to make risk assessments on creditworthiness – meaning business owners turn to whatever products are left available to them. According to one recent GlobalData survey, only 16% of SMEs sampled used a small business account. Nearly three-quarters used a personal account for business.
At the macro level, SMEs face the challenges of inflationary pressures and a complex geopolitical environment. For their owners, the top three concerns are growing revenue, controlling costs, and lack of capital. Cashflow management and payment acceptance also rank highly.1
Time is a precious commodity for small business owners. Data suggests that providers who speed up operations, in a simple and cost-efficient way, can reap the benefits of customer loyalty and active referrals.
SME banking and payment preferences
What can the data tell us about the key factors contributing to SMEs’ payment behaviours? In a survey for GlobalData’s 2025 SME Payment Analytics report, in which a cross section of SME owners were asked about their priorities when choosing a payment method, a hard-nosed calculus emerged. The leading lure is balanced between the costs associated with a new method, customer payment preference and speed of settlement, each of which was cited by around half of respondents. Service features carry weight, though less so: after-sales support scored 39% and customer experience 38%. Practicalities such as the ability to recoup costs rank lower at 32%, while availability through the existing provider draws 31%.
What about the next wave of SME payments? Core rails hold sway: domestic fund transfers and cards were the two most reported payment methods among SMEs, with digital wallets rising up the rankings. Instant retail payments now nudge past the halfway mark, with 52% of SMEs making them and 54% receiving. Legacy tender faces attrition, with a full 16% of respondents intending to stop taking cash for domestic receipts and 17% planning to drop cheques.
Appetite for newer methods is selective. 34% of respondents are already using BNPL, for example, while another 21% are planning to adopt it imminently. The landscape is diverse, with no one-size-fits-all policy for SMEs; payment providers will need to respond swiftly and securely if they are to keep up.
SME-specific banking and payment services
The financial institutions with the most enthusiastic SME customers are not necessarily the world’s biggest. They are the ones that can cater to SME-specific needs. For example, National Australia Bank won the Global SME Banking Innovation Awards for three consecutive years. It credits this accolade to innovative initiatives and a customer-centric approach.
The banking and payment solutions for today’s SMEs lean towards integrated platforms that facilitate payment acceptance, submission of service requests and transaction reports. The cross-pollination of data from third parties such as payroll and accounting platforms saves critical time for busy small business owners. Beyond time efficiency, these integrations unlock strategic benefits. By analysing accounting data shared through these platforms, banks can make faster, more accurate creditworthiness decisions, relieving the entrepreneurs of the onerous of task of applying for capital.
It points to a broader trend of SMEs gravitating towards integrated, digital-first payment ecosystems. For example, in June 2020, Axis Bank responded quickly to the global upheaval of the COVID-19 pandemic by partnering with Mastercard and Worldline to offer a payments service that turned phones into point-of-sale devices and offered link-based payments. SMEs need single touchpoint solutions with dedicated value-added services – and want to work with partners who understand this.
Fraud and cybercrime concerns
Security and fraud concerns were cited by a quarter of respondents as a trigger for switching payment providers in GlobalData’s SME Payment Analytics survey. But they survey also found that 57% rely on their provider for fraud tooling, suggesting that security is something SMEs expect to be baked into any payment offering. GlobalData’s 2023 UK SME Insurance Survey found that 54% of SMEs are concerned about the risk of cyberattack; providers failing to integrate cybersecurity as part of their offering are at a major competitive disadvantage.
Awareness is rising. For example, UK Home Office figures show that 38% of micro, 56% of small and 69% of medium businesses have sought guidance on cybersecurity threats. Innovative payment providers are actively developing protection strategies. Those offering faster and more secure anti money laundering (AML) and know your customer (KYC) processes are experiencing significant growth in the SME segment.
SME payments – the final word
Payment providers must keep in mind what matters most to small business owners and optimise operations to align with their needs. SMEs, especially small and micro businesses and those in emerging markets, are sensitive to cost. They also value integrated systems that allow payments, accounting, payroll, logistics, and e-commerce to be viewed and accessed in one place.
The unhindered flow of payments is essential for the growth, resilience and innovation of small businesses. Payment providers that harness the power of data-driven insights, integrated platforms and fast, secure settlement will both optimise their own operations and empower millions of SMEs worldwide.
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