What we learned at Visa’s first Small Business, Big Future podcast

In fast-paced Asia Pacific, small and medium-sized businesses (SMBs) are at the crossroads of digital transformation. Digitalisation is more than a choice for SMBs; it is about succeeding in a world where new consumer needs are pushing commerce and transactions online, disrupting conventional ways of doing business. Digital payments are a critical way for SMBs to future-proof themselves amid these changes.

In this context, digital transformation and disruption were key topics discussed at Visa’s first Small Business, Big Future podcast. Nichol Ng, Managing Director of FoodXervices, Adeline Kim, Country Manager of Visa, Singapore and Brunei, and Zennon Kapron, Managing Director of Kapronasia, spoke candidly about why digital payments matter to SMBs and how the whole financial ecosystem, including Visa, financial institutions, and fintech platforms, can help.

Here are five of the best takeaways from the discussion.

1. In the digital economy, inaction can be costly

When we talk to SMBs about digital payments, they compare the cost of doing nothing versus the cost of acceptance. But doing nothing can also come with its costs.

— Adeline Kim

Nichol and Adeline highlighted that SMBs today may choose not to digitalise their payments due to perceived high acceptance costs, but the costs of not accepting digital payments can outweigh the supposed cost savings. 

Nichol shared her experience at FoodXervices. Before adopting digital payments, her food distribution company operated on cash, incurring significant expenses through manual processes that took away time, manpower, and resources from other more critical areas of the company. For instance, the company had to pay drivers and security guards to move and safeguard physical cash. 

Counting cash manually also consumed time and man-hours that could have been used to improve operations and customer experience. A reliance on cash created hidden opportunity costs that were holding her company back. 

2. A strategic vision is key to effective digital payments adoption

We saw digital payments as not just payment solutions, but part of the innovation that we needed.

— Nichol Ng

While SMBs weigh the costs and benefits of adopting digital payments, many are still uncertain about what they need to do so effectively. Nichol noted the company's previous lack of familiarity with credit cards and the preference among consumers and business partners for cash and cheques, which discouraged digital adoption.

Nichol also spoke about how a strategic vision is critical to effective digital payments adoption, adding value to any business. For her, digital payments were not just another tool or solution, but part of an effort to modernise the company. With digital payments, FoodXervices could transform the way they pay and more importantly, operate with greater efficiency. By simplifying payment processes and streamlining essential tasks like procurement, accounting, and payment reconciliation, it meant that Nichol and her team could run the company more smoothly and optimise for growth.

3. Fintechs are making digital payments more friendly for SMBs

Many fintechs are coming in to disrupt the ecosystem and offer niche services. This is encouraging and helps the ecosystem to flourish, providing SMBs a lifeline when it comes to digital payments.

— Adeline Kim

Fortunately, SMBs are not alone when venturing into digital payments. Adeline explained how fintechs are reshaping the SMB payments landscape. Over the past couple of years, Visa has observed a surge in commercial cards and B2B payment solutions from fintechs, including multi-currency settlement systems which allow SMBs to conduct cross-border transactions easily.

Additionally, fintechs are making it quicker to accept digital payments. Adeline shared the example of Visa’s Tap to Phone technology that allow SMBs to turn smartphones into payment terminals. This helps to reduce the costs of digital acceptance, especially for micro-SMBs, and mitigates the need for extensive paperwork and setup.

4. Digital payments partnerships reduce risk and drive growth

The best solution is to work with a partner that can help remove the funding pressure, step into this space, and help you run your business. Fintechs feel more like partners that develop the business because they take the risks together with us.

— Nichol Ng

Nichol shared how teaming up with fintech partners gave her the confidence to expand her business while reducing risk. A key benefit is that fintech partners help share the costs of digital transformation. At the same time, their expertise also minimises the risk and uncertainty for SMBs, especially those going digital for the first time.

Adeline also highlighted an additional value of partnerships for SMBs – data. For example, working with Visa allows SMBs to monitor and track consumer transactions, offering insights into spending and evolving preferences. Accepting Visa payments also protects SMBs from potential fraud and security risks through AI-powered and data-driven services across the network.

5. Collaboration and integration are the way forward

In the next 12 to 18 months, the payments space will evolve much more. We are going to see more partnerships across the ecosystem. How the region digitalises will influence how SMBs can trade and connect around the region.

— Adeline Kim

In the realm of digital payments, Adeline believes that many untapped opportunities await SMBs. She foresees incredible potential for digitalisation in Asia Pacific and its impact on SMB trade around the region. Banks are also teaming up with fintechs, leading to partnerships that offer more integrated solutions to more small businesses around the region.

Nichol built on Adeline’s points, emphasising the importance of partnerships between banks, fintechs, and SMBs in the future. Through frequent collaborations, all parties can keep a pulse on the digital business landscape, leading to more ease, convenience, and trust as the digital ecosystem continues to grow.

Digital payments can create real and tangible benefits for SMBs. The question is how SMBs can do so, and how the financial ecosystem can help. The first step is a shift in mindset to perceive the opportunities digital payments create and the hidden costs that a reliance on cash can bring. 

SMBs that can take this first step will be encouraged to find a widening range of solutions, offered by fintechs, financial institutions, payment networks, and more. Those that can take a strategic approach to these solutions will find digital transformation easier, as they can adopt the right digital solutions.

Watch the highlights of the podcast on YouTube.

Discover more SMB insights by accessing Visa’s research paper:

Unlocking Growth Opportunities for SMBs with Digital Payments