Scott Henry is director of product marketing for North America at VeriFone Systems Inc.
There is a huge market of small businesses—an estimated 18 million to 20 million—that are currently not reached or are underserved by payment services. With the broad range of wireless payment devices available today—from robust, dedicated mobile terminals to cost-effective, multiuse smartphone-based solutions—ISOs have an opportunity to cultivate vast ranks of previously untapped customers. The challenge is figuring out how to find them.
A 2008 Experian report on small business owners estimates that 67% of all businesses employ between one to four people. The most recent data from the U.S. Census tallies 19.5 million non-payroll firms (primarily self-employed sole proprietors operating unincorporated businesses) and another 2.7 million payroll firms with one to four employees.
Relatively few of these businesses are believed to accept online credit/debit card payments. That’s a lot of business awaiting ISOs, who today have access to wireless options to fit just about any price point. But—there’s always a “but”—many if not most of these on-the-go businesses lack traditional storefronts, so it’s going to take creativity and research to tap into this new, lucrative market.
Many of these non-equipped businesses rely primarily on cash and checks, even though consumers clearly want the option to pay with credit and debit cards.
For many, that means lost sales, increased risk of losses from bounced checks, and potential loss of market share to more adept competitors. As has been shown in market segments from convenience stores to quick-serve restaurants, card acceptance increases revenue and induces consumers to increase the size of their purchase.
Consider some segments that today rely primarily on cash and checks (even though consumers clearly want the option to pay with credit and debit cards). The tow-truck segment is one example. There are thousands of towing companies in the United States, not to mention gas stations that also operate a tow truck. Or how about home-oriented businesses. An estimated 100,000 carpentry and floor-laying businesses are barely penetrated by card acceptance devices and where cards are used, ticket prices average $1,000 or more.
Similar opportunities await with plumbing, heating, ventilation, air conditioning, roofing and electrical contractors.
Where To Find Them
There’s obviously a case for tapping into new markets. But how do you go about finding them, especially as many of these small business entrepreneurs don’t have traditional storefronts and may be working out of their own homes? It can be as simple as picking up the local Yellow Pages or checking out membership at the local business associations such as a chamber of commerce. Other potential resources include national, regional and state trade associations, industry trade publications, such as
Contractor magazine and Plumbing and Mechanical magazine, and labor associations, such as the United Brotherhood of
Carpenters & Joiners.
You should also leverage the lead-generation activities of your vendors and service providers. They have larger marketing budgets than you and likely will welcome input into how to improve their return on investment. But you also need to develop insight into the needs and business practices of these unique market segments and come up with strategies to match the right product and service to those needs.
Going To the Dogs
Even smaller businesses can benefit from wireless payment solutions. From mobile dog groomers to florists, home repair companies to photographers, party planners to exterminators, custom jewelers to house sitters, the potential is endless. Many smaller businesses likely already are smartphone users who could be particularly susceptible to some of the new solutions coming on the market. They already have the base platform and likely a data networking plan, so it’s just a matter of equipping them with the right software and peripheral and convincing them of the payback they’ll get from a monthly service agreement.
The explosion of consumer wireless adoption has made wireless payment ubiquitous, fast and relatively inexpensive. For relatively low costs, small businesses can minimize or even
eliminate cash and checks and no longer lose the business of customers who only pay with cards.