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Payments Pulse Survey: Small Business Edition (October 2019)

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This year’s survey, which focuses on the payment trends, interests, and views of Canadian small businesses, revealed the majority of small businesses do fewer than 25 per cent of their transactions in cash but still feel obligated to accept it.

The 2019 Payments Pulse: Small Business Edition was undertaken by Leger and Payments Canada between September 17, 2019 and September 24, 2019. An online survey of 300 Canadian small business owners of companies with less than 499 employees was completed using Leger’s online panel. The margin of error for this study was +/- 5.6%, 19 times out of 20.

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Payments Pulse Survey: Small Business Edition (October 2019)

  1. 1. DATE Report PROJECT NUMBER2019-10-07 82685-030 SMALL BUSINESS EDITION PAYMENTS PULSE SURVEY: PAYMENTS CANADA
  2. 2. 2 METHODOLOGY QUANTITATIVE RESEARCH INSTRUMENT An online survey of 300 Canadian SMB payment decision makers was completed online between September 17-24 2019, using Leger’s online panel. The margin of error for this study was +/-5.6%, 19 times out of 20. In order to qualify: › the size of the small business could not exceed 499 employees; › respondents needed to be at least partly responsible for decisions about the business’ payment methods; and › businesses need to fall into a set list of industries (i.e. retail, consultancy, services, manufacturing, wholesale trade, or hospitality). ABOUT LEGER’S ONLINE PANEL Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90%. QUALITY CONTROL Stringent quality assurance measures allow Leger to achieve the high-quality standards set by the company. As a result, its methods of data collection and storage outperform the norms set by WAPOR (The World Association for Public Opinion Research). These measures are applied at every stage of the project: from data collection to processing, through to analysis. We aim to answer our clients’ needs with honesty, total confidentiality, and integrity.
  3. 3. KEY FINDINGS
  4. 4. KEY FINDINGS PAYMENTS ▪ Preferred methods for paying vendors and suppliers vary. SMB payment decision makers prefer to pay their vendors and suppliers with credit cards (62%), cheque (57%), or e-transfer (51%). ▪ Preferred methods for receiving payment from customers are varied as well. The top three methods this time include, e- transfers (58%), followed by cheque (53%) and cash (44%). ▪ Similarly when it comes to the most efficient payment method to process, the top three methods stay consistent. Two- thirds (63%) find e-transfer efficient to process followed by cheque (48%) and credit card (44%). ▪ One-quarter believe that they did frustrate or may have frustrated a customer by not having the method of payment the customer preferred, and two-in-ten say they did or may have lost a sale because of not offering a customer’s preferred payment method. CASH PAYMENTS ▪ Seven-in-ten (68%) SMB payment decision makers receive some cash payments each month from customers, with half saying up to 25% of their business is in cash. Larger and higher-earning small businesses are more likely to be handling cash payments. ▪ The majority are spending less than 20 hours a month processing cash payments, with (74%) three-quarters of businesses spending 10 hours monthly or less processing cash payments and 15% spending 10-20 hours per month doing so. ▪ Seven-in-ten (71%) say they, as a small business, have an obligation to their customers to accept cash payments, while six- in-ten (61%) say accepting cash is important to the success of their business. Larger SMB’s (100-499 employees) are more likely to agree that accepting cash is important. ▪ Six-in-ten (63%) agree their business would benefit from sending and receiving more data or information, such as an invoice, with an electronic payment, with businesses with 100-499 employees significantly more likely to agree (91%).
  5. 5. KEY FINDINGS DIGITAL PAYMENTS ▪ Two-thirds (64%) of SMB payment decision makers agree they would be likely to use digital payments (giving up cheques and cash) if they could send/receive more data or information, such as an invoice. Again, the larger the business, the more likely to agree with this. ▪ There are barriers to the adoption of digital payments, with cost being the main barrier for 38%. The technology itself is a barrier for 26%, while 20% are concerned about having a lack of information or education about digital payments. Four-in- ten see at least two barriers to adopting digital payments. ▪ Despite any barriers, seven-in-ten (68%) feel they could be encouraged to adopt digital payments within their business, particularly having a clear return on investment (36%). Two-in-ten also feel that having some personal support or coaching, grants/funding to pay for the technology, and educational resources being available would encourage them to adopt digital payments. ▪ Three-quarters (74%) of SMB payment decision makers feel that their business would benefit from sending and receiving instant electronic payments. ▪ Nearly half (46%) say their business relies on digital transactions (card, tap, mobile) to operate. Since offering contactless payments (card, tap, mobile) 39% say their business’ bottom line has improved.
  6. 6. DETAILED RESULTS
  7. 7. 75% 10% 5% 5% 1% 1% 2% 2% <500 501-1000 1001-1500 1501-2000 2001-2500 2501-3000 More than 3000 DK / I prefer not to answer 75% PROCESS ANYWHERE UP TO 500 PAYMENTS A MONTH; 23% PROCESS MORE THAN THAT. 0005 On average, how many payments does your business make and receive in a month? Please consider point-of-sale to the customer, and payments to and from suppliers. Base: All (n=300). 7 NUMBER OF PAYMENTS MADE AND RECEIVED PER MONTH 23% process more than 500 payments per month Three-quarters (75%) of SMB payment decision makers say their business processes up to 500 payments per month, while one- quarter (23%) process more than 500 per month with 14% processing more than 1000 payments per month.
  8. 8. 8 TOP5 CREDIT CARDS AND CHEQUES ARE POPULAR METHODS TO PAY VENDORS AND SUPPLIERS. 0007 What is your most preferred method to pay your vendors and suppliers? Please select all that apply. Base: All (n=300). 8 62% 57% 51% 30% 28% 24% 18% 6% 4% 3% 3% 2% 35% 22% 19% 6% 9% 4% 3% Credit Card Cheque E-Transfers Cash Automated funds transfer/ direct deposit PayPal Debit E-Wallet (i.e. Apple Pay, Google Wallet, etc.) Contactless/Tap Digital currency Retail apps DK/prefer not to answer Total methods Preferred method PREFERRED METHODS TO PAYING VENDORS AND SUPPLIERS Six-in-ten SMB payment decision makers say their business prefers to pay their vendors and suppliers with credit cards (62%) or by cheque (57%), while slightly fewer say e-transfer (51%). Cash payments and automated funds transfers follow with three-in-ten saying these are their preferred methods to pay vendors.
  9. 9. 9 TOP5 E-TRANSFERS AND CHEQUES ARE POPULAR METHODS TO RECEIVE PAYMENT FROM CUSTOMERS. 9 58% 53% 44% 37% 33% 23% 21% 6% 4% 4% 3% 1% 23% 18% 15% 16% 15% 6% 4% E-Transfers Cheque Cash Credit Card Automated funds transfer/ direct deposit / pre-authorized debits Debit PayPal E-Wallet (i.e. Apple Pay, Google Wallet, etc.) Digital currency Contactless/Tap Retail apps DK/prefer not to answer Total methods Preferred method PREFERRED METHODS OF RECEIVING PAYMENT FROM CUSTOMERS 0008 What is your most preferred method to receive payments from customers? Are there any other methods you prefer to receive? Please select all that apply. Base: All (n=300). The preferred methods to receive payments by SMB payment decision makers from their customers is by e-transfer (58%) and by cheque (53%), followed by cash (44%). Although credit card is most desirable when it comes to paying vendors and suppliers, only four-in- ten (38%) want to receive payment with a credit card.
  10. 10. SOME CUSTOMERS ARE FRUSTRATED IF THEIR PREFERRED PAYMENT METHOD IS UNAVAILABLE, LEADING TO POSSIBLE MISSED SALES. 0009 Has a customer ever expressed frustration because you did not offer the payment method they preferred? 0010 Have you ever lost a sale as a result of not offering a customer’s preferred payment method? Base: All (n=300). CUSTOMER FRUSTRATED BY LACK OF PREFERRED PAYMENT METHOD: 25% 14% 11% 74% 1% YES/MAYBE (NET) Yes Maybe, but I’m not sure No DK/prefer not to answer One-quarter (25%) of SMB payment decision makers say a customer has either definitely or possibly been frustrated by the lack of a preferred payment method, while two-in-ten (20%) say this has or possibly has lost them a sale. Those in Quebec are significantly more likely to say they have not lost a sale because of not offering a customer’s preferred payment method (89% vs. 76% rest of Canada). LOST A SALE DUE TO LACK OF PREFERRED PAYMENT METHOD: 20% 11% 9% 79% 1%
  11. 11. FOR 30%, NO MONTHLY PAYMENTS ARE MADE IN CASH. 0011 What percentage of your monthly payments from customers is completed in cash? Base: All (n=300). 11 MONTHLY PAYMENTS MADE IN CASH 30% 49% 10% 6% 4% 2% 0 1-25 26-50 51-75 76-100 DK/ prefer not to answer 68% Receive cash payments each month from customers. Seven-in-ten (68%) SMB payment decision makers say their business completes at least some of their payments in cash, with half (49%) saying 1-25% of their payments each month are cash transactions. Smaller businesses, either those with fewer employees (<100 vs 100+) or those earning less revenue (<$500K / $500+ annually) are significantly more likely have no cash transactions from customers.
  12. 12. 12 TOP5 E-TRANSFERS ARE THE MOST EFFICIENT PAYMENT METHOD TO PROCESS. 12 63% 48% 44% 33% 33% 24% 21% 5% 3% 3% 1% 1% 27% 17% 19% 14% 10% 6% 5% E-Transfers Cheque Credit Card Automated funds transfer/ direct deposit Cash Debit PayPal E-Wallet (i.e. Apple Pay, Google Wallet, etc.) Contactless/Tap Digital currency Retail apps DK/prefer not to answer Total methods Preferred method MOST EFFICIENT PAYMENT METHOD TO PROCESS 0012 What payment method is the most efficient for you to process? Do you find any other payment methods efficient? Please select all that apply. Base: All (n=300). Six-in-ten (63%) SMB payment decision makers say that e-transfers are efficient payment methods, with 27% saying it is the most efficient. Half say cheques (48%) and credit cards (44%) are efficient payment methods. One-third find automated funds transfer / direct deposit (33%) and cash (33%) an efficient payment method.
  13. 13. THREE-QUARTERS SPEND 10 HOURS OR LESS A MONTH PROCESSING CASH PAYMENTS. 0013 On average, how much time do you spend a month processing cash payments? Base: All (n=300). 13 89% Spend 20 hours or less per month processing cash payments MONTHLY PAYMENTS MADE IN CASH 74% 15% 7% 1% 4% 10 hours or less a month 10-20 hours per month 20-30 hours per month More than 30 hours per month DK/prefer not to answer Three-quarters (74%) of SMB payment decision makers say their company spends ten hours or less each month processing cash payments. Smaller businesses, either those with fewer employees (<100 vs 100+) or those earning less revenue (<$500K / $500+ annually), are significantly more likely to spend less time processing cash payments each month.
  14. 14. SEVEN-IN-TEN AGREE THAT SMALL BUSINESSES HAVE AN OBLIGATION TO THEIR CUSTOMERS TO ACCEPT CASH. 0014, 0015 , 0016 To what extent do you agree with this statement: Base: All (n=300). Seven-in-ten (71%) SMB payment decision makers believe their business has an obligation to their customers to accept cash as payment, and six-in-ten (61%) believe that accepting cash is important to the success of their business. Nearly two-thirds (63%) agree that their business would benefit from the ability to send and receive more data/information (such as an invoice) with an electronic payment. Larger businesses (100-499 employees vs <100 employees) are significantly more likely to agree that their business would benefit from sending and receiving more data/information (eg. invoice) with an electronic payment and that accepting cash as payment is important to the success of their business. 10% 11% 19% 11% 15% 19% 16% 37% 35% 45% 34% 25% 19% Small businesses have an obligation to their customers to accept cash as payment Accepting cash as payment is important to the success of my business. My business would benefit from sending and receiving more data/information (eg. invoice) with an electronic payment. DK/prefer not to answer Strongly disagree Somewhat disagree Somewhat agree Strongly agree AGREEMENT WITH THE FOLLOWING AGREE SIZE OF BUSINESSS (NET) 1 2-100 100-499 71% 76% 66% 79% 61% 55% 60% 82% 63% 49% 67% 91% Significantly higher
  15. 15. TWO-THIRDS AGREE THAT THEY WOULD BE LIKELY TO USE DIGITAL PAYMENTS IF THEY COULD SEND/RECEIVE MORE DATA. 0017 How likely would you be to use digital payments (give up cheques and cash) if you could send and receive more data / information (e.g. invoices) with a payment? Base: All (n=300). LIKLIHOOD OF USING DIGITAL PAYMENTS: 24% 40% 15% 12% 9% Very likely Somewhat likely Somewhat unlikely Very unlikely DK/prefer not to answer 64% LIKELY 27% NOT LIKELY Two-thirds (64%) of SMB payment decision makers say their business would be likely to use digital payments (give up cheques and cash) if they could send and receive more data / information (e.g. invoices) with a payment. Again, larger businesses (100-499 employees vs <100 employees) are significantly more likely say they would be likely to do so. SIZE OF BUSINESSS 1 2-100 100-499 17% 25% 45% 35% 41% 45% 17% 16% 6% 18% 10% - 13% 7% 3% Significantly higher
  16. 16. 75% 38% 26% 20% 17% 16% 14% 11% 6% 23% 2% ANY (NET) Cost Technology Lack of information/education Value to business Time Lack of support Effort Other I don’t see any barriers to adopting digital payments DK/prefer not to answer 0018 What do you see as barriers to adopting digital payments? Base: All (n=300). THREE-QUARTERS SEE AT LEAST ONE BARRIER TO ADOPTING DIGITAL PAYMENTS; COST IS THE MAIN BARRIER. BARRIERS TO ADOPTING DIGITAL PAYMENTS: Three-quarters (75%) of SMB payment decision makers say they see at least one barrier to adopting digital payments in their business, with cost (38%) being the number one barrier, followed by technology (26%) and lack of information/ education (20%). Four-in-ten (38%) see 2 or more barriers to adopting digital payments 38% See 2 or more barriers to adopting digital payments
  17. 17. A CLEAR RETURN ON INVESTMENT WOULD ENCOURAGE 36% TO ADOPT DIGITAL PAYMENTS. 0019 What would encourage the adoption of digital payments within your business? Base: All (n=XXX). KEYS TO ENCOURAGING ADOPTION OF DIGITAL: 68% 36% 22% 21% 19% 8% 18% 14% ANY (NET) Clear return on investment Personal support/coaching Grants/funding Educational resources Other Nothing would encourage me to adopt digital payments DK/prefer not to answer Seven-in-ten (68%) SMB payment decision makers say they could be encouraged to adopt digital payments within their business, with 36% saying that a clear return on investment would encourage them to do so. Two-in-ten feel that personal support/coaching (22%), grants/funding (21%), and educational resources (19%) would encourage them to adopt digital payments within their business. Only 18% say nothing would encourage them to adopt digital payments. Larger businesses (100-499 employees vs <100 employees) are significantly more likely to say that something would encourage them, while smaller business (<100 employees vs 100+ employees) are significantly more likely to say nothing would encourage them. SIZE OF BUSINESSS 1 2-100 100-499 45% 79% 91% 20% 43% 48% 12% 23% 52% 11% 27% 27% 11% 18% 45% 11% 7% - 29% 12% 9% 26% 9% - Significantly higher
  18. 18. THREE-QUARTERS SAY THEIR BUSINESS WOULD BENEFIT FROM SENDING/RECEIVING INSTANT ELECTRONIC PAYMENTS. 0020 , 0021, 0022 To what extent do you agree with this statement: Base: All (n=300). 6% 4% 8% 20% 30% 12% 13% 21% 47% 30% 32% 27% 9% 14% DK/prefer not to answer Strongly disagree Somewhat disagree Somewhat agree Strongly agree Three-quarters (74%) of SMB payment decision makers agree their business would benefit from sending and receiving instant electronic payments. Half (46%) say their business relies on digital transactions to operate, while 39% say that their business’ bottom line has improved since offering contactless payments such as card, tap, or mobile. Larger businesses (100-499 employees vs <100 employees) are significantly more likely to agree with all statements below. AGREEMENT WITH THE FOLLOWING: AGREE SIZE OF BUSINESSS (NET) 1 2-100 100-499 74% 60% 77% 97% 39% 17% 43% 88% 46% 24% 51% 85% Significantly higher My business would benefit from sending and receiving instant electronic payments. Since offering contactless payments such as card, tap, mobile my business’ bottom line has improved. My business relies on digital transactions (card, tap, e-transfer) to operate.
  19. 19. 52% 26% 21% 3% 2% 37% 1% 10% RELY ON SOMEONE (NET) My financial institution My payment service provider External consultants Neutral third parties I manage it independently Other DK/prefer not to answer 0023 Who do you rely on to support you in the adoption of new technologies for your business, such as digital payments? Base: All (n=300). HALF RELY ON SOMEONE ELSE WHEN ADOPTING NEW TECHNOLOGIES FOR THEIR BUSINESS. SUPPORT IN ADOPTION OF NEW TECHNOLOGIES: Half (52%) of SMB payment decision makers rely on someone for support when adopting new technologies for their business, such as digital payments, with one-quarter (26%) relying on their financial institution and 21% relying on their payment service provider. Nearly four-in-ten (37%) manage the adoption of new technologies themselves. Sole proprietors are significantly more likely to manage the support of new technologies on their own compared to larger companies (2 or more employees). SIZE OF BUSINESSS 1 2-100 100-499 31% 60% 82% 22% 29% 24% 7% 24% 48% 2% 4% 6% - 4% 3% 49% 33% 18% 2% 1% - 18% 6% - Significantly higher
  20. 20. 37% 33% 15% 14% 2% 37% 9% 27% 15% 6% 3% My financial institution My payment service provider External consultants Neutral third parties Other No one. I am comfortable with the level of support I receive. DK/prefer not to answer 0024 Who would you like more support from? Base: All (n=300). FOUR-IN-TEN SMALL BUSINESS OWNERS WOULD LIKE MORE SUPPORT FROM THEIR FINANCIAL INSTITUTION. WHO WOULD YOU LIKE TO RECEIVE ADDITIONAL SUPPORT FROM? When it comes to additional support for the adoption of new technologies, four-in-ten (37%) SMB payment decision makers say they’d like it from their financial institution, with one-quarter (27%) saying this is their top choice. One-third (33%) would like additional support from their payment service provider, while 37% are comfortable with the level of support they already receive. SIZE OF BUSINESSS 1 2-100 100-499 18% 43% 67% 13% 38% 70% 4% 20% 30% 4% 15% 36% 1% 2% 3% 59% 29% 12% 17% 5% - Significantly higher
  21. 21. RESPONDENT PROFILE
  22. 22. Men 59% Women 41% RESPONDENT PROFILE 16% 22% 22% 21% 19% 18-34 35-44 45-54 55-64 65+ AGEGENDER Base: All (n=300). SIZE OF THE BUSINESS 34% 33% 13% 9% 11% 1 2-9 10-50 51-100 100-499 22 REGION QUE 24% WEST 31% ATL 4% ON 42%
  23. 23. 50% 21% 16% 6% 6% < $250 K $250 K - < $1 M $1 M - $4.9 M $5 M+ REFUSAL 23 RESPONDENT PROFILE YEARS IN BUSINESSREVENUE DECISION-MAKING RE: PAYMENT METHODS 13% 26% 58% 3% <5 years 5-10 11+ DK / prefer not to answer INDUSTRY Base: All (n=300). 46% 23% 17% 9% 4% 2% SERVICES CONSULTANT RETAIL MANUFACTURING WHOLESALE TRADE HOSPITALITY 75% 25% Myself Shared with myself and someone else
  24. 24. THE TEAM
  25. 25. Lisa Covens Vice-President Communications and Public Affairs O: 416-964-4107 lcovens@leger360.com Ashley Simac Research Director Communications and Public Affairs O: 416-964-4114 asimac@leger360.com 25 THE TORONTO PR TEAM Kathleen Theriault Research Technician Communications and Public Affairs O: 416-964-4112 ktheriault@leger360.com
  26. 26. @leger360 /LegerCanada /company/leger360 @leger360leger360.com

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