If you’ve been to a farmer’s market recently, bought something from a food truck, or had some work done at your house, you may have been surprised at your payment options. Gone are the days of paying with cash or check only. Instead, many vendors have adopted professional merchant services systems, which allow them to accept payment using a mobile card reader instead.
This development is part of a wider trend that is changing the landscape for small businesses and the wider economy. Technology is helping them adapt. This is how.
Why small businesses matter
It’s no exaggeration to say that small businesses, which are defined as having fewer than 500 employees, are the backbone of United States commerce and employment. The government’s Small Business Administration 2021 report estimates that there were 32.5 million of them throughout the United States. This is a remarkable 99.9% of all US businesses. Between them, these businesses employ 61.2 million people, almost half the entire US workforce.
And the number has been growing. The latest available data shows that between March 2019 and March 2020, more small businesses opened compared to the number that closed, resulting in a net increase of 466,607 jobs.
The demographic impact of small businesses is especially interesting, because women (43.1%) and racial minorities (19%) are business owners, dwarfing representation in larger organizations. And, contrary to the image of small businesses being mom-and-pop taco stands, the largest sector for small businesses in the US is professional, scientific, and technical services (50.4% of all small businesses.)
Together, these businesses account for 43.5% of the United States’ gross domestic product.
How they foster innovation
Of course, the pandemic has had a significant impact on all businesses, not just small ones. Many have temporarily, or permanently, closed. But, for those that found a way to remain open, or even start fresh, many have found their size to be an advantage. As most small business owners know, they are more innovative, seeking out and adopting new methods of doing business. For example, they produce 16 times more new patents per employee than larger ones.
This spirit leads small business owners to tackle business in different ways. For example, the cumbersome task of dealing with payment processing has been streamlined by merchant services providers. Now, these companies offer all-in-one services where payment systems work together across platforms, enabling purely e-commerce, bricks and mortar, and hybrid businesses to seamlessly conduct transactions. This minimizes geographical restrictions so that the plumber who comes to your home can offer the same conveniences you would expect from a physical store, like receipt printing, when paying using a card or digital wallet.
And, for those concerned about security, mobile card readers now have built-in EMV (Europay, Mastercard, and Visa) chip and NFC (near field communication) technology. These innovations give both businesses and customers peace of mind that their data is secure.
Using technology gives small business owners a competitive advantage against their peers locally, nationally, and globally. That’s good for them, and good for the United States too.