Small businesses are suffering as a result of the COVID-19 pandemic, but there are some bright spots according to a new report from the Electronic Transactions Association (ETA) and The Strawhecker Group (TSG) released on April 10.
In a survey of small business owners conducted in late March, almost 40 percent reported that their business operations area closed temporarily or indefinitely. Eating and drinking establishments, education, non-profit and related businesses and retail have been hit the hardest. For those that remain open, the environment is challenging; almost half have experienced a decrease in sales.
Not All COVID-19 Impacts are Negative
However, some subsets of small businesses are experiencing positive signs of growth. Thirty-one percent of businesses report an increase in sales, with healthcare leading the way. Sixty-six percent of healthcare businesses that remain open have seen their sales grow.
The way in which these businesses are getting paid is changing as well. For those businesses still accepting payments on-premises, 27 percent reported an increase in contactless payments made through smartphones and contactless cards.
Payments Acceptance is Changing
Customers are also paying remotely. Restaurants have seen the most dramatic changes as consumers have moved from eating in restaurants to delivery and take-out. Since the start of the pandemic, eating and drinking establishments have cut card acceptance at the terminal in their shop by half, while increasing card acceptance over the phone by two-fold. Twenty-four percent of small business owners that are still open saw an increase in debit card use.
Fraud & Chargebacks Have Seen Modest Impacts
The pandemic has also led to an increase in chargebacks and fraudulent activity, with almost 20% of businesses reporting an increase in attempted fraudulent payments and chargebacks.
“In times like these, one of our most crucial tools for protecting ourselves and our economy is data, because it helps us understand what is actually happening to small business on a macro level as this pandemic advances,” said Jodie Kelley, CEO of ETA. “The payments industry has unique insight into the state of the commerce for small businesses, and we are proud to partner with the Strawhecker Group to deliver this data.”
“As our data shows, there are definitive impacts that the COVID-19 pandemic is having on the American small business,” said Mike Strawhecker, President at TSG. “But we also see bright spots in the midst of this challenging time — optimism from small business owners and an ability to capitalize on socially-distant commerce like contactless payments and online shopping.”
The survey was conducted between March 27 and March 30, 2020 and included a representative sample of over 350 small businesses across U.S. regions and industries.
The Strawhecker Group (TSG) is the largest analytics and consulting firm focused on the payments acceptance industry. TSG serves the entire payments ecosystem and has experience in working on large-scale projects for the world’s biggest payment players. The firm has worked with all card networks, nine of the top ten merchant acquirers in the U.S., as well as leading private equity firms and investment banks. For more information please visit www.TheStrawGroup.com.
The Electronic Transactions Association (ETA) is the global trade association representing more than 500 payments and technology companies. ETA members make commerce possible by processing more than $21 trillion in purchases worldwide and deploying payments innovation to merchants and consumers.