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The adoption of mobile card readers by some small businesses is impacting their need for credit, according to a recent survey by SYNERGISTICS Research entitled, Re-Evaluating the Small Business Credit Market.
SYNERGISTICS examined the adoption of mobile card readers such as Square and GoPayment that allow small businesses to accept credit card and debit card payments from their customers via mobile phones or tablets.
Findings show that close to four in 10 small businesses have used this type of mobile reader. These users were asked if their usage of this device has resulted in any of a number of consequences for their business. Half of the users indicate they have improved cash flow because funds from sales are available more quickly.
Impact of mobile card reader usage
Slightly less than half say usage of the device has resulted in increased sales. More than one-third cite an increase in sales at new venues, while three in 10 say their company has less need for credit services due to the improvement in their cash flow (Exhibit 1).
“Some new technological innovations may be resulting in some unexpected impacts on financial services usage in the small business market. Usage of mobile card readers is a prime example,” explains William H. McCracken, CEO of SYNERGISTICS.
“Findings show that usage of these new devices is improving cash flow for small businesses, which may be resulting in a diminished need for credit among these organizations. At the same time, a significant number report increased sales in new venues.
These businesses may very well have increased credit needs as they plan for expansion and new business ventures. Lenders will need to monitor the adoption of new technological innovations in the financial services area in order to address any behavioural or product usage changes that may result from these new entries.”
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