Financial payment systems have been digitizing for the past five years, and the pace has accelerated since COVID. Unfortunately, many small businesses are still lagging in accepting all digital forms of payment that customers and vendors prefer, which is harming their bottom line.
This week on The Small Business Radio Show, Kerry Hatch, President of Plastiq, discusses how important it is for small businesses to accept and pay with any type of digital payment for any customer or vendor.
Kerry was the President of the American Express Open when the small business payments category was created and its importance to the American economy was recognized. Kerry stated that American Express wanted to assist this category because they were a powerful segment once communicated with.
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Kerry Hatch of Plastiq on Digital Payments
While the payments landscape is changing, Kerry notes that there are still small business owners who only accept cash and checks. According to Goldman Sachs, while it costs $22 to process a check for a small business, 60% of them still accept it as payment.
The transition to digital payments has been difficult for small business owners because many of them still use legacy processes. Because of the fee structure, small business owners, according to Kerry, have never had the same opportunity to pay by credit card to all of their vendors as consumers have. Kerry mentions Goldman Sachs’ prediction that modernizing B2B payments and financial systems will unlock $1 trillion in global value over the next decade.
This is why she became involved with Plastiq because their service allows small businesses to use their credit card wherever and whenever they want, regardless of whether the company accepts credit cards. Plastiq, as the digital payments advocate, enables customers to pay small business owners with credit cards even if you do not accept them directly.
According to Kerry, the ability to use a credit card allows a business to extend its cash flow by 30-45 days before the payment is due. This is ideal for new businesses that are just getting started and have little cash flow to get their product off the ground. Plastiq, Kerry adds, also allows small businesses to avoid significant up-front costs for production and inventory by “floating payments to us so that they can see returns from sales before their payments are due.”
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