A spotlight on small business payments

Payments Canada’s latest survey, the Payments Behaviour Tracker — Business study, examines the business sentiment, payment challenges experienced by and payment innovations of interest to Canadian small and medium-sized enterprises or SMEs (with an annual revenue of less than $10 million).

Key study findings:

• Business outlook has stabilized, with the majority (52 per cent) of SMEs believing they will be the same financially over the next twelve months.  
• Delays in incoming/outgoing payments continue to be the payment challenge experienced by SMEs the most (27 per cent) over the past six months.
• Two-thirds of SMEs would use real-time payments to either send (69 per cent) or receive (66 per cent) payments if the option was available.
• Guaranteed payments (38 per cent) and real-time fraud monitoring (37 per cent) appeal to SMEs and would encourage them to use real-time payments, when available.
• Confirmation of payee (37 per cent) and request for payment (34 per cent) are features that SMEs would value the most for sending and receiving payments, respectively.
• There is interest among SMEs to use social commerce (28 per cent) and live commerce (27 per cent) to buy and sell products.

Business sentiment

Business and economic outlook

There was a significant shift in the business and economic outlook of SMEs in 2024. The majority of SMEs (52 per cent) believe that their business will be the same financially over the next twelve months. The proportion of SMEs that believe the economy will be in worse shape twelve months from now significantly decreased to 32 per cent from 41 per cent a year ago.

Future business plans

In the next twelve months, SMEs remain focused on investing more in their business and decreasing expenses. The top three focus areas for SMEs for the next twelve months include improving efficiency (39 per cent), investing more within the business (27 per cent) and decreasing their expenses in general (25 per cent). Twenty-three per cent of SMEs plan to increase their number of employees.

Payment challenges

Overall, payment experiences of SMEs slightly improved between April 2023 and April 2024. The proportion of SMEs that experienced any payment challenges over the last six months decreased from 65 to 63 per cent. The top three payment pain points continued to be delays in incoming/outgoing payments (27 per cent), cash flow management issues (18 per cent) and being forced to accept a specific payment method for getting paid by customers (17 per cent).

Embracing payment innovation

Close to three in four SMEs (72 per cent) believe that payment innovation is key to making payments more convenient, secure and instantaneous, providing consumers with more payment options and important in supporting their overall health and growth. Some of the payment innovations that are of interest to SMEs include real-time payments, fraud monitoring services and social and live commerce.

Real-time payments

Over two-thirds of SMEs (69 per cent) would use real-time payments to send a payment if the option was available, while 66 per cent of SMEs would use real-time payments to receive a payment if the option was available.

The top three drivers for SMEs wanting to send payments in real-time include paying a vendor invoice (22 per cent), paying their employees (18 per cent) and paying government taxes (18 per cent).

In contrast, the top three drivers for SMEs wanting to receive payments in real-time include receiving money from a personal or business account in Canada (25 per cent), a customer bill payment (20 per cent) and refunds for returns, cancellations or over-payments (20 per cent).

Fraud monitoring 

Fraud detection and prevention is the leading generative artificial intelligence (GenAI) application that would drive the most benefit among SMEs (44 per cent). Real-time fraud monitoring services appeal to SMEs (37 per cent) and would encourage them to use real-time payments.

Confirmation of payee ー a service that checks the name of the account holder you intend to pay against the details held for that account by the payee’s bank ー tops the list among the features that would provide the most benefit to SMEs overall for sending payments (37 per cent).

Request for payment ー a messaging system paired with an instant payment that businesses can use to send bills and invoices directly to customers via a mobile banking app ー also tops the list among the features that would provide the most benefit to SMEs overall for receiving payments (34 per cent).

Social and live commerce

Over a quarter (28 per cent) of all SMEs find social commerce ー selling goods or services directly within social media platforms like TikTok, Instagram, Pinterest and Facebook ー appealing. Of the SMEs that do find social commerce appealing, the top three reasons for wanting to use it include reaching more customers (34 per cent), it is an innovative way to do business (13 per cent) and a good way to advertise (9 per cent). Over one quarter of SMEs who don’t currently use social commerce are interested in using it in the future ー for purchasing (26 per cent) or selling (27 per cent) goods.

Over a quarter (27 per cent) of SMEs find live commerce appealing ー buying or selling products on-screen during live-streaming events like music concerts, sporting events, fashion shows and shopping events. The top three reasons for finding it appealing include reaching more customers (22 per cent), it’s an innovative way to do business (15 per cent) and increasing revenue (10 per cent). Over one in five SMEs who don’t currently use live commerce are interested in using it in the future ー for purchasing (23 per cent) or selling (21 per cent) goods.

About the study

The Payments Behaviour Tracker Business survey was compiled to examine Canadian businesses’ sentiments around their future business and economic outlook. Five hundred Canadian businesses were surveyed using Leger’s online panel between July 29 and August 9, 2024.