5 small business tools to help boost sales.
Innovation in consumer financing technologies, payment card acceptance, e-commerce fraud prevention, and loyalty marketing services, is helping small businesses take on their larger competitors.
1. Offering consumer financing can help increase sales.
Consumer financing is an often underutilized tool for generating sales. But new consumer financing products are making it an option for more retailers. Consumers may buy more when they can pay over time. Large retailers, especially the ones selling “big ticket” items like refrigerators, washing machines, and home theater systems, use this element of consumer behavior to their advantage. They can often afford to offer financing promotions, or they can partner with banks to issue their own store-branded credit cards. And consumers have become more aware of the interest rates they’re paying on their credit cards.
Small businesses — from retailers to service-based businesses — are usually unable to offer consumer financing on their own because they don’t have enough cash to make loans to their customers, and credit card programs can be too expensive and demanding to manage.
Fortunately, the tables are turning. For example, PayPal Credit1 helps online sellers present a financing option to their customers. It doesn’t cost you anything extra, and it gives your shoppers greater buying power.
2. Mobile point-of-sale devices open small businesses to card sales.
Until recently, the ability to accept credit and debit cards was not available to all businesses. Some small businesses don’t have enough sales or a long enough history to qualify for a business account. In addition, many small businesses have struggled to justify the cost of card acceptance, even when it’s an option. The cost to purchase a point-of sale-terminal and the recurring monthly account fees can add up quickly.
But companies like PayPal are turning their attention to creating mobile card readers and apps that make accepting payments affordable for small businesses. Mobile card readers are devices that business owners and store employees can plug into their smartphones and tablets to swipe customers’ cards. They’re simpler and much less expensive than large point-of-sale (POS) terminals, and even support accepting checks and cash like their POS brethren. Plus, the companies that provide them often charge more predictable fees than some merchant services providers. Moving beyond simple card acceptance, these providers are working to popularize consumer payment apps that work with their mobile card readers. For example, with the PayPal mobile app, a consumer can walk into any business that accepts PayPal and pay by “checking-in,” without having to swipe a credit card.
The development of these technologies is a great benefit to retailers because it enables them to offer customers the much appreciated, and often expected, convenience of broader and faster payment acceptance.
3. Loyalty programs can help drive new business and strengthen your customer relationships.
Some of the companies that provide the most economical credit card acceptance services combine them with automated loyalty programs. For instance, some providers have developed a tablet-based card acceptance solution that also tracks and applies the retailer’s discounts when consumers make a purchase.
Other companies focus entirely on providing loyalty services to small businesses. In general, these solutions are pretty versatile. Retailers can use them to help attract new customers, turn occasional customers into loyal customers, and keep their loyal customers satisfied.
The power of each of these solutions comes from their ability to track offer redemptions to unique customers. This helps retailers get to know their customers better, and allows them to evaluate the effectiveness of their promotions. All retailers want to reward their most loyal customers, and now small businesses have access to technology that can help them manage customer data on an individual basis.
4. Combating fraud to limit e-commerce risks.
Fraud is another concern for retailers, especially those selling products online. The Internet connects small businesses to customers around the world, but the anonymity creates opportunity for abuse. National retailers spend hundreds of thousands, if not millions, of dollars every year on technology that helps them detect when a potential customer is using a stolen credit card or is part of an organized crime ring.
The risk is perhaps even greater for small businesses.
Accepting even one fraudulent order can put you out of business if it’s large enough. Local retailers shouldn’t experiment with e-commerce without first looking into the number of applications that can help them manage the risk.
As consumers have embraced online shopping, more businesses are venturing into cyberspace. Fortunately, many e-commerce companies that service small- and medium-sized businesses either sell fraud detection software or provide fraud services as a component of their offering.
For instance, PayPal offers solutions that filter transactions through a variety of screening criteria to help prevent fraud. Both companies give users the flexibility to customize the filters to target specific threats to the business. Also included is the ability to check for things like discrepancies between the customers IP address and shipping address, the Card Code Verification (CVV) number (the three or four-digit security code on a credit card), and when several orders are submitted in rapid succession. Online retailers that use these tools stand a much better chance against fraudster’s attacks than those that go it alone.
5. Data-driven marketing solutions can also offer great potential for growing your business.
For example, with PayPal Marketing Solutions, you can get unique insights about the shopping behaviors of your customers, and then use those insights to improve their shopping experience.
The battle between local and national retailers might never be a fair fight, but there are several ways that smaller businesses can use technology to become more competitive. Consumer financing, card acceptance, loyalty services, and fraud detection technology are becoming accessible to retailers of all sizes for the first time. Not every new technology makes sense for every business, but these innovations are so central to retail operations that business owners should consider them carefully. New card acceptance and fraud prevention technologies both help businesses contain costs, while loyalty and consumer financing services help drive revenue. Smaller retailers that take advantage of both kinds of technology greatly improve their chances of successfully taking on their national competitors.
About Mercator Advisory Group
Mercator Advisory Group is the leading, independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.
1Customers get No Interest if paid in full in 6 months on purchases of $99 or more. Customers must check out with PayPal and use PayPal Credit. PayPal Credit is subject to consumer credit approval.
Frequently asked questions.
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Learn how to link a debit or credit card to your PayPal account.
PayPal Credit allows your customers to pay for their purchases without entering debit or credit card numbers, or sharing their personal data with you. It’s convenient and secure, and you still get paid right away. And best of all, PayPal Credit customers buy now and pay over time, or by choosing to take extra time on non-promotional purchases and paying a competitive interest rate.
Good for you. Good for your customers.
Offering PayPal Credit as a payment option is not only a benefit for your customers. It can help you boost sales as well as increase average order sizes, 21% of PayPal credit users say they spent more online because PayPal Credit was available1.
PayPal also gives you free, ready-made banners that you can use to advertise the PayPal Credit special financing offer on your website. Adding the banners to your website is as easy as copying and pasting a few lines of code, and you can choose from several different sizes in our financing portal.
When your customers finance purchases with PayPal Credit, you don't assume any credit risk or have to worry about billing customers and collecting their payments. So if a customer doesn't pay, there's no impact to your business or your account balance - PayPal won't deduct the amount from your account to cover the loss. And it's free to put banners on your website and in customer emails. Offering financing increases customers' buying power and encourages them to buy more.
Most customers think about how they're going to pay for a purchase while they're still shopping. And if they know they have the flexibility to buy now and pay over time, they tend to keep adding merchandise to their cart - so you capture sales you may have otherwise missed. Offering financing will also:
- Let buyers pay over time for their purchases.  >
- Boost the average order size on your site.2  >
- Let customers know that you give them more choices, so they come back to shop again.
Plus, the application process is easy for customers: They simply check out with PayPal and select the PayPal Credit payment option, enter a few pieces of information, accept the terms, and get a decision in seconds.
1 Study commissioned by PayPal and conducted by comScore Research. comScore survey administered in Q32017 to over 2,100 U.S. adults who have made online purchases in the past year. Specific questions may have been answered by a subset of the participants.
2 As reported in Nielsen's PayPal Credit Average Order Value Study for activity occurring from April 2015 to March 2016 (small merchants) and October 2015 to March 2016 (midsize merchants), which compared PayPal Credit transactions to credit and debit card transactions on websites that offer PayPal Credit as a payment option or within the PayPal Wallet. Nielsen measured 284,890 transactions across 27 mid and small merchants, Copyright Nielsen 2016.
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