Covid-19 has proven to be a rocky ride for small businesses trying to adapt their services but as the economy opens up, there is hope on the horizon. A new report from CardFlight, a point-of-sale technology provider serving small businesses through its SwipeSimple service, shows that, since the pandemic hit, merchant activity is beginning to increase alongside customer transactions. Evie Rusman analyses the findings
The CardFlight Small Business Impact Report is intended to provide insights into the impacts of Covid-19 on small businesses across the United States. It is based on analysis of a representative sample of over two million transactions processed from March 2 to May 24, 2020 by more than 60,000 small businesses who use CardFlight’s SwipeSimple software to accept credit and debit card payments.
The company says: “In early March 2020, Covid-19 upended all the basic assumptions we had about how small-business commerce works. At CardFlight, we immediately began analysing weekly sales activity of the small business merchants using SwipeSimple to accept payments, in order to gain and share insight into the short-term impacts of these changes.”
The company’s latest report reveals that over the week (May 18–24), small business sales increased 5.2% compared to the previous week. For the first time, sales are now up over the baseline week of March 2–8 by nearly 5%.
In addition, the total number of transactions increased for the sixth consecutive week to 7.4% week-over-week.
The number of active businesses also rose over the week. As a result, the number of active merchants is now down 12.2% from the baseline week, compared to the low of nearly 30% reported in mid-April. CardFlight credits the food and drink sector for this increase as active merchants were up 4% and 3.8% respectively.
To add to this, the average number of transactions per active merchant was up nearly 5% week-over-week, making it 11% above the baseline week.
Food and drink, service providers and retail
During the week May 18-24, sales at food and drink businesses increased by 7.6%, maintaining a healthy margin above the sales numbers seen during the baseline week of March 2–8, 2020.
However, retail businesses suffered a decline in sales of 9.3% after three weeks of growth. Sales in this category are now down 3.6% over the baseline week of March 2–8, 2020. While sales were down week-over-week, the number of transactions was up 4.7% and are now 5.4% below the baseline week.
On a more positive note, sales at services businesses were up nearly 12% week-over-week. This sales increase brings the services category to positive sales growth territory for the first time since March 2–8, up almost 1%. The number of transactions in the services category also increased 7.2% week-over-week, but are still down by 18% over the baseline week.
As lockdown begins to ease in the US and businesses assess how life after Covid will look like, CardFlight has predicted some key transaction trends to watch out for.
In a blog post, the company said: “Now, as communities determine how to reopen safely, governments, employers, and the public are starting to assess how activities will transform in the months and years to come. We believe that small businesses have been permanently changed in several ways. We have made some initial predictions based on current conditions and data, and have looked at how small business owners will need to adapt as they work toward recovery.”
According to the payments provider, shifts in the way businesses accept payments will rapidly accelerate. Specifically, CardFlight predicts emerging trends in the payments sector that were expected over the next decade will accelerate by one-to-three years.
CardFlight claims these trends will be accelerated due to Covid-19:
- Contactless payments – CardFlight suggests contactless tap to pay will become the preferred payment method over chip-and-PIN, swiping cards and cash. Both customers and employees may claim cash as ‘dirty’ and so, merchants will need to accommodate all forms of contactless payments.
- Removing physical checkouts – Actively taking physical checkout out of the equation will rise due to the pandemic, CardFlight says – even for things that have to be done in-person, like purchasing a hot latte and a croissant, and onsite service calls.
- Reprogramming payment terminals to drop the required signature line
- Cloud-based payment solutions – Choosing cloud-based payment solutions to replace physical wired hardware terminals. Business owners will use these “smart” solutions to accept payments while being agile serving customers and to monitor business no matter where they are.
CardFlight plan to release a series of deep dive explorations examining how these forecasts play out as the economy reopens.