SMBs Will Switch Banks for Real-Time Payments

From SMBs demanding real-time payments to Klarna’s latest BNPL expansion and the skyrocketing growth of payment gateways, the payments industry is evolving fast, creating new opportunities and challenges for businesses and consumers alike.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your daily dose of payments notes.

A Third of SMBs Would Switch Banks for Real-Time Payments

Last week, when James Shepherd stood in for me, he reported on an article from PYMNTS.com about SMBs and their need for integrated payments. Today, I want to give another shoutout to the website PYMNTS.com.

A just-published article highlights recent research by Deloitte on how micro and small businesses are underserved by most banks. Another study by Datos Insights confirms that a lack of faster payment options is driving 61% of SMBs to fintechs for their banking needs.

What’s more, 1 in 3 SMBs say they would switch banks for real-time payment options.

It’s not that banks don’t have access to faster payments. RTP, the real-time payment system operated by The Clearing House, can reach 90% of demand deposit accounts in the U.S. The banks holding these accounts provide real-time payments to their large business customers. They need to extend the same functionality to SMBs.

And here’s why: research from PYMNTS reveals that instant payments benefit SMBs more than enterprise customers because SMBs have a greater need for faster cash flow.

SMBs face severe cash flow challenges today—77% operate with barely sufficient cash flow, according to PYMNTS. Many are even willing to pay fees for instant payments—about half would pay a percentage-based fee, while the other half prefer a fixed fee. Any way you look at it, offering SMBs real-time payments is a profitable opportunity.

BNPL for Late-Night Snacks and Groceries

It’s been a big month for the buy now, pay later (BNPL) firm Klarna. The Stockholm-based company just inked a deal with DoorDash to offer Klarna’s payment options to DoorDash customers. Customers can use Klarna as a pay-in-full option at checkout or choose to:

• Pay in four equal, interest-free installments.

• Defer payments to a more convenient time—when their bank accounts are flush.

This announcement follows news that Klarna has secured a deal with Walmart to be the exclusive BNPL provider for the mega-retailer’s customers. Klarna has also just filed paperwork with the SEC for an IPO.

When BNPL companies first emerged, many assumed they were just a passing trend. But BNPL has proven its staying power and continues to grow. As Worldpay reveals in its latest payments report, online spending using BNPL skyrocketed from $2.2 billion in 2014 to an astonishing $342 billion in 2024.

Payment Gateway Market Headed to $161 Billion

Finally, let’s look at the global payment gateway market, which surged past $26 billion in 2022 and is projected to reach $161 billion by 2032, according to Market.us Scoop. The compound annual growth rate from 2023 to 2032 is estimated at 20.5%.

This rapid growth is fueled by a booming global e-commerce industry, rising internet penetration, and widespread adoption of mobile devices. Analysts predict that platforms offering real-time processing, enhanced data security, and regulatory compliance will experience the most significant growth.

North America currently leads the payment gateway market, as the U.S. and Canada continue investing in fintech innovation and regulatory modernization. However, the Asia-Pacific region is the fastest-growing market, the report noted.

Conclusion

That’s all for Today in Payments. Keep coming back every weekday for your daily dose of payments news.