Here are the week’s main news stories in the world of small business and e-payments:
Most small business owners unprepared for cyberattacks
Small business owners are unaware and unprepared when it comes to cybersecurity. According to research by small business insurance specialist InsuranceBee, SMEs are more vulnerable than large organisations. More than half of the 1,300 small business owners surveyed believe a cyberattack on their business is unlikely, with six per cent believing it will never happen. While a quarter believe a cyberattack is inevitable, 54 per cent have no plan to deal with a cyberattack, and 20 per cent say they’ll just react when something happens. In addition, 83 per cent have no funds set aside to deal with the fallout of a cyberattack.
Global digital payments market value set for 14.1 per cent CAGR over next five years
The global digital payments market is projected to grow at a compound annual growth rate of 14.1 per cent between 2018 and 2023, according to a report published by market research firm Mordor Intelligence. Consumer buying behaviour is changing as digital payments provide consumers with faster, safer and more convenient payment solutions, including bank cards, online banking, e-wallets and mobile in-store applications. The growing popularity of smartphones and e-commerce is also increasing the popularity of these payment methods.
Two-thirds of SMEs plan growth in next three months
Over two-thirds of SME owners (67 per cent) are working on growth plans in the next three months compared with 61 per cent this time last year, according to new quarterly research from Hitachi Capital’s British Business Barometer. Half the businesses that aim to grow say they need additional staff, with IT and telecoms and legal services having the most pressing needs. Investing in new equipment is seen as the second-best way to encourage growth (36 per cent), along with expansion into new, overseas markets (also 36 per cent).
FCA to become stricter on payment services
The Financial Conduct Authority (FCA) is planning to revamp its rules for payment service providers (PSPs) and e-money organisations. The proposals are designed to tackle recent concerns over confusing and misleading marketing materials and exchange rates shown by some e-money and non-bank payment service providers. PSPs and e-money firms have previously been regulated under separate EU legislation, which meant that they were not subject to the FCA’s Principles of Business, leading to discrepancies in service levels.
SME owners concerned by level of employee benefits they offer
Sixty three per cent of SME bosses are worried their staff face an employee benefits protection gap, compared to those offered by bigger companies. That’s according to a study by employee benefits provider MetLife UK. Senior managers surveyed said that they believe there is a duty to provide benefits beyond pensions (69 per cent), although around one in 10 said they are unable to provide benefits other than workplace pensions, citing a lack of budget as the most common reason. However, employees at smaller firms are most likely to receive employer pension contributions higher than the statutory minimum and have access to counselling and legal advice if needed.
SMEs see low loan application conversion with high street banks
The average conversion rate of one high street bank for loans to SMEs is just eight per cent, according to SME funding platform Code Investing. This partly explains the £59 billion funding gap in Britain between money applied for by SMEs and loans agreed.
“Due to regulation, due to banks having huge cost structures, due to SMEs not having standardised data, there’s quite a big funding gap,” said Code Investing CEO Ayan Mitra.
One problem is that it takes the same amount of effort to provide larger loans compared to SME lending.
£300 million SME programme announced
Alternative finance provider ThinCats has partnered with global asset manager Insight Investment to create a funding programme for UK SMEs worth a total of up to £300m. Funding will be in the form of commercial loans of between £100,000 and £10 million.
“In an era in which banks are retrenching from certain lending markets due to regulatory considerations this is a concrete example of how institutional investors such as pension funds and insurance companies can step in to support SMEs and UK economic activity across the country,” said Insight Investment’s head of secured finance, Shaheer Guirguis.