If I could get [payment fees] down to 1.5-2%, that would be a big saving. Research Participant We found in interviews that SMEs will meet their customers where they are, adjusting their business processes to accommodate a customers preferred

We started out accepting credit card, cash, and then check. We didn't advertise it, but if somebody wanted to pay by check then it was fine. And then to accommodate, people were inquiring whether we accept Venmo, PayPal and Zelle. And I was like yeah, if that's easier for you. So I set those up, and for certain [gym] members, that's how they pay. So it's according to the needs of our members. I wanted to accommodate them. Research Participant PAGE: 6 0 // 10 8 Originally I said we accepted Venmo and then a couple of customers said I don't have Venmo, but I do have Cash App. And I said Okay, I can accept via Cash App. Research Participant Accepting a diverse range of payment methods is a competitive opportunity for SMEs, and a way for them to provide a positive customer experience. While we observed this dynamic with merchants that would qualify as smallto-medium enterprises, this pattern may not repeat with large enterprises

The savings on operational efficiency could outweigh some lost sales from economically disadvantaged populations. There is an upward trend in people signing up for merchant accounts with digital third-party payment services.69 It can be expected that merchant adoption of new digital payment methods will continue as long as customers wish to pay using these methods, especially given the decline in cash use over the last few years (in 2020, 19% of all transactions were made in cash, down from 26% in 2019).70 4.2 Delays in clearing payments are not a deal-breaker for SMEs, but the confirmation that a transaction has been initiated should be instant. We heard in interviews that when receiving a payment via a bank wire, thirdparty payment service, or by check, SMEs can feel frustration and uncertainty while waiting to see if the customer payment has been approved. SMEs would

However, there is a difference between payment approval and receiving the funds. SMEs need confirmation that the payment has been approved to be confident the sale has closed, but there is less urgency for the money to be immediately reflected in their account. It should be noted that there are likely SMEs of specific business models without the same flexibility to wait long periods of time for the funds to clear, and we did not focus our research on that specific cohort. PAGE: 61 // 10 8