We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now
Digitalisation is essential to unlocking a small business's growth potential. Picture: Supplied/Mastercard
Digitalisation is essential to unlocking a small business's growth potential. Picture: Supplied/Mastercard

Small businesses are the engine of the SA economy, representing 98% of all businesses, creating more than half of the private sector workforce, and contributing a third to the country’s GDP.

As a result, these companies’ accomplishments and failures cause knock-on effects that affect innumerable lives and local communities in long-lasting ways. If small- and medium-sized enterprises (SMEs) fail, then jobs are lost and supply chains suffer. Their survival is a matter of socioeconomic survival. 

For most SMEs, maintaining a healthy cash flow is everything: it ensures they can pay staff, maintain stock and put aside money for a rainy day.

However, the effects of Covid-19 have aggravated an already struggling economy, making cash flow a challenge and financing often a necessity.

About the author: Gabriel Swanepoel is country manager for Mastercard SA. Picture: Supplied/Mastercard
About the author: Gabriel Swanepoel is country manager for Mastercard SA. Picture: Supplied/Mastercard

The pandemic has also accelerated the shift to digital commerce, meaning many entrepreneurs have had to quickly get up to speed on things such as digital payments and cybersecurity.

Nonetheless, people who go into business for themselves aren’t ones to shy away from challenges. The determination that has taken entrepreneurs this far can, with a powerful support system, help them weather the Covid-19 storm.

Mastercard wants to provide that support system for SMEs. It aims to empower businesses by connecting them with the tools and training they need to not only survive the pandemic, but to arrive on the other side stronger, more resilient and better equipped for the digital economy.

That’s why it has leveraged its insights to identify three areas in which it can help unlock the potential of small businesses and propel them forward:

1. Get digital

In a Mastercard study, 68% of SA consumers said they were shopping more online since the onset of the pandemic and will continue to do so. 

This shift in consumer behaviour, together with a changing commercial landscape, has provided SMEs with the chance to future-proof their businesses by going digital. 

Yet there remains a gap between those who can take advantage of e-commerce and those who can’t. Getting SMEs online requires specific tools, knowledge and resources that many entrepreneurs don’t have. 

That’s why Mastercard is “democratising digital” by partnering with the big players across the globe.

Locally, the company’s partnership with Google and Standard Bank enables SMEs to move their businesses online, accept digital payments and attract more customers through free access to Standard Bank’s Simply solution.

2. Pay and get paid 

SMEs have been trending towards digital banking for a while, but Covid-19 has accelerated this shift.

In fact, 82% of the SMEs surveyed in Mastercard’s Global State of Pay report said they were interested in increasing the amount of digital payments they make, and are looking for low-cost, simple and easy-to-use solutions to do so.

That goes for digital payment acceptance too.

The pandemic has highlighted the importance of SMEs accepting digital payments as a means of  “staying open”, securing income and boosting business growth. It’s also driving the need for them to offer contactless payment solutions as consumers seek ways to shop with minimal contact.

Research from Mastercard shows that the adoption of new payment technologies is on the rise in SA, with 77% of respondents saying they would shop more frequently at small businesses if they were offered more diverse ways to pay.

New technologies such as Mastercard’s Tap on Phone, which turns an Android phone into a contactless payment acceptance device, is helping small businesses adapt to these trends.

For microbusinesses who largely operate in the cash economy, quick response (QR) code technology provides a simple and more affordable solution to accept card payments than traditional point-of-sale devices for both online and face-to-face transactions. 

3. Get capital

Cash flow issues have affected 75% of SMEs, with 71% agreeing that the pandemic prevented them from growing.

Getting access to the capital required to adapt and keep an enterprise's doors open isn’t easy — more than half of small businesses who apply for financing receive less than what they would like or none at all, and 70% of women entrepreneurs are underserved or unserved altogether.

Improving financial strength and resilience is important. That’s why Mastercard’s corporate and business credit card solutions provide easy access to credit, including supplier management, which increases cash flow and eliminates the cost of chasing collections.

Tools and insights to help entrepreneurs on their digital journey:

This article was paid for by Mastercard SA.