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Navigating the new normal for small businesses

COVID-19 has exposed the world to uncertainties that have not been experienced before. Almost everywhere, governments halted international travel and advised people to remain socially distanced. With ongoing uncertainty, forecasting the full economic impact on businesses is challenging.

Small businesses, the lifeblood of our economy, have been hard hit. When social distancing, our dollars do not flow into local cafés, gyms or bookstores. In fact, an estimated three in four small businesses reported a 75 percent decline in revenue during the impact of the pandemic. This has been compounded by the growth in e-commerce, as many small businesses lack the tools and expertise to take advantage of this shift. 

One silver lining that is surfacing is people’s enthusiasm to support local businesses. Mastercard’s latest research found that 73 percent of consumers want to actively spend in their local community to help small businesses bounce back and recover. What’s more, despite the economic hardship many people are facing, 42 percent are happy to buy items locally, even if they cost more, to support their local community. 

It’s not just consumers that are rallying behind small businesses. The Getting Back to Small Business support package was launched this year to help reignite growth for small businesses.

The package empowers local businesses to take advantage of the shift to online. The program offers SMEs access to a range of digital resources, tools, and services to help them navigate and adapt to the new demands of online commerce.

Navigating the digital domain and its new challenges

In an evolving digital environment, the most convenient way for many shoppers to buy is online. This trend is evident from the latest Australia Post e-commerce figures which revealed that, in August 2020, online purchases in Australia increased by 85 percent compared to the previous year.  

With an agile mindset, many small businesses have been able to pivot as they strive to keep up with these evolving consumer demands. 

For example, when COVID-19 restrictions all but shut down the hospitality sector, many restaurants were able to create a new profit stream through either augmenting their product offering or exploring online delivery channels. 

One example is Sydney-based café, Nútie Donuts, who moved their business online during COVID-19. As a result, they were able to build relationships with customers from all over Australia and have now formed a stronger connection with their local community. This is a perfect example of how digital solutions can be deployed to create new opportunities with no operational downtime.

However, the move to the digital domain requires small businesses to transact in an entirely new way. Setting up a website, addressing potential cybersecurity issues, organising deliveries, and managing fraud may be issues small businesses have never faced before. 

With over half of Australians (52 per cent) planning to use less cash in the future, payment security is paramount to keeping all transactions secure. Cards already represent Australia’s primary way to pay online, accounting for $17.2 billion of sales

The increase in online payments has seen 62 per cent of respondents from the Australian Cyber Security Centre Small Business Survey realising they had experienced a cyber security incident. 

Mitigating risk

As technology continues to evolve, so do cyber threats, and the onus is on businesses to ensure confidential data is protected. Mastercard Digital Enablement Service (MDES) for Merchants, has the potential to reduce online payment fraud by around 30%, by replacing card numbers with a unique and encrypted digital token. It empties the ‘vault’ of data cyber criminals often look to access, ensuring customer payment information and the business holding them are protected.  

Businesses can also roll-out solutions like Mastercard Identity Check™, to authenticate the consumer. Mastercard facilitates the exchange of data between merchants and banks, to ensure the strongest possible digital security for payments, reducing fraudulent transactions and shifting the chargeback liability away from merchants.

Many small businesses moving online may also find themselves facing (potentially costly) chargebacks for the first time. Solutions like Ethoca Alerts offer small, medium and large businesses an effective way of identifying, managing and resolving fraud and chargeback disputes, in near real-time. 

Since 2019, it has helped businesses around the world prevent more than seven million chargebacks and nearly AU$310 million worth of fraud. 

The adoption of these services creates a safe and seamless customer experience for small businesses, building consumer trust and ensuring sensitive financial data and small businesses remain protected. 

At the core of all of these solutions and initiatives is the importance of supporting the small business community during this period and beyond. 

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