PayTechs replace banks as most important business partners for SMEs

September 22, 2021

Research by FinTech firm YouLend has found PayTechs and website and webshop providers have overtaken banks as the most important business partner for SMEs.

Up to 41% of SMEs surveyed for the research said that payment service providers rank as the most important business relationship, while 37% claimed both website and webshop providers and suppliers were the most important. Banks were the least important at 34%.

The research found that up to 43% of respondents need funding to cover day-to-day running costs, while 34% need funding to buy equipment, 32% for materials and supplies and 21% to cover staff costs.

A key finding in the study was that a fast response is critical for almost half of those surveyed. However, up to 44% that used traditional providers waited up to 7 days to receive funding.

In addition, the research found that the repayment model of traditional firms lending with fixed repayments can be stressful for SMEs, with 27% claiming to experience sleepless nights due to pressures of repayment.

Up to 42% of respondents said they had fears about committing to long-term repayments at a fixed rate, while 41% had fears about missing payments in downturn. Meanwhile, 44% of those surveyed said they would be interested in flexible payment options – such as having the ability to pay more during profitable times and less at more testing times.

YouLend CEO Mikkel Velin said, “What we see from this new research is the changing of the guard when it comes to business relationships – and the importance of the new partners as a route to the capital needed by online merchants.

“Payment service providers and website/webshop providers are well-placed to offer an embedded finance solution at the point where merchants need financing. They understand their merchants well. And they can deliver a seamless experience because they have robust, real-time data on merchants’ trading activity which can be used by an embedded finance platform like YouLend to make tailored, finance offers in minutes rather than days or weeks.”