Bringing Digital Payments to Rural America

Small-town merchants present unique challenges. Processors that can meet those needs will reap a bountiful harvest.

Owning a small business in rural America comes with a lot of benefits, like a strong sense of community, loyal customers, lower costs of doing business, and less competition. However, a small-business owner in rural America also faces a fair share of challenges.

Despite these challenges, small and medium-size businesses (SMBs) play a pivotal role in the fabric of America’s economy. The nearly 33 million SMBs account for 99.9% of U.S. firms. And the majority of small businesses are run by one to four employees. So while these companies might be categorized as small, their impact and hard work is anything but.

Still, challenges like low-speed internet, smaller operational budgets, and presence in banking deserts can hinder the growth potential and scalability of SMBs in provincial regions.

That’s where payment processors come in. Processors bringing digital-payment technologies to small businesses in rural America are playing a vital role in the long-term viability of these local businesses.

A “2022 Small Business Credit Survey” found that making use of technology was one of the top five challenges small businesses face. This is not surprising when you consider that 17% of Americans in rural areas lack access to broadband Internet services, according to the Federal Communications Commission’s “Broadband Deployment Report.”

Without high-speed Internet, operating a business in 2024 creates many barriers and obstacles for entrepreneurs. It can limit them to revenue strictly coming through in-person purchases, as opposed to offerings through online sales. Not only that, but managing inventory and operating point-of-sale terminals becomes difficult while operating on low-speed Internet.

Thankfully, resources like the United States Department of Agriculture’s ReConnect Program are working to expand broadband digital access and technical support to rural small businesses. However, the problem remains: To succeed, small merchants need alternative solutions that fit the needs of their businesses.

Banking Deserts

One of the factors payment processors need to consider is the budgets these SMBs are working with. Usually, the cost of new technology disproportionately affects small businesses in countryside areas more than it does the urban, larger businesses.

These rural SMBs have much smaller budgets and, frankly, don’t need the shiny bells and whistles that many payment processors upcharge for. Rather, what these merchants are looking for is simplified, easily integrated, user-friendly options.

Lastly, many small businesses rely on cash as their main source of payment. But they live in banking deserts where in-person financial services are miles and miles away. Thankfully, banks and financial institutions are recognizing this challenge and are adapting digital or online-banking offerings to ease some pain points.

For example, 73% of banks now offer services like automated clearing house payments, payment tracking, wire transfers, and history searches in digital formats to allow small businesses to operate seamlessly wherever they’re located.

Small-business owners are recognizing these struggles and identifying ways to improve their situation, ways that will ultimately grow and support their business.

For example, a Visa Inc. survey in 2023 found that 51% of small businesses plan to go cashless by 2025. If that’s the case, the struggles of operating in a banking desert would greatly diminish. And, at the same time, demand for digital-payment solutions would increase.

Tailored Tech

So, how can payment processors deliver technology and services to rural America?

There is no one-size-fits-all approach when running a business, so merchants need solutions that will easily integrate with their pre-existing management styles. An ideal payment processor looking to reach small businesses in rural areas needs to have the flexibility to tailor its offerings to each merchant.

Not every business in a rural region requires or desires the most advanced technologies that are typically used by large urban businesses. But, offering all-inclusive—and customizable—technology platforms can help streamline operations for businesses in rural America.

With these platforms, necessary tracking of items like payroll, inventory, reporting, and even customer loyalty-programs can be managed in one place, under one operator, and can significantly increase efficiency. It can also be used strictly for payment processing—it’s completely dependent on the merchant’s needs and wishes as communicated to its payment processor.

Another way to make digital-payment solutions a viable option is to consider whether a merchant needs services on a month-to-month basis. Being locked into long-term contracts wouldn’t be suitable for some. And lower monthly rates and no long-term commitments make digital-payment solutions more of a possibility for businesses with smaller budgets.

Fintechs can also make digital-payment solutions helpful to rural merchants by ensuring there are multiple payment methods available to customers. It can be tricky to know which payment methods to offer at a business. Sorting out cash, credit, debit, mobile, and contactless payment options, payment-service providers (PSPs) can help a small business determine which combination will be ideal for their customer base.

A 2024 study by the Federal Reserve Bank of Atlanta found that, for in-person purchases, three-quarters of consumers prefer to use a card and one in five prefer using cash.

On a national scale, U.S. Mintel’s 2023 report found that Gen Z consumers by far prefer using debit cards and cash over credit cards, even though credit cards remain the number one payment preference overall. According to the report, this trend with the younger generation “suggests a future where consumers alternate between an array of physical and digital payments rather than simply choosing between debit and credit.”

Business owners might also need multiple POS terminal options. It’s up to the payment processor to deliver the equipment they need to succeed. This can include a standalone desktop terminal, multiple wireless handheld terminals, or compact credit card readers. An a la carte approach to payment methods gives merchants the ability to work with a PSP in a way that works best for them.

Equity And Inclusion

Of course, delivering digital-payment solutions to businesses in rural America wouldn’t be possible if there weren’t people to bring the technology to them. A vital part of advancing these rural businesses is to meet them where they are and offer boots-on-the-ground support.

Recognizing that many businesses already operate in banking deserts, PSPs need to offer in-person, hands-on assistance to set their merchants up for success with their new technology.

Payments platforms may forget, when they expand into rural areas, that some merchants are tech-averse and need additional support when they take on new systems. In some instances, they might have just gotten used to high-speed Internet, so moving operations to an online platform can take some time to adjust.

Bringing digital payment solutions to rural America is more than finding new sales opportunities for payment processors. It’s about giving these businesses equity and inclusion with their urban counterparts.

Through a hands-on approach and diverse and customizable options, payment providers can present all businesses with the same opportunities for growth, scalability, and innovation, no matter where they’re located or what challenges they face.

—Austin Mac Nab is chief executive and cofounder of VizyPay.