Anders la Cour, Co-founder and Chief Executive Officer of Banking Circle discusses the findings of the financial utility’s latest research and looks at the challenges and opportunities ahead for SME payment providers.

It only takes a light scratching of the surface to discover that late payments, limited access to services and restricted credit lines are seriously affecting the success and potential of SMEs of all sizes and stages. SMEs who spoke to Banking Circle recently commented that access to payment services is restricted, it takes too long to open a merchant account and there is little support for accounts payable.

Each of these can have a significant impact on an SME’s ability to maintain and grow its client base and profit margin. In turn, this limits its ability to expand, reach new markets, increase product lines and better serve its customers. With 24 million SMEs in Europe making up 99% of private businesses in the region, employing around 60% of the European workforce and contributing more than half of all business turnover, a problem holding back SMEs is a problem holding back the economy.

Finding solutions

Banking Circle recently commissioned MagnaCarta Communications to carry out in-depth research into financial exclusion and how different financial institutions can each play a role in supporting SMEs and improving access to banking and finance solutions. The resulting white paper and subsequent insight papers uncover the problems SMEs face in access to banking services, and the limitations of current offerings.

David Selves, owner of the Selves Group of Companies, commented: “Three to five banking days for card payments is still the norm, which causes considerable issues for many small businesses who need to restock rapidly.”

Michael Ault, COO of Universal Transaction Processing added: “SMEs have already been through an arduous process to get a merchant services account, and then it takes days to get their funds.” 

Access to finance has undoubtedly improved in recent years, but for SMEs this improvement is not enough. Access to additional funds is vital to almost every SME at some point in the first few years, and are an essential lifeline to many. Yet loans will not solve all the financial challenges these businesses face.

In the latest insight paper from Banking Circle, ‘Pay, Set, Match! Payment services for SMEs – Jump-starting a virtuous digital payment circle’, unique insights from experts working right in the heart of the payments sector provide up-to-the-minute feedback on the state of the industry, current provision, the challenges and what the road looks like up ahead. By gathering this range of first-hand insights, and sharing them with the industry, we believe we can work together with financial institutions to find better solutions which meet the current needs of SMEs facing potentially lethal financial exclusion.

The unique challenge of serving SMEs

Each SME is unique – some are one-man-bands, others have 249 employees. Some are local businesses while others trade internationally. Some are seasonal and others have a steady flow of income throughout the year. This immense variation creates a dilemma for financial institutions trying to build scalable solutions to meet SME requirements.

What SMEs do have in common, however, is the need for banking services. Any business, any size, any industry, any target market and any turnover will need banking accounts. And almost all will, at some point, need an injection of cash, whether that is to kick-start an expansion, purchase stock at the beginning of the season or to replace broken equipment.

The reality is, however, that a traditional business loan from a bank is generally too expensive, too inflexible and too slow to arrange, for a fast-paced SME in today’s highly competitive, digital and international marketplace. As Kent Vorland, CEO of SmartTrade App, told us during our research, “consumer products are not agile enough and providers have little knowledge of small businesses… Equally, the big boys have complicated functionalities, but nothing optimised for small merchants.”


As Ivo Gueorguiev, the chairman of Paynetics said, “Any service providers deploying digital technology are ideally placed to serve SMEs, and would address the problems of scalability, access, utilisation and viability”. Supporting this view is recent research which showed nearly half of UK small businesses would be willing to move to a non-bank provider if their financial needs would be met in new and innovative waysi.

With many PSPs and other providers already delivering innovative ‘point’ solutions, and many ambitious SMEs currently underserved by their existing bank, the opportunity to build bridges and connect solutions is ready and waiting. Each provider has a role to play, and value to add, if they build relationships across the board.

Dialogues must be kept open, and innovation must continue, in order to find and develop successful, effective, affordable solutions which will work for SMEs of all types, increasing financial inclusion and benefiting the global economy.

For a copy of the latest insight paper, visit