The payments industry is a dynamic and rapidly evolving sector that has undergone significant transformation in recent years. Technological advancements have revolutionized the way businesses and consumers interact with payments, and as a result, the industry has become more accessible and user-friendly. However, despite these advances, there are still many underserved markets. For example, small and medium-sized enterprises (SMEs) have been hit hard by the pandemic, experiencing significant revenue drops of over 30%, according to a report by McKinsey. This underscores the importance of solutions that can help SMEs navigate financial difficulties and thrive in the face of adversity.
Furthermore, there are still many industries and businesses that lack access to traditional banking services due to various factors such as geographic limitations or not meeting the criteria for these services. This underserved market represents a significant opportunity for payments companies to provide tailored solutions that meet the unique needs of these businesses and industries. In this post, we will discuss how the payments industry can help and broaden the boundaries mentioned before.
An underserved market in payments refers to a group of businesses that face challenges in accessing payment solutions that are appropriate for their unique needs. A few to mention: agriculture, healthcare, education, and other similar sectors. Despite the significant contributions these industries make to the economy, they often struggle to find payment solutions that can cater to their specific requirements. This is due to a variety of factors such as limited access to financial services, regulatory hurdles, and a lack of payment technology infrastructure. Many businesses, especially in the underserved areas, do not have access to financial institutions, or they do not meet the criteria for traditional banking services.
According to a recent report by PYMNTS, one of the significant issues, for example, in the United States is medical debt and default, which accounts for 57% of consumer credit report collections and is the second most common reason for personal bankruptcy. The associated costs of healthcare have caused these individuals to reduce their engagement with healthcare providers. Moreover, the high expenses have led to 46% of patients canceling their healthcare appointments within a year before being surveyed. When patients are unable to afford the cost of medical services, they may choose to delay or avoid seeking treatment altogether, which can lead to serious health consequences. As a result, healthcare providers may see an increase in the number of patients who present with more advanced or complicated conditions, making it more challenging to provide effective treatment. Additionally, when patients are unable to pay for medical services, healthcare providers may face financial difficulties as well. Providers may need to write off unpaid medical bills as losses or spend additional resources on collections efforts, both of which can strain their finances.
The agriculture sector is another underserved industry for several reasons, including the fragmentation of the market, the lack of digital infrastructure in many agricultural regions, the seasonal income of farmers, the low margins in the industry, and limited financial literacy among farmers. Banks have been hesitant to serve the agriculture industry due to these challenges, as well as the perception that the industry is risky and volatile. This has left farmers and agricultural businesses with limited access to financial services and payment solutions, which can hinder their ability to grow and compete in the global market. According to a report by Forbes, in the agriculture industry traditional forms of payment, such as checks, are still prevalent, accounting for around 90% of transactions.
Education, as mentioned before, is also an underserved industry that can benefit from digital payment solutions. Many students, particularly those in low-income areas, struggle to pay for education expenses, including tuition, textbooks, and housing. Additionally, educational institutions often have complex payment needs, such as the ability to accept payments from multiple sources (such as scholarships, grants, and loans), which can make it more difficult for payment providers to create streamlined payment solutions.
The underserved market goes way beyond healthcare, education, and agriculture. Many other industries also lack access to traditional financial services, including small businesses, startups, and the gig economy. These industries face unique challenges in managing their finances, including cash flow management, payment processing, and access to financing.
How can the payment industry help underserved markets?
The payment industry can have a significant impact on helping challenging industries, such as healthcare, agriculture, education and others, by providing innovative payment solutions and services that address the unique challenges and needs of these sectors:
- Mobile Payment Solutions: In many underserved markets, access to traditional banking services is limited. By offering mobile payment solutions, companies can help reach populations that do not have access to traditional banking services, such as farmers in remote areas or gig economy workers who rely on cash payments.
- Streamlining Payments: For instance, healthcare providers can use payment systems that allow them to quickly and securely process insurance claims and patient payments. Similarly, farmers can use payment systems that allow them to quickly receive payment for their crops, while educators can use payment systems that make it easy to collect tuition and fees from different sources.
- Providing Affordable Payment Solutions: As an example, payment providers can develop and offer farmers with low-cost payment terminals that enable them to accept electronic payments.
- Payment Plan Solutions: Healthcare and education are two industries that often require payment plans to make their services more accessible to underserved populations. The payment industry can offer payment plan solutions that allow patients and students to pay for services over time, making them more affordable and risk-free.
Providing various payment solutions can play a critical role in improving financial inclusion. It can broaden customer reach, enhance customer experience, and increase revenue.
The payments industry has the potential to support and empower underserved markets by providing tailored payment solutions and services. By increasing financial inclusion, streamlining payment processes, offering affordable payment solutions, and providing financial education, the payment industry is able to help businesses and individuals in underserved industries access financial products and services that are essential for their growth and success. With technological advancements and innovative solutions, it is possible not only to bridge the gap between traditional banking services and challenging markets, but ultimately drive economic growth and prosperity for all.
Payment service provider companies like COLIBRIX are dedicated to addressing the needs of underserved markets. With a focus on providing easy-to-use, secure, and cost-effective payment solutions, our company is committed to helping underserved markets manage their financial transactions effectively. By leveraging the latest technologies we are well-positioned to make a significant impact in the payments industry, including in an underserved market.