The Winners and Losers of 2020: Reporting on the Payment Processing Volumes of Small Businesses in 2020

The Winners and Losers of 2020: Reporting on the Payment Processing Volumes of Small Businesses in 2020

The year 2020 has been a crazy one to say the least. Between forest fires, murder hornets, racial strife, and a global pandemic, the last several months have created a more challenging environment for many businesses, particularly smaller companies. 

So, how did small businesses perform during these — pardon the cliche — unprecedented times? 

To answer that, Payment Depot, a membership-style payment processing company, analyzed the credit card processing volumes of small businesses across various sectors. We examined over 2 billion worth of credit card transactions from January to September 2020 to see how different businesses fared during the past nine months.

By looking at the ebbs and flows of credit card transactions from different industries, we uncovered trends and insights into the performance of various sectors. 

Have a look at our findings below. 

Credit Card Processing Methodology

We analyzed the credit card transaction counts and volume of small businesses across multiple industries and identified some of the verticals that had the biggest gains and losses during the pandemic. 

These industries include:

  • Beauty and Barber Shops 
  • Dentists & Orthodontists 
  • Doctors Offices 
  • Furniture and Home Improvement 
  • Restaurants  
  • Travel Agencies and Tour Operators 
  • Veterinary

From there, we calculated the changes in credit card processing volume between January (i.e., pre-lockdown) and April and May (i.e., when lockdown measures really took hold). We then looked at the transaction volumes in September to see how businesses fared when economies opened back up. 

Key Takeaways on Payment Processing

  • Home improvement businesses and pet clinics saw the biggest payment processing gains during the pandemic. These businesses faced the challenge of adopting contactless payments and implementing social distancing measures. 
  • The travel and tourism businesses, as well as those that provide beauty and grooming services (e.g., salons, barbershops) saw the biggest declines. 
  • Having money in the bank is key to weathering the storm. Cash in the bank will enable you to capitalize on opportunities and also protect your business in the event of a downturn. 
  • The right cost-cutting tactics depend on the business, but typically involve renegotiating contracts, saving time through automation, and lowering the business’ payment processing costs

Furniture and Home Improvement Businesses Were the Clear Winners

One of the clear winners of COVID-19 was furniture and home improvement businesses. While these companies saw a 12.43% decline in credit card processing volume between January and April, furniture and home improvement companies saw major jumps in transactions — 104.83% — from April to May. This means their processing volumes during the lockdown period were much higher compared to the beginning of the year. 

When people settled into “lockdown mode” at home in April and May, many spent time (and money) upgrading their living spaces by buying furniture or tackling home improvement projects. 

The performance of furniture and home improvement companies continued to be strong in June. By September, their payment processing volumes have stabilized back to pre-lockdown levels. 

Veterinary Companies Were Busier Than Ever

Another sector that did well during the lockdown? Veterinary clinics. These businesses saw a 13.06% dip in credit card processing volume between January and April, but bounced back in May, with a 27.39% increase from the previous month. 

By May, veterinary facilities’ payment processing was 10.75% higher compared to January.

Their numbers have stayed high in the subsequent months, and by the end of Q3, veterinary clinics and hospitals’ processing volume was 20.97% higher compared to the pre-lockdown period. 

COVID-19 clearly brought about a rise in pet ownership, with Americans increasingly opting to purchase or adopt new pets to keep them and their kids company while staying at home. 

“We’re busier now as we’ve ever been. In the light of this pandemic, more and more people have gotten pets because they’re home,” says Martin Donohoe who helps run The Whole Pet Vet Hospital in Los Gatos, CA.

According to him, while business was booming, one of the challenges they faced was implementing curbside services. 

“The first and most impactful protocol was shifting to a curbside service, so that clients are not coming into the building,” he explains. Donohoe says that this was particularly challenging because curbside services weren’t something they had to consider before. 

Donohoe knew that the team couldn’t carry on with running in and out of the building to process payments, so he got in touch with Payment Depot to find a better way

“I contacted Payment Depot and told them that we needed a mobile solution. The first thing they did was set me up with an account with Swipe Simple and they sent me the processing units that I could use for my phone… We put that in place really quickly, and we were up and running in two days.”

“I was very impressed because they understood the sense of urgency. They overnighted the equipment and they had me set up on the Swipe Simple account,” he explained.

According to Donohoe, the mobile credit card machines enabled the team to build more efficiency into the curbside process. Having clients wait in their cars still wasn’t ideal, but at least they could process payments outside of the clinic. 

Medical and Dental Facilities Took a Hit — But Bounced Back Considerably

Doctors and dentists saw very similar trends this year. Both medical and dental practices saw a significant decline in transactions at the onset of the lockdown. Between January and April, the credit card processing volumes of medical offices decreased by 54.37% while dentists saw a decline of 72.39%.

That said, medical and dental facilities saw a gradual increase in the succeeding months. By the end of September, the credit card processing volumes of these businesses were sitting at slightly above pre-lockdown levels. 

Restaurants Are on the Way to Recovery

Like most industries, restaurants saw a sharp decline at the onset of state lockdowns. Between January and April, these businesses experienced a 61.48% decline in credit card processing volume. And while things improved slightly in May (with a 55.23% increase from April), processing volumes were still below pre-lockdown levels from June to September.

With more people staying home, it’s no surprise that food establishments experienced a drop and processing volume. But it’s promising to see the numbers continue to rise, and we’re optimistic that restaurants will do well in the coming months. 

Salons and Barber Shops Suffered Major Losses, but Are (Hopefully) Bouncing Back

Beauty salons and barbershops were greatly affected by lockdown measures. These businesses saw a 97.87% decline in credit card processing volume. Payment numbers were still low in May, but these businesses started to pick up slowly during the summer months. When September wrapped up, the processing volumes of salons and barbershops were up 142.05% compared to May.

It’s no secret that beauty and grooming businesses took a major hit because of the pandemic. judging by the numbers though, it’s safe to say that these businesses are slowly recovering. Unless salons and barbershops are ordered to close once again, we expect the numbers to continue trending up.

Travel Companies Saw the Biggest Decline, and Haven’t Recovered Yet

Travel agencies and tour operators suffered the most during the pandemic. These businesses saw a 108.27% decline in credit card processing volume. Refunds increased, with many merchants giving customers their money back or offering credit towards a future trip or event.

One merchant that did just that is Beach Occasions, a wedding vendor that organizes beach weddings in Myrtle Beach, SC. Since the company relied heavily on tourism, many of its planned events were cancelled during the government shutdown.

Beach Occasions issued refunds and the company implemented a policy that allowed customers to re-book their wedding anytime they can make it back to Myrtle Beach. According to owner Scott Blackburn, their typical rebooking policies only let clients rebook within a year, but they decided to change that when COVID-19 hit.

Travel companies continued to see negative processing volume in May, and while business improved slightly during the summer months, their credit card processing volumes were still low. As of September 2020, the processing volumes of travel and tourism businesses were 93.52% lower compared to pre-lockdown levels. 

Recommendations for 2021 and Beyond

The pandemic experiences of small businesses in the United States have varied greatly, depending on their industry. While some sectors (e.g., home improvement and pets) saw an uptick in transactions, others (e.g., salons, travel agencies) had major declines. 

As such, it’s important to pay attention to the trends in your space and find ways to serve your customers in the most relevant ways. 

That being said, below are some general pointers you could apply to keep your business healthy in months ahead. 

Be Agile and Always Be Prepared to Act

If there’s one thing 2020 taught us, it’s the importance of speed and flexibility. Situations can change instantly, and your business needs to be agile and adaptable to survive and thrive. 

From a COVID-19 perspective, the future looks promising, as we get closer to a vaccine. But nothing is set in stone, and you should always have a game plan for what to do in the event of a lockdown, natural disaster, or other unforeseen circumstances. 

As we move into 2021, now is a good time to review your business continuity plan and insurance policies to ensure that you’re prepared with whatever comes your way in the year ahead.

Leverage Tech Solutions to Improve Your Payment Processing Operations

This pandemic has pushed everyone towards digital transformation. From online shopping platforms and remote working tools to mobile payments and contactless solutions, businesses and consumers alike are increasingly adopting and relying on technology. 

To that end, evaluate the existing systems and tools you have in place. Do you need to invest in other hardware or software to help your business run better in 2021? Are you running the best and most updated versions of your solutions?

The right apps and devices can streamline your operations and improve the customer experience, so see equip your business with the necessary tech to help it run better. 

Reduce Credit Card Processing Expenses Without Compromising on Quality

Saving money should always be on your mind. Cash in the bank will enable you to capitalize on opportunities and also protect your business in the event of a downturn. So, find ways to lower your expenses without compromising on product or service quality. 

The right cost reduction method depends on your business, but here are some quick suggestions:

  • Renegotiate your lease and other contracts 
  • Automate tasks and processes to save time
  • Be proactive with your orders and supplier relations (e.g., push back ship dates, see if it’s possible to return unsold goods, etc.)
  • Audit operational expenses
  • Minimize your tax bill

Another key tip? Lower your credit card processing fees.

Profits can take a big hit thanks to fees associated with accepting credit card payments from customers. Take a look at the number of cashless purchases being conducted in your business and what you’re paying to process those payments, then explore whether or not there’s a more cost-efficient alternative. 

One example of a merchant that took this step is Brett Woods of JeepSwag.com, who saved $1,200 when he switched to a better payment processor.

“I always suspected that I was overpaying a bit on credit card processing,” said Woods. So, he connected with Payment Depot to see if he could lower his costs. 

“It was really neat to see that they [Payment Depot] could compare my old statements, and really show me upfront how much money I was going to save by switching,” he added. Being a small business, I try to make every dollar count. And the $1,200 I save with Payment Depot, I can put into marketing and help grow the business and turn that into more profit. 

Payment Depot’s Credit Card Payment Processing Service

At Payment Depot, we make credit card processing fair and simple for everyone. We want to bring integrity to the credit card processing industry through honesty and transparency. 

So, rather than taking a cut out of your sales, we simply bill a membership fee and then give you access to wholesale rates with no added costs — just a lot of savings on your end.

Known as the “Costco of payment processing,” Payment Depot gives you, the merchant, access to wholesale credit card processing rates. We don’t mark up these fees, so you only pay what you have to. 

Get in touch with the Payment Depot team and we’ll run a free analysis of your statement or proposal to help you figure out the best decision for your biz. Want to get to learn more? Give us a call at 877-876-8776 or visit PaymentDepot.com.

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