The Federal Reserve Bank of Boston published analysis from the Federal Reserve’s Small Business Credit Survey highlighting that payment frictions are widespread for small employers. The 2024 Report on Payments finds that 80% of surveyed firms reported challenges in sending and receiving payments, with fees and the speed of receiving funds among the most frequently cited issues. The report draws on responses from 4,920 employers with 1 to 500 employees across industries. Credit card processing fees emerged as the most common challenge, reflecting that merchants receive less than the full value of a card transaction, typically by around 2% to 3%. Checks were reported as the most commonly accepted payment method overall, followed by credit cards and then cash, with checks particularly prevalent in manufacturing and in professional services and real estate, while card payments were more common with retail and leisure and hospitality customers. On settlement speed, the publication points to instant payments, including bank-to-bank transfers via FedNow, as a way to reduce multi-day delays associated with check mailing and clearing and support small-business cash flow needs such as payroll and inventory.
Federal Reserve Bank of Boston 2025-02-13
Federal Reserve Bank of Boston report finds 80% of US small businesses face payment challenges led by card fees and slow access to funds
The Federal Reserve Bank of Boston's analysis from the Federal Reserve’s Small Business Credit Survey reveals widespread payment frictions for small employers, with 80% reporting issues like fees and slow fund receipt. Credit card processing fees, reducing transaction value by 2% to 3%, are the most common challenge. The report suggests instant payments, including FedNow transfers, to mitigate delays and support cash flow needs.