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ChapterTitleEducation

Making the most of niche opportunities

Innovation is essential
While consumer services SMBs are lagging other sectors
in implementing new technologies, almost half indicated
they view innovation as essential to their survival. That
makes them a compelling opportunity for ISOs and agents.

Historically, smaller market segments have tended to at-
tract niche service providers. Large players are OK with
servicing those markets when they can sell a general mar-
ket product. But when those SMBs ask for solutions more
specific to their businesses, larger players tend to veer off,
as they don't see a profitable path in tailoring more spe-
cialized solutions.

Smaller payment solution service providers can build a
handsome business focusing on these smaller segments,
but they often find it difficult to grow their businesses –
By Nicky Koopman for example, how many arcades can you find in one town?
AEVI If they want to add a new specialized segment, they find
that much of their skills and expertise doesn't transition
t's easy to get locked into a market segment when easily, and must create parallel workforces or technology
it comes to consumer payments. Past successes and providers, all of which make it costly to expand.
experiences may cause payment solution services Reaching new markets
I providers to focus on broad business segments,
such as Main Street retailers, food and hospitality, or Selling a single-purpose card acceptance device into spe-
health and beauty salons. Many other niches are ripe for cialized market segments is relatively easy when that's all
innovation, but what works for a broader segment may the merchant needs. But when they want to add value-
be overly generalized when it comes to more specialized added applications to help automate their businesses and
merchants. enrich the consumer experience, life for the service pro-
vider becomes more complicated.
A large number of SMB consumer service operations don't
easily fit within larger segments. Think of some of the ser- At least, that's the way it used to be. Now with the avail-
vices you utilize in the course of a year: automotive repair ability of smart POS devices and app marketplaces, it's
and service garages; plumbers, electricians, and a host of possible to mix and match solutions to meet the needs
other contractors; and leisure activities, ranging from ar- of a diverse customer base that spans different merchant
cades, to travel and tourism agencies. These types of SMBs types. Naturally, payment acceptance tops the list of pay-
are even more in need of innovative payment solutions, ment applications desired in a smart POS solution, accord-
according to a survey conducted by PYMNTS in collabora- ing to the PYMNTS survey, and more than half across
tion with AEVI. each vertical segment and revenue size category see the
value in digital receipts. After that, key differences start to
The survey polled more than 700 consumer services mer- become apparent:
chants; almost half were contractors with physical store-
fronts. The PYMNTS innovation score for this broad seg- • Arts and entertainment and parks are most inter-
ment averages 25.5 points, considerably lower than three ested in inventory management and marketing.
earlier surveys involving, respectively, general retail, food
and accommodations, and health and beauty. But smaller • For garages, payroll management ranks even with
SMBs are in even worse straits, with those making under inventory management.
$250,000 in annual revenue scoring just 18.2 points on the
innovation index, on average. • Arts and entertainments SMBs as well as garages
are more interested in staff management apps than
are merchants in the other categories.

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