Small- to medium-sized enterprises (SMEs) know best that growth doesn’t happen in a straight line.

But that message hasn’t always translated into how financial solutions are designed. Too often, small business digitization is framed as a simple migration—cash to card, analog to digital—rather than a redesign of how businesses actually operate day to day.

That narrative is missing the mark—and it has implications for how financial providers design, position and support digital payment solutions for small businesses.

“Small businesses don’t just swap payment methods. They replace an entire cash workflow,” Mark Barnett, global head of small and medium enterprises at Mastercard, told PYMNTS, stressing that what’s really at stake is not a change in payment method, but a deeper transformation of how businesses operate.

“Workflows are sort of a fancy business word,” he added, noting that “workflows” often simply refer to the practical and repeatable ways businesses manage money.

What has long appeared to be a battle over payment methods, then, is in reality, a contest to redesign the operating systems of small businesses—a challenge that requires providers to think beyond products, toward the end-to-end workflows that feel fastest, most reliable and offer the greatest sense of control. Payments here are merely the entry point.

After all, SMEs don’t simply replace cash with cards; they need access to the right tools in the first place, along with clear guidance on how to adapt long-standing processes like paying suppliers, reconciling accounts and managing liquidity.

That shift requires providers to actively support behavior change—not just through products, but through education, onboarding and workflow-level design.

The Myth of a Simple Payments Shift

If the challenge were purely technological, the solution would be straightforward: expand acceptance and distribute hardware. But operational realities are often more durable than technology alone. A business owner who has paid suppliers the same way for decades is unlikely to change overnight—even if a new option is objectively better—unless the transition is clearly supported and operationally seamless.

“Just putting an SME card in the hands of an SME isn’t going to mean they’re going to use it,” Barnett said. He cited Mastercard research showing that 45% of SMEs want to reduce their reliance on cash—a signal that intent is already there, even as adoption remains uneven.

The gap, Barnett suggested, is less about willingness and more about whether providers are removing the right friction points at the right moments.

Cash persists because it delivers immediacy, control and simplicity—the same fundamentals small businesses expect from any financial tool.

For providers, the task is not to convince SMEs to abandon those priorities, but to design digital experiences that meet them head-on—and then support businesses through the shift from familiar processes to more capable ones.

That means providers need to think beyond acceptance and focus on activation, usage and repeat behavior. In practice, that requires bringing acceptance and issuing together, embedding payments into the workflows small businesses already use and supporting the first moments where SMEs replace cash or checks with digital tools, without forcing them to reengineer how they operate.

To help providers do that, Mastercard launched a new resource hub for issuing and acceptance partners to help them drive SME growth through payment acceptance and card solutions.

“When a new SME starts to accept a card, why not make sure they have a card themselves?” Barnett said.

Read the report: Nearly Half of SMBs Want to Ditch Cash and Checks

From Payment Method to Operating System

It appears that the challenge of digitizing SME payments won’t be won by the most sophisticated payment products, but by the providers that embed digital tools most effectively into how SMEs already operate.

In practice, adoption accelerates when providers embed digital payments directly into the workflows SMEs already rely on—from ordering and supplier payments to expense management and reconciliation. When cards are designed as part of that operating layer, they stop feeling like a change and start feeling like an upgrade.

Still, SMEs vary widely in their operational readiness and financial needs. Barnett stressed that the path to adoption depends on factors like company size, industry and local infrastructure. He outlined three archetypes: fully cash-based businesses, check-heavy operators and digital-first firms.

Designing for all three means moving away from a one-size-fits-all approach toward more tailored onboarding, support and product design.

At a certain point, after adoption reaches an operational threshold, digital payments cease to be a tool and become an infrastructure layer for SMEs. They can help underpin inventory management, supplier relationships, accounting and financial planning.

Barnett highlighted a partnership with L’Oréal in Latin America as a case in point. A co-branded card enabled beauty salons to order inventory, access credit and track spending within a single ecosystem. For L’Oréal, it eliminated the need to chase invoices or manage cash-based transactions. For the salons, it simplified purchasing while providing greater visibility and liquidity—without requiring them to overhaul their entire operation.

“What L’Oréal gets is a fully digitized ecosystem,” Barnett said. And for the small business, the card shifts from an occasional tool into a central operating layer, supporting purchasing, visibility and cash flow management in one place.

That shift is also being accelerated by agentic experiences like Mastercard’s Virtual C-Suite, which will enable providers to deliver executive-level insight and decisioning to small businesses. The module can help close long-standing gaps in resources and give SMEs clearer visibility into how they pay, get paid and manage working capital.

For many SMEs, managing cash flow and accessing credit at the right moment matters more than the payment mechanism itself—a reality providers need to design around.

“All our research shows that access to capital and cash flow flexibility are the biggest friction points,” Barnett said, noting that true competition is not between cash and cards, but between constrained and unconstrained liquidity. Nearly half of SMBs say they would pay for tools that let them adjust payment timing based on when they actually have money.

Digital systems that integrate payments with access to credit fundamentally alter that equation, particularly when providers simplify approvals and support SMEs through first use.

In that sense, payments are no longer the end product; they are the starting point. They are the foundation providers can use to deliver access to capital, operational visibility and control—and to help small businesses modernize in ways that actually fit how they work.