Can you believe it’s already June? This year is just flying by! It’s the first full year back to normal for many businesses, so we thought we’d take a look at how things are going so far and what are some of the challenges being faced by small Canadian businesses. Al welcomes Jim Filice, VP and Head of Commercial and Money Movement at Visa Canada to talk about those challenges, and how digital payments are helping to ease some of the pain.
Can you believe it’s already June? This year is just flying by!
It’s the first full year back to normal for many businesses, so we thought we’d take a look at how things are going so far and what are some of the challenges being faced by small Canadian businesses. Al welcomes Jim Filice, VP and Head of Commercial and Money Movement at Visa Canada to talk about those challenges, and how digital payments are helping to ease some of the pain.
Also in this episode:
Links of Interest
Chapters:
Al Grego:
Coming up on Shop Talk.
Jim Filice:
Those that have adopted digital payments early on have come out of the pandemic even stronger.
Al Grego:
Right.
Jim Filice:
What's great about Canadian small businesses and entrepreneurs is that they're forever optimistic and they are definitely taking that lens going forward.
Al Grego:
Hello everyone. I'm Al Grego.
Sydney Lupton:
I'm Sydney Lupton.
Al Grego:
This is the June, 2023 edition of Shop Talk with Moneris. Welcome to the Shop Talk podcast, Sydney.
Sydney Lupton:
Thanks, Al. Super great to be here.
Al Grego:
Sydney, you just joined our team as a summer intern.
Sydney Lupton:
Yes, I actually just started on May 1st, so I've been at the company for just about a month.
Al Grego:
Great. What are you studying?
Sydney Lupton:
I just finished my first year at the University of Guelph studying marketing management.
Al Grego:
Nice. Well, then you're on the right team for that.
Sydney Lupton:
Yeah, everyone's been super welcoming and accommodating so far. I'm learning a ton, so I've really, really enjoyed it.
Al Grego:
Now that you've been here about a month and you've had a chance to listen to our podcasts, what do you think?
Sydney Lupton:
I think they're awesome. I love listening to them when I'm driving to and from the office.
Al Grego:
Oh, I thank you. I'm glad you like them.
Sydney Lupton:
I do, but I do have a couple notes for you, Al.
Al Grego:
You have notes?
Sydney Lupton:
Yeah, I was thinking maybe they could be, I don't know, a little shorter.
Al Grego:
Okay, that's fair.
Sydney Lupton:
And shot in some sort of portrait mode.
Al Grego:
But there's no video.
Sydney Lupton:
And maybe you could incorporate some dancing or have it so folks can stitch their responses. Just something like that.
Al Grego:
Dances, stitches. Wait, you're talking about a TikTok post?
Sydney Lupton:
Yeah, if you could make it more like a TikTok post, that would be great. I find I'm on it all the time, so why not?
Al Grego:
You've been hanging around with Tanya too long.
Sydney Lupton:
What was that?
Al Grego:
Nothing. Nevermind.
Sydney Lupton:
I'm just messing with you Al. I love the podcast.
Al Grego:
Are you sure?
Sydney Lupton:
Absolutely.
Al Grego:
Well, thank you.
Sydney Lupton:
You're welcome. So, Al, what's this month's theme?
Al Grego:
Well, according to my travels with the Yes, We Are Open podcast.
Sydney Lupton:
You mean the award-winning Yes, We Are Open podcast?
Al Grego:
You got my memo.
Sydney Lupton:
All 23 pages.
Al Grego:
Yes, according to my travels with the award-winning Yes, We Are Open podcast, for many businesses this is the first normal year they've had in a while.
Sydney Lupton:
Yeah, I definitely suppose that's true.
Al Grego:
It is, and given that we're halfway through this year, I thought it might be good to see how things are going for small businesses.
Sydney Lupton:
Yeah, I know the year's flown by, but it would be like a midyear update.
Al Grego:
Exactly.
Sydney Lupton:
Makes sense. Who do you have lined up today?
Al Grego:
Well, our feature interview is with Jim Filice from Visa Canada.
Sydney Lupton:
Impressive. That's awesome.
Al Grego:
Jim's going to talk about the challenges facing small Canadian businesses today and how they can overcome those challenges.
Sydney Lupton:
Great guest. I'm sure he was happy to be here. Who else is on this month?
Al Grego:
Then we'll have a regular visit from our data expert, Sean McCormick, who'll share some actual consumer spending data from the restaurant sector and we'll talk about what story that data's telling us and the trends in that sector.
Sydney Lupton:
That sounds great
Al Grego:
Indeed. Let's begin with my chat with Jim.
Speaker 4:
Featured interview.
Al Grego:
I'm joined by Jim Filice, he's the VP and head of Commercial and Money Movement at Visa Canada. Jim, thank you so much for joining me today.
Jim Filice:
Hey, thanks Al. Great to be here.
Al Grego:
My pleasure. 2023, this is kind of the first normal year back for a lot of small businesses in Canada, and I'm just wondering, it's June now, so I thought it'd be a great way to take a snapshot of how the year is going so far and maybe talk a little bit about some of the challenges that small businesses are facing in Canada from your perspective. Why don't we start with that? What are some of those challenges that small businesses are facing?
Jim Filice:
You mentioned coming out of the pandemic and whether this is a normal year or not, I don't know what normal is-
Al Grego:
Yeah.
Jim Filice:
Anymore. Small businesses are definitely concerned around inflation, concerned around sort of the macroeconomics in our economy today. That does have them a little bit of worried about a recession-
Al Grego:
Right.
Jim Filice:
And whether that's going to happen, how deep is it going to go? There's a lot of concern, I would say, but the beauty is coming out of the pandemic, those that have adopted digital payments early on have come out of the pandemic even stronger.
Al Grego:
Right.
Jim Filice:
They've come out of the pandemic at this point now fairly optimistic despite the headwinds that they're seeing. They think it's going to be short. They think that they'll come out of it stronger. What's great about Canadian small businesses and entrepreneurs is that they're forever optimistic and they are definitely taking that lens going forward.
Al Grego:
Now, certainly the case where the past couple of years have probably accelerated the move to more digital payments probably by 10 years out of necessity, right?
Jim Filice:
You're absolutely right. I think what we've seen across the board, consumers, small businesses, everyone over the course of the pandemic got a little deeper in their digital adoption or digital engagement. Whether you were very digitally engaged before the pandemic, you got even deeper, whether you were someone that didn't use digital payments, didn't tap your card card even at point of sale, you got a little deeper and more digitally engaged. That has definitely increased digital adoption and the expectations around digital adoption. That's created some benefits and some extra challenges. Small businesses today, and businesses in general, some of the challenges that they have is just the inertia of the way they've done payments in the past.
Al Grego:
Right.
Jim Filice:
Whether it was check or different mechanisms. What we're seeing now is with the digital adoption, how do they manage and reconcile all of those payments in a more effective way as they start to see these payments come in from different channels? Those are some of the pain points that we're experiencing now, is how do we make payments in general way more efficient? It really becomes, how does that small business get more efficient in what they do so that they can spend their time doing the things that they really love to do, which is run their business and serve clients and do all the great things that small businesses bring to the Canadian economy.
Al Grego:
You've covered business to consumer pretty well there. What about business to business?
Jim Filice:
I think when we think of business to business payments, and if traditionally, a good example in Canada, there's about $3 trillion that move between B to B via check and some of the challenges of sending checks out when it's going to arrive, et cetera, reconciling that process costs businesses quite a bit of money.
Al Grego:
It's almost like businesses are like 20 years behind the consumer. As a consumer, I can't remember the last time I wrote a check, but they're still doing that. You said, what? 3 trillion with a T annually that are still being transacted by check. I think the biggest plus going digital, away from check, is that reporting, is that data management, and it's probably immediate cash flow as well, right? You're not waiting for reconciliation and all that other stuff that comes with checks.
Jim Filice:
Businesses need transparency and predictability in order to manage their cashflow.
Al Grego:
Yes.
Jim Filice:
They need to know where things are. They need to know if I can make payroll or I need to possibly take out a loan in order to make payroll. All of the visibility, the transparency, the predictability of digital payments empowers a business to thrive so that they can make decisions that they need to make in order to grow their business.
Al Grego:
We've talked about some of the pain points for consumers and also for business to business. What are some of the specific solutions Visa has available?
Jim Filice:
Yeah, I think where we're focused, again, is all around creating that efficiency for that small business. Beyond the payment, what we want to do is provide platforms in which the small business operator can have visibility to all the things that they do with payments and provide the controls. We have a platform called Visa Spend Clarity, and in that platform that allows a small business owner to manage all of their employee expenses, ensuring receipt capture, that ability for a small business to provide payment capability to their employees and then have a central area in which they can control that. They also, from that platform, have the ability to send a virtual card to one of their employees digital wallets with controls, spend controls, where they can spend, how much they can spend, so that they can empower that employee to go do purchases, get supplies, but also have the security knowing that that employee only has certain capabilities available to them.
Al Grego:
Those virtual cards, kind of all the benefits of a corporate card, but without the logistics of having to give out plastic cards and track all of that.
Jim Filice:
Yeah. One of the challenges of small businesses is, do they give everyone a credit card?
Al Grego:
Right. Yeah.
Jim Filice:
That's not always an easy thing for an entrepreneur to sort of provide credit to every one of their employees. This gives them the ability to take all full advantage of credit and providing it to employees, but without the risks associated to having employees just have credit cards in their wallet-
Al Grego:
Yeah.
Jim Filice:
And it solves for what the reality is with most small businesses, is when they're providing either cash or they're providing their own credit card to an employee or a debit card in order to go make purchases, this puts much more control in the hands of the business owner and a lot more flexibility and freedom in the hands of the employee.
Al Grego:
It makes so much sense, and just a great example of how going digital is providing smaller businesses with those benefits that used to only be for larger corporations,
Jim Filice:
That's right. If you think of a company that, let's say it's a landscaping company and one of the employees needs to make a run to Home Depot.
Al Grego:
Yes.
Jim Filice:
Do you hand your credit card to the employee or your debit card in order for them to make that purchase or cash and not really knowing where that is going to get reconciled later, or that ability to instantly issue that employee a virtual card within their wallet. They have the ability to go to Home Depot, make those purchases on the virtual card. You can put controls that say, "This card is only available to be purchased at home hardware-"
Al Grego:
Right.
Jim Filice:
"Type stores and no more than $500 or a thousand dollars." Then you're insured that you have all that control. But then once the payment is actually made, the power of that is that comes back into the platform-
Al Grego:
Right.
Jim Filice:
And now we have reconciliation around, "I know that I gave this virtual card to my employee and I see the purchase and I know why and I can capture that receipt and then I have much more efficient control over my spend."
Al Grego:
That's a great idea.
Jim Filice:
It's that type of control that I think empowers businesses.
Al Grego:
Visa is investing a lot into small Canadian businesses. Where would you say the focus of your investment is?
Jim Filice:
I think we touched on some of it already. Small businesses, again, are anything but small to Visa. We provide and want to provide tangible value to these small businesses so that we're helping them every step of the way. Where we're investing our time is supporting the entire ecosystem in order to help small businesses. While we provide tools to the incumbents, like banks, et cetera, that are serving small businesses, we also want to empower those innovative technology companies that are looking to solve specific niche areas for small businesses. The goal here is to take the collective ecosystem and all the players in Canada and those that are yet to come to Canada to really drive the services because they ultimately know the small business best.
Al Grego:
Yeah.
Jim Filice:
If they can drive those that value to small businesses, that's where we want to invest in.
Al Grego:
If I'm a small business and I want to learn more about the services and investment that Visa's making, where would I go?
Jim Filice:
I think I direct people specifically to our small business hub. In there, there's a variety of tools, everything from tips, thought leadership, et cetera, as well as fraud tools that small businesses can leverage in order to mitigate risk out of their business. I would start with Visa small business hub. You can also search up, "She's next empowered by Visa." I think that that's an important website to look up that will provide opportunity for small business owners, women led small business owners, and there's a bunch of tools there as well, as our Visa practical business skills, and that is an area in which a lot of our small businesses can access and learn a little more about some of the business skills and help them scale their business.
Al Grego:
Sounds great, Jim. Thank you so much for your time today.
Jim Filice:
All right. Thanks, Al. It was great to chat with you.
Speaker 6:
Hey, business owner. Does your current POS service provider offer terrible customer service? Are they unable to accept all forms of payment? Do they leave you feeling exposed to fraud? If you answered yes to any of these, then you're obviously not using Moneris, Canada's number one payment processor. We provide advanced fraud protection, give you 24 7 live support and accept all major credit cards. Plus, until June 30th, new clients can get the latest terminals for $0 a month. In other words, no rental fee for up to a year. For more information on our quick and easy out-of-the-box solution, please visit us at the link provided in the show notes. See why so many Canadian businesses choose Moneris. Terms and conditions apply.
Speaker 4:
By the numbers.
Al Grego:
I'm joined by Sean McCormick. He's the director of Data business Development at Moneris. Sean, thank you so much, once again, for joining me today.
Sean McCormick:
Awesome to be back, Al. Thanks for having me.
Al Grego:
This year is kind of the first year where a lot of businesses are back to "normal," and since it's June, I thought it'd be a good time to maybe do a bit of a mid-year checkup or update us to how things are going. We had Jim Filice from Visa on already to talk about small businesses in general, but you've got some restaurant spending data to share with us today, right?
Sean McCormick:
Yeah. Restaurant spending has been a really interesting study the last couple of years, Al. We've seen seasonal peaks in November and December, increasing between 15 and 20% year over year the last few years. This past December, average transaction size at a restaurant was $29.33 cents.
Al Grego:
Right.
Sean McCormick:
That was up 17% over the seasonal peak the previous year in November and December. If you're getting sticker shock when you go into restaurant, no surprise-
Al Grego:
Yeah.
Sean McCormick:
And that continues to grow, but I feel like that's starting to level off based on the data that we're looking at at Moneris and our restaurant platform division at UEAT. When we break down spend, volume is up, at restaurants, 16%, and more specifically fast food at 12%. Now, one thing to pay attention to is that instead of larger orders, the average transaction size, year to date, is only up three to 4%. That tells me that things are leveling off. One of two things might be happening, either consumers are spending less-
Al Grego:
Right.
Sean McCormick:
At restaurants, so the demand is slowing so the restaurants aren't as aggressive in increasing the price of the food and drinks at the restaurants.
Al Grego:
Right.
Sean McCormick:
Or things are just leveling off from an inflation standpoint. One or the other, average transaction size is only up three to 4% and more frequent transactions are driving that growth.
Al Grego:
You mentioned our friends over at UEAT and the data that they're providing us. What kind of trends are they showing from their platform?
Sean McCormick:
What they're seeing is that based on share of total orders, they're processing orders in restaurant and they're processing takeout orders, and based on total share of orders by month, takeout is becoming increasingly popular.
Al Grego:
Right.
Sean McCormick:
In January, takeout accounted for 55% of all orders-
Al Grego:
Wow.
Sean McCormick:
Compared to 45% in restaurant and, throughout the year, takeout has continued to increase by April, which is our last data point, takeout accounted for 58% of all orders.
Al Grego:
If you're a restaurant, what this shows is maybe you want to put a little bit more focus on your takeout and maybe you want to improve your customer experience when it comes to the takeout window.
Sean McCormick:
Well, yeah, that, definitely I agree, and it's also more cost-effective for a restaurant to process a takeout order as opposed to a dine-in-
Al Grego:
Right.
Sean McCormick:
Experience because they don't have to pay to wash the dishes.
Al Grego:
Right.
Sean McCormick:
They don't have to pay for the presentation, that whole in restaurant experience, there's costs involved in that. Consumers love a good in restaurant experience, and the restaurant owners and managers are obviously happy to give it to them, but from a business standpoint, a purely business standpoint, the margins are better on takeout.
Al Grego:
Right. That's a great point. Also, good to see maybe that the trend showing that the food inflation anyway is slowing down.
Sean McCormick:
Yeah, definitely. We're seeing that not just in restaurant spend. We're starting to see that in the average transaction size across a lot of different consumer spending categories, grocery being one of them. That's an interesting one. You and I have talked about that before.
Al Grego:
Yes. Absolutely.
Sean McCormick:
Where grocery inflation at 10 to 12%, it's definitely real and it's definitely happening, but people are buying less when they go to the grocery store. They're choosing not to waste as much, so they're buying less so that the items don't go bad in their fridge or they're also value shopping. Shopping for cheaper brands to accomplish the same goal.
Al Grego:
Thank you so much for your time today, Sean.
Sean McCormick:
Thanks, Al.
Speaker 4:
Save the date.
Al Grego:
I'm joined by Matt Rovet. He's a senior events producer here at Moneris. Matt, thank you for joining me today.
Matt Rovet:
Thanks for having me, Al. How are you?
Al Grego:
I'm all right. We're talking about the June events calendar. What do you have for me?
Matt Rovet:
Yeah. Moneris is sponsoring the Forum's Spring e-series. The Forum is a Canadian based charity that energizes, educates mentors, and connects self-identified women entrepreneurs to be wildly successful, promoting strengthened economies and thriving communities. This is happening May 16th to June 15th. There's six days of programming over the course of four weeks. Moneris's session will be on June 1st.
Al Grego:
Okay. How can we learn more about that?
Matt Rovet:
Yeah, you can learn more about the e-series at theforum.ca/eseries-program.
Al Grego:
Okay. Do you have anything else?
Matt Rovet:
I sure do. On Sunday, June 4th, second Harvest is hosting Toronto's most exciting culinary and concert experience of the summer, the rescue party. Moneris is proud to sponsor the raffle at the event.
Al Grego:
Where can we get tickets for that?
Matt Rovet:
Tickets can be found at secondharvest.ca.
Al Grego:
Okay. Anything else?
Matt Rovet:
Yeah. Moneris is sponsoring Toronto Region Board of Trade's Growth Development Program from June 22nd to the 28th. The growth Development program offers hands-on curated highly practical workshops and mentorship sessions led by leading experts in advisory services. Moneris will be hosting two sessions during the program, one on June 27th, risk management and governance, and one on June 28th, understanding how consumer behavior, data, and insights can help support your business strategies.
Al Grego:
Those sound like really great programs.
Matt Rovet:
Sure do.
Al Grego:
Thank you so much for your time today.
Matt Rovet:
Thanks for having me, Al.
Al Grego:
That's all we have for this month. I hope you found this episode informative. If you haven't already, check out Moneris's other award-winning podcast, Yes, We Are Open. Season four just came to a close and it's one of our best seasons ever, so check it out.
Success in business doesn't come without moments of struggle. Moments when you had to face your challenges head on. When you overcome these moments, what you're left with is not just success. You're also left with a story. A story of how you did it, a story to inform, inspire, and be proud of. At Yes, We Are Open, it's our business to tell these stories and we're kind of good at it. Subscribe now to season four of the award-winning Yes, We Are Open, available wherever you get your podcasts.
Sydney Lupton:
If you haven't already, you can subscribe to this podcast as well as the Yes, We Are Open wherever you get your podcasts.
Al Grego:
If you'd like to support this show, share this podcast with your network or review us on Spotify or Apple Podcasts. Finally, if you have a payment related question you'd like to submit to one of our experts, you can email us at podcast@moneris.com.
Sydney Lupton:
Join us again next month for more expert insight and data to help you grow your business.
Al Grego:
Thank you so much for co-hosting, Sydney.
Sydney Lupton:
Thank you for the invite, Al. I love being here.
Al Grego:
On behalf of Sydney, myself, and the rest of Moneris, thank you for listening to Shop Talk. Talk again in July.