SMBs Trade Fees for Liquidity as Instant Payments Replace Credit Lines

Cash flow has long been the make-or-break factor for small enterprises.

Unlike large corporations with credit lines, cash reserves and investor buffers, small- to medium-sized businesses (SMBs) often run on tight liquidity schedules. Delays in receiving payments can ripple through the organization. Vendor bills pile up, payroll becomes strained and inventory replenishment slows.

Historically, this has meant that instant payment options were off the table, in large part because they came with fees that small business owners often balked at.

When margins are razor-thin, paying an extra 1% or a flat $10 per transaction seemed unnecessary, especially when the industry norm was to wait for the batch settlement cycle to clear.

However, the PYMNTS Intelligence report “Fast Funds, Steady Cash Flow: How Instant Disbursements Empower SMBs,” produced in collaboration with Ingo Payments, highlights that this traditional calculus has shifted. Inflation, tighter lending standards and rising interest rates have made access to capital more expensive.

At the same time, the share of micro SMBs, or those with less than $100,000 in annual revenue, that rely most on instant payments has tripled year over year.

What has changed is not just the technology that makes instant payments possible, but also the mindset of SMB owners who now see speed as a competitive weapon rather than a convenience.

The ability to receive money immediately is helping SMBs avoid high-interest credit lines, reinvest faster in operations and seize opportunities their slower-moving competitors can’t.

The PYMNTS Intelligence data underscores this dynamic.  Cash flow improvement is a dominant driver for instant payment adoption. Whether an SMB operates in high-urgency or low-urgency environments, ensuring that money moves in real time reduces the float gap that can hamstring day-to-day operations.

For example, a restaurant sourcing fresh produce daily can’t afford a two- or three-day delay between catering events and supplier payouts. Similarly, a small marketing agency that relies on freelance creatives must pay them promptly to retain talent and avoid project delays. In both cases, instant settlement turns liquidity from a constraint into a competitive advantage.

The PYMNTS Intelligence data found that businesses that typically need more than 40% of their payments urgently are twice as likely to rely on instant payments.

Read the report: Fast Funds, Steady Cash Flow: How Instant Disbursements Empower SMBs

SMBs are vulnerable to payment failures. In traditional ACH transfers or paper checks, the appearance of payment often precedes the confirmation of available funds. That lag exposes businesses to the risk of bounced transactions and associated fees.

By contrast, instant payments confirm funds at the moment of transfer, allowing SMBs to ship goods, schedule services or allocate resources with confidence. For a small wholesaler, knowing that a buyer’s payment has truly cleared before releasing inventory can mean the difference between profitability and costly write-offs.

The PYMNTS Intelligence data found that there is a difference in fee tolerance between high-urgency and low-urgency SMBs.

High-urgency SMBs, or those whose operations depend heavily on rapid cash conversion, are more likely to pay fees for instant payments. For them, the cost is viewed less as an expense and more as an investment in operational stability.

Low-urgency SMBs, those with more predictable revenue cycles and lower liquidity risk, are more cautious about absorbing additional payment costs.

High-urgency environments include industries like hospitality, transportation, event management and seasonal retail, where sales volume and payment timing fluctuate. In such cases, even a small delay in incoming funds can trigger a cascade of operational disruptions. Paying a small transaction fee to avoid those disruptions is, in effect, an insurance policy.

The willingness to pay for instant payments also reflects a broader cultural shift in SMB finance. Historically, small businesses were conditioned to work within the rigid timelines of banks and payment processors. That meant building contingency plans for delayed funds, like lines of credit, invoice factoring or reserve accounts.

Today, with instant payment infrastructure increasingly available, these workarounds are looking less like necessary safety nets and more like outdated inefficiencies. This shift mirrors the adoption curve of other digital transformations, first optional, then differentiating and eventually table stakes.

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