By Lori Griboski
Paysafe
Micro and small businesses are the lifeblood of most economies worldwide. They provide products and services tailored to locals, generate new jobs, and stimulate an inflow of community resources. They also offer role models to society by integrating women into the economic mainstream. But in many countries, women starting businesses still face a wide range of challenges, and these are significantly different from those experienced by their male counterparts.
Cultural norms and societal barriers set the pace at which women become self-employed business owners. Defying social expectations, building a support network and balancing a business with family life are some challenges they must overcome. On top of that, access to financial services and funding from investors remains a considerable hurdle.
Throughout this article, I'll assess how players in the fintech industry can help close the gender gap while shedding light on the disparities that limit entrepreneurial-minded women from gaining access to the resources needed to build a legacy of their own.
The pandemic served as a catalyst, changing how women participate in the economy. Restrictions on travel and disrupted supply chains meant households had to rely on local goods and services.
This encouraged enterprising women to set up micro businesses to serve their communities and provide a solution where there was none.
Hence, female entrepreneurship is increasing around the world. A study by the World Economic Forum from 2021 (see https://bit.ly/3lrue2C) found that almost half of the startups (49 percent) in the United States are formed by women, compared to 28 percent in 2019. This trend is mirrored in the U.K., where research shows that women are now running almost 40 percent of all U.K. micro businesses—up from 32 percent before March 2020 (see https://bit.ly/3yOBTvb).
Yet, despite the rising number of women-owned businesses, a disproportionate number of disadvantages still exist. Men still outnumber women three to one when it comes to business ownership, according to the World Economic Forum (see https://bit.ly/3ZZuVPK).
One of the primary reasons for that is the inequality in access to finance. This means the ability for an individual to access investors, financial institutions, services and mentorship that are affordable and suitable to support a business' stage of development.
In fact, the World Economic Forum (see https://bit.ly/2KtYy8E) reported that 80 percent of women-owned firms with credit needs are either unserved or underserved—an equivalent of a massive $1.7 trillion financing gap.
According to a 2019 study, 61 percent of female small business founders opted to self-fund their ventures (see bit.ly/3JypXSX). This means some entrepreneurs use their personal savings to get started, limiting their economic power.
Additionally, a recent TechCrunch study of all venture funding found that female-backed ventures received just 10 percent of overall funding, while the remaining 90 percent went to male-backed ventures (see https://tcrn.ch/3JRm796). The lack of equality in funding stifles economic progress, and entire markets fail as these founders can't bring their innovation to the industry due to a lack of financial support.
Further compounding this is the reality that traditional lending models often require collateral which some women lack primarily due to cultural norms and legal inequalities.
Financial institutions must acknowledge the cultural norms and also work to change their perspective regarding loan approval.
A survey by Inter-American Development Bank in Latin America found that women were 18 percent less likely to have their loans approved even though their online loan applications may have the exact wording (see https://bit.ly/3JR1AS2). To mitigate this bias, financial institutions should consider anonymizing loan applicants' gender, and launching inclusive training programs that raise employees' awareness of gender biases, and educating loan officers on how they can work to increase their loan approval rates for women.
The proliferation of digital payments and the expansion of new technology can also level the playing field for women-owned businesses. That's because transactions between customers and vendors have evolved so that solutions, such as tap-to-pay or mobile POS terminals, offer a faster and simpler way of completing a purchase.
This often frees up time for small business owners to focus on memorable interactions with their clientele, enabling them to better serve the needs of their customer base and establish an enjoyable experience.
Adoption of modern solutions is not only a way for business owners to control hardware costs, as newer devices are often quite affordable compared to terminals of the past, but these solutions also offer value-added services that can be significant revenue accelerators. For example, payment solutions that are integrated with cloud-based technology enable business owners to access real-time data and analytics that provide further insight into consumer payment patterns, as well as patterns around buying behavior.
This ultimately empowers owners to make data-driven decisions, which can be leveraged to power loyalty programs, enhanced inventory management, and even marketing and social media campaigns that help female entrepreneurs tap into new markets and expand their customer reach.
It's estimated that improving women's access to financial services could unlock $330 billion in annual global revenue. Investing in women-owned businesses is imperative, whether it's through funding or by creating critical technology that can empower future generations of female founders. The structural and cultural inequalities that are set as barriers for women must be addressed, and financial institutions, as well as payments providers, have a significant role to play. 
Lori Griboski, vice president of petroleum sales for Paysafe's Petroleum Card Services, leads the company's mid-market sales team, as well as its referral partners. With a passion for innovation and operational efficiency, she focuses on driving revenue by creating an exceptional customer experience for PCS merchants, agents, banks and partners. To contact her, please email kandice.satterfield@paysafe.com.
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