A Shopify-Gallup survey earlier this year of nearly 47,000 entrepreneurs found that 40% cited financial risk as a barrier to starting a business.
Now, Shopify – an e-commerce platform popular with small and medium-sized retail and B2B businesses – is trying to turn the tide of financial services for entrepreneurs. Noting that “entrepreneurs innovate at breakneck speed but traditional banks haven’t kept up,” the e-commerce technology provider is set to transform the financial opportunities available to startups with the new Shopify Finance product suite.
“Unnecessarily complicated finances shouldn’t overshadow the dream of running a business,” Shopify said in announcing Shopify Finance. “Entrepreneurs deserve better.”
Shopify’s financial services range from financing to tax management
The Shopify Finance suite includes the following financial products and services:
⦁ Shopify Capital offers eligible merchants access to up to $2 million in “fast funding, regardless of size and financial maturity, with no credit checks or impact on personal credit score.”
Shopify says Shopify Capital is rolling out “monthly borrowing cost structures” that result in lower overall repayment costs when merchants accelerate their repayments. “This new pricing structure gives merchants more choice and flexibility unique to their businesses,” says Shopify.
⦁ Shopify Credit is a “pay-in-full” Visa business card that offers merchants up to 3% cash back on eligible marketing, wholesale and fulfillment purchases. “Now merchants get up to 10 months to pay by choosing to pay the entire statement balance within one month or pay over time from a percentage of sales,” says Shopify.
⦁ Shopify Balance is a “free business account” that allows merchants to get paid as soon as the next business day and comes with a 3.39% annual percentage return (APY) reward on every dollar in the Shopify Balance account. Shopify notes that merchants on the Shopify Plus plan have access to a 4.43% APY reward, higher ACH financial transfer limits, and default next-day business day payments.
⦁ Shopify Tax allows eligible merchants to automate their sales tax filing and return. In a complementary service, Shopify Tax can automatically set aside sales tax funds in a Shopify Balance account to help meet tax obligations.
⦁ Shopify Bill Pay allows merchants to pay business bills via their preferred method, including credit card, debit card, bank transfer or Shopify Balance, “whether or not a merchant accepts that form of payment.” In addition, Shopify says a new service allows merchants to process batch and recurring payments to save time and combine payments to save on transaction fees.
Merchant startup Shopify Pupsentials cites growth
Jake Chambers, co-founder of pet apparel embroidery merchant Pupsentials, says in a recent Shopify press release: “We wouldn’t be on our way to $10 million in revenue if it weren’t for Shopify Finance. Having worked with multiple financial vendors in the past, it makes a lot more sense to run our business on one platform.”
Shopify Inc., an Ottawa, Canada-based company with its US headquarters in San Francisco, has partnered with Stripe Payments Co. for money transfer and account services, with funds held by Evolve Bank & Trust and Fifth Third Bank. Shopify says the Shopify Credit and Shopify Balance Visa commercial credit cards are “powered by Stripe and issued by Celtic Bank pursuant to a license from Visa USA Inc.”
Shopify says that “all financing through Shopify Capital in the US has been issued by WebBank.”
In Shopify’s most recent quarter reported, ending the Q2 period ended June 30, the company said gross merchandise volume on its e-commerce platform rose 22% year over year to $67.2 billion as revenue rose 21% to $2.05 billion.
In North America, 117 of the top 1000 online retailers use Shopify as their e-commerce platform. The Top 1000 is a Digital Commerce 360 database of the region’s largest online retailers by annual web sales. In 2023, those 117 online retailers combined for more than $9.72 billion in web sales.
Paul Demery is a Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].
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