Shopify unveils plan to offer banking services to merchants

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Merchants in the U.S. who use Shopify, an e-commerce site that helps more than a million businesses around the world set up and manage their online stores, will get another way to handle their cash flow when the company launches a suite of banking products later this year.

Balance, a money management solution Shopify announced Wednesday, aims to help business owners budget, pay bills, track expenses and more within Shopify. It will include a federally insured business bank account with no monthly fees as well as a corporate charge card that will offer cash-back and rewards related to shipping and marketing — two major expenses for entrepreneurs.

Shopify Balance card
Shopify plans to offer a corporate charge card and a bank account to its entrepreneur customers, whom it often refers to as "digital nomads."

“Our goal here isn’t to replicate a bank,” said Kaz Nejatian, general manager of financial solutions at Shopify. “The goal here is build financial products for our merchants that are newer and more nimble than what traditional banks offer.”

Nejatian points to the struggles small businesses have faced reaching their banks and applying for funding during the crisis caused by the coronavirus pandemic.

“We think legacy banks serve the largest corporations really well,” he said. “But small businesses or independent entrepreneurs can’t get access to the services they want, and the services they can access are insanely expensive.”

Users of Shopify — from fledgling one-man bands working out of their basements to global brands including PepsiCo and Staples — already spend a good deal of time managing their inventory and dealing with sales inside Shopify. The forthcoming money management tools are meant to be an extension of that service, rather than a bid to acquire new users.

They will also serve new Shopify entrepreneurs, such as farmers who have become direct-to-consumer sellers of flowers and produce during the pandemic or those who are scaling up a side hustle if their current job feels unstable. In the U.S., Shopify's new online store creations grew 53% month over month in April, which it attributes to brick-and-mortar businesses shifting their activity online.

“This is consistent with what happened in 2008, or the last national crisis, where people were given a chance to start a business because they felt like their old job was at risk,” Nejatian said.

Merchants in the U.S. can now register for early access to Balance.

Shopify will partner with established financial institutions to deliver these services, but has not named any.

Although the idea for adding banking tools had been floated around Shopify before, the pandemic inspired the company to redraw and accelerate its plans.

“When the next troubles hit, we don’t want our merchants to be in the position they were this time around,” Nejatian said.

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