Shopify moves further into financial space with new 'bank card' for merchants

Shopify cards

As it challenges banking behemoth RBC as Canada’s most valuable company, e-commerce giant Shopify says it’s launching its own version of a bank card to help its merchants better manage their finances.

The Ottawa-based company (TSX:SHOP) said Wednesday it will unveil a new line of financial services products that will include physical or virtual cards merchants can use to deposit and withdraw money from ATMs or pay for merchandise online. 

“We want to make the Shopify card better than any bank card you’ve ever had,” chief operating officer Harley Finkelstein said.

The card is part of a series of new products aimed at entrepreneurs and small business owners. Known as Shopify Balance, the plan also includes a “one-stop shop” where merchants can pay bills and track expenses as well as a rewards program that will give store owners who use the Shopify platform discounts on expenditures such as shipping or marketing.

The accounts will have no fees or minimum balance requirements and will operate similar to regular bank accounts, but they will be run by Shopify. The program will be rolled out in the United States later this year before eventually being expanded to other markets. 

Pointing to research that shows 40 per cent of merchants use their personal bank accounts and cards to pay for business expenses, Shopify said the new program is designed to help make it easier for entrepreneurs on its platform to separate their personal and business finances. 

“It becomes very tricky for them to separate their business from their own personal bank accounts and that causes all sorts of problems, for example, when they need to get financing … and in some cases, it affects their credit score,” said Shopify’s chief product officer, Craig Miller.

Finkelstein unveiled the program at the end of Reunite, a virtual conference the company hosted Wednesday morning in place of its annual Unite conference, where Shopify executives usually make major product announcements. Unite, which was due to be held in Toronto in May, was cancelled in March because of COVID-19.

In other efforts to help entrepreneurs “futureproof” their companies, Shopify said it is launching a handful of other business management and sales tools, including giving its merchants the ability to let customers “buy now, pay later” in four equal, interest-free instalments as well as tip.

Miller said some of the new features and products were in the works long before the pandemic, but others were dreamed up or accelerated as entrepreneurs scrambled to pivot their businesses to online models while experiencing lost income, furloughs and layoffs.

“It almost became 2030 overnight,” he told The Canadian Press. “Some of the things we were anticipating as being important over the next coming years became super important basically overnight, so we've been trying to equip our merchants as much as possible to deal with this kind of situation.”

The pandemic has proved to be a boon for Shopify, which briefly passed RBC to become the most valuable publicly traded company in Canada earlier this month. Its stock now regularly reaches more than $1,000 in trading and the company boasts that more than one million businesses now use its offerings.

Online shopping boom

“It sounds a little weird at first glance, but we're seeing some grocery stores and restaurants use Shopify,” said Miller.

He said the number of local orders Shopify merchants received each day on average spiked by 176 per cent in the six weeks leading up to April 24, just as physical distancing and work-from-home orders were put in place in several countries.

Shopify believes companies may see an additional boost from its Wednesday announcements, revealing merchants will be able to collect tips and set fees, minimum order prices and distance radiuses for deliveries.

They’re just the latest in a series of moves aimed at helping the Ottawa firm capitalize on a growing trend toward online shopping as consumers hunker down during the pandemic.

The company began allowing merchants to sell gift cards in recent weeks and teamed up with Facebook on Tuesday to unveil a new and free tool helping companies create a customized online storefront for Facebook and Instagram. 

In the past month, Shopify has also unveiled a revamped point-of-sale system that allows merchants to create specific instructions for curbside pickup and released a new app designed to allow customers to search for local businesses, buy merchandise and track their orders all in one place.

Shopify shares were up more than $16 to $1,065.64 in late afternoon trading on the Toronto Stock Exchange.

​– With files from the Canadian Press