E-commerce giant Shopify has launched Shopify Capital in Australia, giving quick access to funding to Australian merchants selling on its retail platform. By including lending in digital offerings, Shopify aims at helping retailers boost their online sales. The Canada-based company said that small business owners in Australia can access up to $2.5 million AUD. Sales data from the platform will be evaluated to assess risk and lend off its balance sheet.
“Today, almost 40% of Australian merchants on Shopify sell internationally through features like Shopify Markets, and access to working capital through Shopify Capital now gives merchants greater scope to build their brand both here and internationally,” the company said on its website.
Australian businesses are concerned about the increasing cost of capital, inflationary pressures impacting margins, and declining consumer confidence impacting sales. Shopify Capital is remitted only when a sale is made, so Australian merchants can be confident that they can afford to invest in their businesses.
Shaun Broughton, APAC Managing Director, Shopify
How Shopify Capital Works?
Removing the complexities involved in traditional finance, Shopify Capital eases the process for merchants. With no lengthy application process and no personal credit checks, it allows small business owners to apply for and pay back through the existing Shopify platform they use to run their online store. Once approved by experts, funds get deposited within two business days. There is no hidden fees and uncertainty of compounding interest rates. Merchants repay based on mutually agreed fixed percentage of daily sales. Most importantly, there is no time limitation involved for the repayment — merchants can repay based on their sales, hence payments flex with the business.
“We couldn’t be more proud to support Australian businesses with everything they need to build strong brands for customers here and around the world,” said Shaun Broughton, APAC Managing Director, Shopify.
“Banks Don’t Have The Insight we Have”
“At the same time, Australian businesses are concerned about the increasing cost of capital, inflationary pressures impacting margins, and declining consumer confidence impacting sales. Shopify Capital is remitted only when a sale is made, so Australian merchants can be confident that they can afford to invest in their businesses,” he added.
Tui Allen, Shopify’s head of product for capital lending and financial services, said, “We are embedding capability directly where merchants are running their shop”.
“Banks don’t have the insight we have. We are expanding the service, so it’s about not just running your shop but your entire business on Shopify, including the financial components. We have a significant depth of fintech capability and continue to expand those across the platform,” she added.
Shopify Capital offers range from $200 to $1 million to support the growth needs of each individual business owner, like Riaz from Hearthy Foods, who used funding to update his branding and packaging pic.twitter.com/Ix6gotB2Kp
— Shopify (@Shopify) February 19, 2020
Expansion in Australia
Shopify has collaborated with Westpac, which will offer money-movement services by linking Shopify into the Australian payments system. Shopify has also partnered with Stripe, another global fintech company that has expanded its services from payments processing to offering loans and deposits. Shopify aims at expanding financial services in Australia, said Tui.
“Capital is a very important first step on the journey of what we want to do,” she said. Shopify plans to register with the Australian Prudential Regulation Authority. However, the company does not need an Australian Financial Services License as its business loans do not come under ASIC-administered credit laws.
About Shopify Capital
Launched in 2016 in the United States and later expanded to Canada and the UK in 2020 and 2021 respectively, Australia is the fourth market for Shopify Capital. Shopify Capital has lent more than $3.8 billion USD in its first three markets since its launch, the company stated on its official website. It claims that merchants who received fund through Shopify Capital witnessed 36 percent higher sales in the next six months compared to others.
Shopify’s expansion into financial services comes while the company’s stock has fallen over 70 percent. The e-commerce company also laid off 10 percent of its global workforce after online shopping volumes plummeted after COVID restrictions were lifted globally. Earlier, Square (now Block) and PayPal launched business loans in Australia.
