Vikram Anreddy, Head of Product for Financial Services at Shopify asserted that Shopify credit card is unlike most other business cards. Lately, in a conversation with fintechnexus.com, Anreddy talked in length about different product offerings by Shopify, especially the latest one, Shopify credit.
The Shopify executive also explained about Shopify Balance, Shopify Bill Pay and Shopify Capital besides the e-commerce’s expansion plans. Below are the excerpts from his conversation in a podcast with Peter Renton, co-founder of Financial Nexus.
Why Choose Shopify Credit?
Quite excited to talk about Shopify Credit, Anreddy told Renton that the team had been working on the product for a while. Explaining the reason behind the product launch, he said that smaller merchants don’t get access to business credit cards and if they do, the credit limits are limited. Hence, Shopify planned to redress the pain points.
“Our smaller merchants tell us that they prefer to spend using credit cards for most of their business expenses. The majority, actually 58% of all non payroll expenses from SMBs are paid for using credit cards. But they also tell us that a lot of them can’t even get access to a business credit card, a lot of them just get a personal credit card and use it. And even if they can qualify and get access to a business credit card, the credit limits are not right sized, the rewards are not truly rewarding. They’re really confusing, there’s lots of hidden fees and so on. And we are entering this space to really solve for these pain points,” Anreddy said.
“The other thing that I would say from a timing standpoint is in this current macroeconomic environment, access to credit and funding is pretty tight for a smaller merchants. And we thought this is the perfect time for us to actually provide this, bring this product to market,” he added.
No Credit Checks
Shopify’s Director of Product also described the USPs of Shopify credit and why merchants should choose it over any other business cards. He said Shopify doesn’t do any credit checks for the card. The eligibility and credit limits are decided as per the performance of the business. He went on to say, “the credit limit will grow with your business. As your business grows, your needs grow you’ll need a higher limit and the business credit limit will grow with you.”
Talking about the other unique features of Shopify credit, he added, “We’ve kind of designed these rewards, really to be meaningful, and valuable to our merchants based on trying to amplify the rewards on categories they spend the most, be it marketing and sales, be it B2B wholesale, to buy inventory, or be it shipping the cost of fulfillment to their customers. Merchants can earn up to 3x rewards on the top spending category every month and 1% on the other two categories.
“Again, we are trying to make it super simple to redeem this rewards, we give you cashback and that cashback is applied to the merchant statement credit as the statement rate for the next statement, the merchant has to do nothing to get this rewards, right. And the third thing is like with Shopify Capital, we’ve learned how well this works for Shopify Capital, merchants get offers, if they’re eligible, they get offers personalized offers in the Shopify admin, and they can apply within a few minutes, get approved a few minutes after that and get a virtual card that they can use. Start spending a few minutes after that, like a lot of these merchants will get approved instantly. Right. And the final thing I say is that this is a no BS card, no fees, no credit checks, we just like keep it very simple and transparent.”
Shopify Capital
Talking about Shopify Capital, online funding for entrepreneurs launched in 2016, Anreddy says that capital helps Shopify merchants grow. “This growth comes back to the Shopify ecosystem, because that GMV comes to Shopify, and in some ways, powers the overall Shopify platform and the flywheel there, right. So I would say I think the financial services products by making it easy to access funding and making it easy to manage your money will actually have an amplifying effect on the overall Shopify platform, not just in reducing churn but also driving growth,” he added.
Shopify’s Head of Product for Financial Service went on to explain in detail about Shopify Balance, which is a newer offering than Capital. Balance, promoted as more than a bank account was built in collaboration with Stripe and Evolve. Anreddy called it ” a money management account”.
“It helps merchants get paid on their sales on the Shopify store sales much faster than any other bank account,” he said.
“Trusted merchants can get paid instantly or same day, with balance versus having to wait three or four days. Now, this is really material for really small merchants whose cash flows are always stretched. Right? The second thing that I will say is that merchants can also earn rewards when they use the card that comes with the Balance card, spending their own money. Right. And again, it’s a fairly unique thing that you will not see in a checking account or a savings account. And the last thing is that I will also say it gives you all the tools that you need from a money management perspective to move money in and move money out, all the things that you would expect from any traditional bank account. We have that in Balance as well. In some ways, the easiest way for merchants to manage the money within the Shopify ecosystem,” Anreddy added.
He went on to explain, “We launched Balance at the beginning of 2022, right, it’s been a year and a half. And if you look at some of these early cohorts, some of these entrepreneurs have grown up, and they stick with Balance. Banking is a fairly retentive product. And you see a lot of this adoption in new merchants and new entrepreneurs. But at the same time, we also seeing adoption of Balance amongst existing merchants as a replacement account, again, driven by these two value props that we have – faster payouts and rewards on spend and that is again driven adoption of balance even in our existing merchants”.
Shopify Bill Pay
Explaining what motivated Shopify to build Bill Pay, Anreddy said, “We started Balance and merchants started growing up on Balance and one of the pain points merchants told us that as merchants grow, they start to work with many vendors, and their number of bills they have to pay explodes and they start managing these bills in many different places because they have different timelines to be paid and so on. And that is what motivated us to build Bill Pay. And Bill Pay is tightly integrated and works very well with Balance. We built Bill Pay with in collaboration with Melio”.
“And we’re trying to do something very simple there again, right, give merchants the ability to manage your vendors and pay your bills, pay your bills on time, schedule your bills on time, and pay with the methods that you care about. You want, even if the vendor doesn’t accept those methods, because Melio and we will take care of that on the back end. We are motivated, a lot of times we are motivated to build products based on what we hear from our merchants on what their pain points are in managing money. Going back to my earlier point, we want to make it super easy for merchants to manage their finances, so that they can spend their time on building the best products for their customers,” he added.
Global Expansion
Regarding the expansion of Shopify products all across the globe, Anreddy said that the company is focused on popularising them well in the core market before taking them to the international level. “Entrepreneurs in more than 150 countries can build a Shopify store and sell using Shopify across the globe. The way we’ve approached all new products, not just financial services products, all new products at Shopify or many new products at Shopify, is to first figure out start within the core markets of the US and Canada, figure out the right product, make it work, and then slowly expand, right. And that’s the path we’ve taken for Shopify Capital, for instance.
“We started out in a few states in the US, and then Canada expanded to nearly all of the US. And then we went to the UK, we launched, last year we launched in Australia. So we slowly expand after that, right. And in some ways, we’re also guided by how Shopify overall is doing in various international markets. Right. And so with some of our new products, like Balance, Bill Pay, and Credit, right now, we are focused on really making them work well in our core markets. And over time, we may think about how to expand them, and bring them to other new markets,” he said in the podcast.
Anreddy’s Motivation
Talking about what keeps him excited, Anreddy didn’t forget to mention Artificial Intelligence. “Our mission at Shopify, across all our products is to marginally, to make it super easy for entrepreneurs to get started. And to marginally increase the probability of success. All the products that we build, whether they are fintech products, or whether or not fintech products, right. And that is just like the exciting mission that we are on, on the journey with right.
“The second thing I would say, I think there’s a ton of excitement around AI and what AI can do in helping entrepreneurs succeed on their commerce journey. And I’m excited to see what we’re launching with additions,” he concluded.
