What You Can Learn From Your Account Holders’ Non-Traditional Business Lending Payments

What we're seeing

Shopify Capitalis a business lending product offered by the ecommerce platform Shopify to help its merchants grow. Instead of a traditional commercial lending model with monthly payments, these business loans are secured by a percentage of sales made through the Shopify Platform. For any day that a merchant makes a sale, a percentage of that day's sales go towards paying back the loan.

Shopify Capital users likely prefer to conduct transactions online, are likely tech savvy, and may appreciate the convenience of this funding option.

Based on the full calendar year 2023, the average Shopify Capital borrower made 17 payments per month and had a median payment amount of $53.57. Monitoring this transaction flow can provide a financial institution with insights into the overall revenue and growth of the merchant.

Small and medium businesses need capital to grow their operations and may not look at their financial institution first. Understanding the nuances of non-traditional lending products can be the key to innovating products for financial institutions to provide tailored services to meet those business needs.

Takeaway and Call to Action

Banks and credit unions should monitor Shopify Capital payments inside their account holder core data and create a plan to serve these business accounts with products that are relevant to their financial need. Some of these businesses may benefit from a traditional monthly repayment plan instead of the daily payments that Shopify Capital deducts.