Shopify Now Provides Direct Payments In Attempt To Be One-Stop Finance For Retailers

Shopify and Israeli B2B payments startup Melio have partnered to introduce a new bill pay feature that will enable its merchant clients in the United States to manage their spending and vendors through its platform. 

Shopify's global head of merchant services partnerships and monetization, Shruti Patel, said it is another step in the company's strategy to bridge the gap between financial and commerce.

The idea behind the new functionality is to allow merchants to focus more time on expanding their companies by allowing them to spend less time on time-consuming processes like consolidating their invoices and paying bills.

According to Patel, it was also influenced by merchants' need for money-movement capabilities.

“We have been on the fintech journey since we introduced payments back in the day, powered by Stripe,” she said.

“That gave us tons of insight on our payments data. And then we came out and offered Shopify Capital in 2016, which was designed to meet our merchants’ micro and macro lending needs.

"And then last year we introduced what we call Shopify Balance, which was almost like a money management tool.”

Because Shopify intended the bill pay function to be a fully integrated accounts payable solution within the shop administration, it worked deliberately to integrate it within its existing offering, which is also where its merchant clients operate their companies.

“If you look at how banks offer and financial institutions offer bill pay today, it’s a pretty redirect experience,” Patel said.

“…But a lot of those experiences are pretty broken because they just link to a bank account and enable them to use them through that one method of payment.”

Shopify businesses, on the other hand, will have a selection of funding options, including a bank account, Shopify Balance, credit or debit card, or an ACH bank transfer, she added. Even if a seller doesn't take credit cards, they can still pay with them.

“It’s not only the cost optionality on which payment method and how to choose that, but also the speed we are allowing them to schedule payments,” Patel added.

Shopify, for example, can allow for payments to be made up to four days earlier than a traditional bank, she said. Merchants also have the option to pre-schedule payments.

There are "minimal fees" connected to some payment methods, such a credit card, even though the bill pay option is free for its businesses, according to Patel. 

“One of the reasons we wanted to do this for our merchants is going back to some of the feedback we heard which was how much bill pay is a pain point, especially for smaller merchants who cannot afford very expensive subscription plans,” she said.

Internally, having bill pay capabilities will give Shopify information on their spending patterns and the companies they work with.

“And today, banks have that insight, but they don’t really do anything with it, because they’re not running storefronts for the small businesses,” Patel said.

“What we want to do is really have that data help us drive more revenue for our merchants.”

Shopify refuses to disclose the number of merchants it works with in the United States, saying only that there are "millions of merchants" worldwide.