Affirm, the buy now, pay later fintech founded by PayPal’s Max Levchin, has landed a major deal with Shopify.
The exclusive deal will see Affirm power US-based instalment payments for ‘Shop Pay’, Shopify’s new fintech offering for online stores.
In May, Shopify – a Canadian-founded ecommerce platform – announced the imminent launch of a series of banking services.
Its Shop Pay product, powered by Affirm, will rival the flexible payment options offered to US merchants by Klarna, PayPal and Square.
It will allow consumers to split purchases into four equal payments, interest-free. It is set to launch “later this year”.
Merchants which use Shop Pay will receive payments upfront and Affirm will handle the collection.
“With the acceleration of online spending, many small businesses must reinvent themselves,” says Levchin.
“By partnering with Shopify, the gold standard of commerce platforms for businesses that want to sell direct-to-consumers, we can help merchants seamlessly enable a pay-over-time option at checkout.
“In doing so, we’re helping them reach new customers, particularly Gen Z and millennials, who are looking for more transparent and flexible ways to pay.”
Testing will begin “in the coming months” for a US launch of Shop Pay later this year.
Shopify’s move to banking
As well as its buy now, pay later product, Shopify is also rolling out Shopify Balance. It’s a no-fee banking account designed for independent businesses.
The account, accessed through the Shopify admin, allows merchants to see their cashflows, pay bills and track expenses.
Businesses don’t need a minimum balance to open an account. They will get issued a physical or virtual card which they can use online, in-store or at ATMs.
The slew of new products, brought forward due to the current market conditions, will offer up some fresh competition. Both banks and fintechs are trying to tap this same, growing pool of small, independent businesses.
The rise in mobile banking: Bank of America, First National and TD
Share Mobile banking has surged during the coronavirus pandemic, and banks are reacting with enhanced mobile capabilities, new features and educational tools to support the new wave of digital users. Bank Innovation talked with some of the biggest banks across the country to learn how mobile banking has changed in the past five months and …Read More
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Get Wise: Business Banking Gains a New Challenger
Whatever benefits the challenger bank revolution may bring to retail banking customers, the opportunities these neobanks provide to small businesses may be even more significant. In fact, there is a growing cadre of digital-first challengers who have decided to put innovating on behalf of small business banking at the top of their priorities.
One such company is Wise, a BBVA-backed challenger based in San Mateo, California, that announced the release of its premium checking account in the U.S. this week. The new offering, available for $10 a month, enables businesses to earn up to 1% APY on deposits through a combination of a 0.5% base APY and an additional 0.1% for every $1,000 purchase using a Wise debit card. Accountholders get 25 free ACH deposits and 25 free outgoing bank transfers a month, as well as additional payments services. Among the functionalities to be added are remote check deposit, the ability to send digital checks and international wires, and support for Quickbooks.
The new offering comes in the wake of the company’s first major fundraising: a $5.7 million seed round in April led by Base10 Partners and featuring the participation of several other investors including Abstract Ventures and Backend Capital. The company told TechCrunch earlier this year that it has 1,000 business customers, with average workforces ranging from 2 to 10 employees, and “between $500,000 and $5 million in ARR (annual recurring revenue).”
Finovate audiences met Wise last year when the company made its Finovate debut at our September conference in New York. At the event, Wise co-founders Arjun Thyagarajan (CEO) and Suresh Venkatraman (CTO) demonstrated the company’s “small business banking-in-a-box” solution, and previewed additional products and services for small businesses including payments and invoicing.
Thyagarajan founded Wise after a stint managing product for Mojio, a platform for connected cars. Before that he was a classic serial entrepreneur, launching a personal organizer (LivingOrganized), and a pair of password management platforms (TeamsID and Gpass). But a sense that he wasn’t “doing what I really wanted to do” led him to leave the “hot startup” in search of what he called “problems that needed solving.”
“My explorations led me to FinTech and I was pleasantly surprised with the rapid advancements in technology transforming the financial industry, especially in banking and payments,” Thyagarajan wrote on the company blog last summer, looking back on his decision to launch Wise. “It got me thinking: what if we could build a banking product that can deliver on the promise of putting the customer first … And solving real world problems.”
Thyagarajan’s reflections are similar to those his co-founder Venkatraman, who in a companion post observed that Wise’s own experience as a small business trying to secure quality banking services was vindication of the company’s mission.
“The day started innocently enough as we walked into a local bank with all our paperwork in hand,” he wrote. “That was the beginning of a chase around Silicon Valley to find a bank that would take our money and open up an account. Banks would reject us for all sorts of reasons or just ignore us.”
These days, with an new offering, a big investment and a major banking partner in BBVA in hand, it looks like the fintech world might be ready to wise up.
Standard Chartered Ties Up with Microsoft
The bank will leverage Microsoft to take a multicloud approach that will port its significant applications to the cloud. Specifically, Standard Chartered is planning to make its core banking and trading systems and digital ventures such as virtual banking and banking as-a-service cloud-based by 2025.
“Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients,” said Group Chief Information Officer of Standard Chartered, Michael Gorriz. “Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners.” Gorriz added that today’s partnership is a “major milestone” in Standard Chartered’s journey to become cloud-first.
Standard Chartered will pilot the launch by moving its trade finance systems to Microsoft Azure. The move is expected to facilitate cross-border trade at the bank.
The partnership extends to Microsoft’s workplace tools. Standard Chartered’s 84,000 employees will be working on Office 365 and communicating via Microsoft Teams.
This news comes during a time of widespread digital transformation across the banking sector. Banks and fintechs are seeking to move their operations to the cloud to update their infrastructure and create a better customer experience. There are two factors driving this change: the global health crisis that has moved many in-person interactions to online channels and the rise of competition from challenger banks.
“Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand,” said Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft. “We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”
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