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Shopify Takes On Aussie Banks With Lending Push

Canadian e-commerce giant Shopify will begin lending to small Australian businesses on its platform, with the launch of Shopify Capital.

The company will offer loans of up to $2.5 million to Australian small business owners, seeing it competing not only with the banks, but with similarly disruptive financial companies such as Block and PayPal, who both offer small business loans in Australia.

Increasingly, Australians are moving past the banking system for finance. PayPal Working Capital has lent more than $1 billion to over 100,000 Australian businesses.

Businesses eligible to apply for funding through Shopify Capital will be notified via an email, “inviting you to view your available funding options.”

Shopify has around 100,000 Australian business using its platform. Australia will be the fourth market Shopify launches Capital in, first starting in the US in 2016, before expanding to Canada in 2020, and the UK last year. It has lent A$5.5 billion in total, across those three markets.

“Small business feels underserved and overwhelmed by traditional financial services and lack the funding they need to have the business grow,” said Tui Allen, Shopify’s head of product for capital lending and financial services.

“We are embedding capability directly where merchants are running their shop.”

Allen says Shopify’s own data set is more instructional than those of the banks.

“Banks don’t have the insight we have,” he said.

“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.”

To launch in Australia, Shopify is working with Westpac as a pipeline into the financial system, as well as registering the business with the Australian Prudential Regulation Authority.

As its business loans don’t fall under ASIC’s credit laws, Shopify does not need a Australian Financial Services Licence to lend in Australia.

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