Financial technology, or fintech, has dramatically changed the way people manage their money. It impacted consumer buying habits, spawned many new opportunities, and gave a giant push for existing industries to evolve.
The most noticeable impact fintech has had in the e-commerce space. In the last ten years, fintech solutions have helped many e-commerce players grow, advance sales, improve business banking, and more.
According to Statista, 2022 showed the highest e-commerce sales growth in many regions, especially emerging markets.
India and the Philippines have increased online sales by more than 25 percent. Brazil and Argentina became the fastest-growing e-commerce countries, rising 22 percent and 19 percent, respectively.
If you’re amazed by the numbers and want to launch your small company, you must build a financial system to service your customers and process your money operations.
While traditional banks may seem not the best option for newcomers, fintechs offer many unique services to meet the needs of online sellers.
From easy-to-integrate payment checkout to convenient ways to collect customer payments, fintech helps online brands compete with bigger names and grow.
So do you want to grow your business in the highly competitive e-commerce landscape? Read on to learn about the best fintechs that will push your online sales to the next level.
How fintech makes an online business different from classic commerce
Fintech has completely changed the way businesses operate in the e-commerce space.
The first difference between e-commerce and classic commerce lies in customer interaction.
Fintech has disrupted the traditional communication channels and made the payment processing system easier for e-commerce companies to service customers.
Another thing is that e-commerce allows entrepreneurs to launch a business with relatively low starting investments compared to traditional offline stores.
With different fintech solutions, you won’t need any assistants, managers, or accountants. In most cases, all of them can be easily replaced by one platform or specific software.
Finally, due to financial technology, e-commerce can streamline operations, reduce costs, improve customer service, and create new business models that would never be possible in classic commerce.
Why is fintech essential if you want to start an e-commerce business?
Not only does fintech make it easier for e-commerce to process payments. It also makes finances more streamlined and organized.
For example, next-gen financial services can already help businesses track their spending, budget better, invest money wisely, and make crucial decisions.
Also, fintechs can assist online sellers in expanding into new markets and reaching more customers by making them more efficient, convenient, and trustworthy.
Finally, by using online banking and payment processors, e-commerce businesses can get:
- More flexibility
- Extra security and fraud prevention
- Global scalability
- Chance to switch from B2C to B2B segments, and vice versa
- Opportunity to build partner programs and set up a reward system
- Real-time reports & data analytics
Why fintech is better than traditional banks for small business owners
Statista says that the number of fintech companies in the EMEA region (Europe, the Middle East, and Africa) has tripled between 2018 and 2021.
As we see, new digital banking excels traditional financial institutions. Why? There are several reasons for that.
First, traditional banks still involve a lot of manual processes. Their current financial system relies on some old and outdated strategies and approaches.
Second, classic banks are often time-consuming and seldom frictionless. Merchants, looking for a financial solution that fulfills their needs, want processes to become smooth and trouble proof.
Third, if a small business would request their bank for a loan, they’d be required to submit tons of papers. They may include previous records, tax returns, business plans, proof of ownership, and more.
After that, they’d have to wait weeks or months to know whether their application is approved or not. Then, if approved, there’s the wait for actual funding.
The process is extremely long and involves a lot of manual work for both the applicant and the bank.
As a result, it’s no surprise that technology-driven solutions have emerged to streamline the way businesses get financing and manage other aspects of their work.
Fintech is filling the gap between what traditional banks must provide and what modern businesses expect.
Why your e-commerce business needs to partner with fintech
Now that you see the value in fintech, how can you leverage it for the good of your e-commerce business? Start by looking at these five fintech solutions for online sellers.
It helps build a solid customer base
For every business, there is nothing more important than its customers. And if you want to build a customer base, you need to give each of your clients an excellent customer experience.
Payment strategies and a wider range of payment options directly impact customer preferences and their behavior.
Buy-now-pay-later option, mobile payments, single-click checkout, etc., significantly improve customer experience. Allow your consumers to make purchases on the go, and the result will not be long in the coming.
The only drawback of continuous advancements in technologies is that businesses can no longer take a pause. They must work hard to make buying and selling convenient and reliable and outperform their competitors.
It saves your budget
What is the major goal of every business, including e-business? Of course, it’s income. And the lower the costs are, the higher the profit is.
Every online business needs a special account to process transactions and collect payments. But when it comes to all traditional banks, the process may end up with lots of fees.
This way, fintechs can become a great alternative for online-only businesses. Usually, they don’t impose huge extra costs as banks and often offer individual pricing plans by agreement.
Also, with the same (or often broader) set of offers — online banking, money collections, digital payments, etc. — merchants can enjoy extra income with minimal to no fees.
It gives rich real-time data analytics and valuable insights
For every new entrepreneur, knowing everything goes right is vital. That’s why one of the greatest benefits of fintech in e-commerce lies in its ability to gather valuable insights.
Outdated reports and poor information systems may cause a significant profit loss. At the same time, real-time reports allow small e-commerce companies to make better decisions and stay competitive in the online marketplace.
On top of that, being at the head of the tech revolution, fintechs successfully leverage smart analytics tools like AI or machine learning.
It helps identify consumers’ habits and find the most suitable offer based on their previous buying activity.
This, in turn, has an enormous potential to boost sales. Consumers will be offered something that they have already viewed and demonstrated interest in.
Finally, thanks to fintechs, merchants can make balanced decisions about pricing and inventory. They can take into account many economic indicators such as inflation, cost volatility, competitive factors, and more.
It protects businesses from fraud and cyber-attacks
Online payment fraud is on the rise. And since cyber-attacks are becoming frequent, all e-commerce brands need to focus on better protection.
Unfortunately, huge cash flows have made e-commerce one of the most tempting targets for all types of bad activity. That’s why it is no surprise that even a starting seller needs a reliable means to increase cyber resilience.
In this regard, fintechs have much room to act. They can facilitate different security programs, collect and check full user information, and provide more complex protection.
It can give many innovative solutions
Another significant aspect of the partnership with fintechs is linked to innovation that enables sellers to transform their businesses.
Financial technology constantly evolves. It can become a perfect tool for various commercial needs – from transactions and money transfers to shipment and security.
Latest fintech advancements already make it possible to track a supply chain, manage inventories, reduce costs, and much more.
Finally, financial innovations can open gates for online sellers to use the new markets in developing countries, as consumers there don’t require an intermediary to process their payment requests.
What are the best fintechs to start your e-commerce business?
While traditional banks try to keep up, fintech are already offering custom services to meet the unique needs of online sellers. From digital payment options to controlling cash flow with real-time payouts, here are the best fintechs to help you grow your online brand.
1. Intuit QuickBooks
What is it for? Performance tracking and accounting needs
QuickBooks is an accounting software developed and released by Intuit.
The platform is designed mainly for starting small and medium-sized businesses and offers accounting apps and tracking tools that control business payments, manage and pay bills, and payroll functions.
Business solutions:
- Income and expenses tracking
- Accurate payroll
- Sales and sales tax calculator
- Enhanced reports
2. Payability
What is it for? Funding for growing and scaling an online business
Payability is the funding platform for e-commerce businesses. It provides entrepreneurs with flexible funding and tailored cash flow solutions to help them grow and scale.
The platform’s funding programs are built on fast and easy approvals that require no credit checks, no bank statements, and no prepayment fees.
Business solutions:
- Funding programs
- Growth plans for inventory or marketing expenses
- Marketplace payouts
- Seller cards
3. Klarna
What is it for? Flexible payment solutions
Klarna empowers businesses to give their customers a seamless, intuitive, and easygoing shopping experience.
Using modern technology, Klarna offers several buy-now-pay-later products to give customers the ultimate flexibility and keep them returning for more.
Business solutions:
- Pay in four interest-free installments
- Offer an extra 30 days to pay
- Offer up to 24 months to pay
- Faster online checkout
4. Xero
What is it for? Accounting needs
Xero is online accounting software that helps small and starting businesses take control of their numbers.
Xero automates tasks that used to take up a lot of time. It keeps employee pay records online, processes pay runs, and easily reconciles salary and wage payments.
All the data is securely stored in one place, so it’s easy to see how business is performing.
Business solutions:
- Bill payment
- Claim expenses
- Payments acceptance
- Projects tracking
- Bank reconciliation
- Invoices sending
- Sales tax
- Reporting & analytics
5. Verifo
What is it for? Full end-to-end services for modern e-commerce businesses
Verifo is an EU-based and EU-regulated fintech company that offers various payment services to business clients inside and outside Europe.
With a clear goal to let every business owner operate their funds efficiently and securely, Verifo keeps its finger on the pulse to provide the best services to help with a vast array of day-to-day business needs.
Business solutions:
- Easy-to-integrate payment checkout
- Convenient ways to collect customer payments
- Payment initiation services
- Merchant API
- Mass payouts
- Settlement accounts and B2B accounts
- SWIFT and SEPA transfers
Top e-commerce industries reaping the benefits of the online boom
If you are still thinking of what industry to enter to make the most of the e-commerce space (with the help of fintechs, of course), here is the list of sectors that are clearly outperforming others.
Fashion
Web stores selling fashion items and brands remain the most popular e-commerce industry in the world.
Shoppers are always on the lookout for the latest trends, so now could be the perfect time to launch your very own fashion brand.
By the way, South Korea sees the biggest sales, with 77% of shoppers stating that they’ve purchased fashion items online.
Beauty
Beauty and personal care goods are becoming increasingly popular worldwide. With 65% of people making a purchase through online retailers, it’s no doubt that this industry has started dominating the e-commerce landscape.
Entertainment
Statista says that in 2021, e-commerce revenue generated through physical books, music, video, and gaming retail sales in the U.S. amounted to over $31.7 billion.
Revenue saw an increase of close to $2 billion since 2020. The Statista also estimates that revenue in the segment will continue to increase and reach approximately $36 billion in 2025.
Household goods
The coronavirus pandemic has made us spend much time at home in 2020-2021. This, in turn, pushed the household goods industry to skyrocket.
In South Korea, for example, more than 50% of consumers confirmed that they preferred shopping online for household goods rather than visiting offline stores.
Electronics
E-commerce stores in the electronics sector continue to grow. In 2020, Electronics & Media hit e-commerce with total global revenue of $557.3 billion in 2020.
Brazil sees the most number of shoppers making purchases in the electronics industry. Almost 60% of Brazilian consumers said they’d made an online purchase for electronic goods.
Make the most of the fintech boom
Fintech has transformed traditional finance services across multiple industries, including e-commerce.
While traditional banks are trying to catch up, fintech startups have tailored multiple services to meet the unique needs of online sellers.
Fintechs transformed payment processing, customer experience, and business strategies, and there is no doubt they will continue to change everything around them in the years to come.
Do you want to start your e-commerce business today? Great! We are right here to support you on your way to success.
Feel free to contact us at [email protected] or via our LinkedIn account with any questions or concerns you have. We will be happy to find the best possible solution.