Shopify is shining a light on its role in the online payment industry. During its recent earnings call held Friday (Nov. 3), the company shared that 58% of its users prefer to use Shopify Payments, their in-house payment solution.
“That is an all-time high in penetration rate,” said Harley Finkelstein, president at Shopify, during the call.
Finkelstein also shared information about various businesses that have recently embraced Shopify Payments. Some newcomers to the payment processing solution include Banana Republic Home, HiSmile and Anastasia.
Finkelstein highlighted that Shopify Plus merchants, larger enterprises, have a higher adoption rate of Shopify Payments compared to regular merchants.
You know what they say: “Keep your friends close; keep your enemies closer.”
In August, PYMNTS reported that Amazon and Shopify had announced a new partnership that allowed merchants who paid for Shopify’s eCommerce tools to use Amazon’s logistics network. This meant that Shopify merchants in the U.S. would soon have access to Amazon’s “Buy with Prime” option, which offered fast and free delivery to Prime members. The program had already started for invited Shopify sellers and had rolled out to all merchants by the end of September.
Read more: Amazon Offers ‘Buy With Prime’ Logistics to Shopify Merchants
Just last week, PYMNTS CEO Karen Webster raised the question of whether Shopify could become a major rival to Amazon, primarily because of Shopify’s ability to establish an ecosystem that simplifies the process for merchants to offer a variety of features and for customers to make use of them.
What added to this notion was Shop Cash. Webster admitted to avoiding downloading the Shop app for years, but when she discovered an unexpected balance to spend, her curiosity got the best of her, leading her to finally download the app to see what it was all about.
“It’s not a crazy idea. It even got me, who resisted downloading the app for years, to poke around the app and contemplate how to redeem my found money,” Webster said.
Webster also pointed out that Shopify claimed a conversion rate of over 15% for buy buttons on the internet, which was 35% better than “its competitor” — Amazon.
Read more: Can Shop Cash Turn Shopify Into an Amazon Challenger?
During the call, Shopify delved into why more merchants are choosing Shopify Payments over other payment providers, and it seems that there are two primary reasons behind this trend.
First, many larger brands transitioning to Shopify are looking to modernize their technology stack, which includes their payment provider. Shopify Payments fits into their modernization plans, offering an integrated solution.
Second, even businesses that have preexisting agreements with other payment providers are transitioning to Shopify Payments. This trend may indicate that, as these existing contracts come to an end, most merchants perceive Shopify Payments as a superior product in terms of functionality and cost-effectiveness.
“Our third-quarter results demonstrate the progress we are making to further solidify Shopify’s position as the global leader in commerce,” Finkelstein said in a statement. “Our ability to help our merchants succeed in any economic environment by delivering innovative product solutions has not only built strong trust with our merchants but has positioned Shopify for sustained growth and profitability for the future. As we look forward to the busiest shopping season of the year, we’re confident that our unified commerce platform empowers our merchants with the tools they need to seize every opportunity and achieve greater success.”
Shopify reported that in the third quarter its gross merchandise volume (GMV) had surged to $56.2 billion. The total revenue climbed to $1.7 billion, reflecting a 30% year-over-year increase when adjusting for the impact of the sale of logistics businesses.
Merchant Solutions revenue also grew, reaching $1.2 billion. Gross payments volume (GPV) was $32.8 billion, constituting 58% of the GMV processed during the quarter. Subscription Solutions revenue grew, with monthly recurring revenue (MRR) hitting $141 million, marking a 32% year-over-year increase. Gross profit increased to $901 million, with a gross margin of 52.6%.
Operating income rose to $122 million, a notable turnaround from the operating loss of $346 million reported during the same period in the previous year. Shopify reported positive free cash flow of $276 million and held cash and marketable securities amounting to $4.9 billion as of Sept 30, with a net cash position of $4 billion after accounting for outstanding convertible notes.
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