The key differences between eCommerce and conventional commerce are market access and scalability. Although fintech may be seen across both brick-and-mortar as well as online establishments, it is more popular in the digital world. This is due to the fact that fintech helps to eliminate the traditional constraints that impeded eCommerce development in the past.
Additionally, fintech may help organizations simplify processes, cut expenses, and enhance customer service. Let us explore how this synergy works, in more detail.
What Does Fintech Mean for eCommerce Businesses?
Fintech, a derivation of “financial technology,” refers to companies that use modern technology to challenge conventional financial processes in the financial sector. The “ABCD” of fintech includes artificial intelligence, blockchain, cloud computing, as well as big data.
Fintech has revolutionized the payment processing sector in recent years (especially during the pandemic), making it simpler and quicker than ever before for eCommerce companies to receive payments from consumers all around the globe.
Fintech not only makes it simpler for eCommerce firms to handle payments but also enables them to better manage their money. For instance, it may help organizations monitor expenditures, budget more effectively, and invest intelligently. In addition, it may facilitate the expansion of eCommerce enterprises into other areas and the acquisition of additional clients.
Another crucial area wherein fintech and eCommerce overlap is access to capital. Here is a closer look at these eCommerce use cases for fintech.
Top Fintech Applications in the eCommerce Sector
eCommerce refers to small businesses, large retailers, and aggregator marketplaces like Amazon, which operate their sales transactions online. Customers can choose from an online catalog and get the product(s) delivered to a location of their choice. Companies operating in this model can use eCommerce for:
1. Digital payments and ease of cash flow
Digital payments are a blessing for eCommerce merchants. The payment procedure has become simpler and more straightforward. With digital payments, consumers are not required to be present to make a purchase. Digital transactions have streamlined the process. And, as eCommerce businesses await payment from marketplaces, they often encounter cash flow problems. These procedures are simplified by online payments, which also offer quick access to cash.
2. Payment in installments, also known as “buy now, pay later” (BNPL)
“buy now, pay later” (BNPL) services, illustrated by organizations such as Affirm, Klarna, and Afterpay, are also another type of fintech solution that is also altering consumer behavior. Using these methods, loan financing providers are now able to provide 0% interest online loans immediately at checkout, allowing customers to buy big products all at once. This has substantially increased eCommerce, particularly for high-priced items and Christmas buying.
3. Simple, hassle-free access to credit
It is no surprise that banks are losing popularity among small business owners, who’ve been particularly attracted to the native digital solutions offered by fintech businesses.
Instant Advance from Payability is a solution of this kind. Instant Advance allows you to get up to $250,000 in as little as 24 hours. It is not a loan, but rather a reduced purchase of your future receivables, therefore, no credit check or compounding interest is required. Payability analyzes your sales history across all channels, such as Amazon, Walmart, Shopify, Newegg, eBay, and others. Online retailers may be authorized and financed within one working day.
4. International market expansion
Fintech has transformed the global eCommerce industry into one that is thriving. Geographical restrictions no longer prevent buyers from purchasing from other nations. Payment systems and e-wallets have revolutionized eCommerce, enabling users to buy products and services from all over the world without ever leaving their homes. This increases the market reach of eCommerce sellers and targets the ideal customer no matter where they are.
4. Customer incentivization
As more fintech competitors enter the marketplace and compete with conventional firms, eCommerce companies, and customers stand to benefit from this intense rivalry. By partnering with well-known brands, fintech businesses frequently provide customers with appealing offers and discounts. Digital payment providers are always vying for market share by offering rebates, flat discounts on purchases, and sometimes even free movie tickets. In turn, this has raised the amount individuals spend online, thereby improving online sales and eCommerce in general.
5. Financial data analytics
Lastly, analytics is one of the most essential financial applications in eCommerce. Through a variety of applications and services, fintech firms may gather data on countless users. They then process this data via analytics as well as AI algorithms to detect individuals’ purchasing habits, thereby targeting them with adverts. Fintech companies may also offer such data-rich analytics and reports to eCommerce businesses, which can utilize valuable customer insights to deliver more targeted services and products.
Benefits of Fintech in eCommerce
By embracing fintech in the myriad ways we discussed, eCommerce companies and small businesses can:
1. Make their operations more efficient
Thanks to fintech, transactions may now be conducted in a more safe and more convenient manner. The use of online banking and payment processors allows eCommerce enterprises to provide a more streamlined and hassle-free checkout experience for their clients.
2. Prevent fraudulent transactions
Fintech helps to cut down on fraud by making security measures stronger. Most old ways of making digital payments focus on one main task: checking the logging-in activity. In contrast, fintech asks for credentials, show CAPTCHAs, and use multifactor authentication (MFA) when possible to make sure that the right credentials are being used.
3. Scale faster
Another important advantage of financial technology is that it makes it possible for firms to communicate with a greater number of people. E-commerce retailers are able to offer their products to customers all over the world if they accept a variety of payment methods and currencies. This scalability paves the way for new prospects for businesses of all sizes and contributes to the expansion of the eCommerce industry.
4. Transform B2B experiences
Today’s B2B clients need B2C-like payment experiences; thus, e-commerce companies must have several payment options that provide the same instant pleasure as a contactless B2C purchase. Fintech solutions play an important role in achieving this.
5. Speed up the checkout process, and therefore increase purchase volumes
There are further advantages to using fintech for eCommerce, including reducing the amount of time spent checking out. This benefit may be realized in the form of time saved by using previously stored payment and shipping information, utilizing automated checkout, or making purchases with a single click.
6. Provide customers with greater convenience
Customers can buy things from the comfort of their own homes or while they are out and about. Because of the rise of mobile devices and apps, this is now ubiquitous and easy to do. Messenger apps like WhatsApp and WeChat are an example of this because they let people do business without leaving the app. People can also connect with eCommerce businesses through chatbots and digital assistants.
The Growing Synergy between Fintech and eCommerce
Fintech has turned into a safe way to handle payments, and e-commerce companies recognize this in 2023. Modern fintech solutions offer all-in-one services for e-commerce teams and make workflows safer. They also help e-commerce owners take control of costs, rethink staff roles, give employees more freedom, and scale at every step.
This synergy is a big reason why fintech has remained an investor favorite, even in a complex economy. In fact, there are several fintech trends that are transforming the eCommerce sector, and the two will continue to influence each other in meaningful and game-changing ways.
