TD launches e-commerce platform aimed to compete with Shopify

TD launches e-commerce platform aimed to compete with Shopify

Toronto-Dominion Bank TD-T has launched an e-commerce platform for small businesses to sell their wares online that aims to compete with Canadian online giant Shopify Inc SHOP-T.

The new product is a first for a Canadian bank and is being done in partnership with BigCommerce, a Nasdaq-listed software company based in Austin, Tex.

TD’s entry into e-commerce builds on the bank’s long-time payment processing services, but is also a step in the blurring line between traditional and digital financial service providers.

For example, tech companies such as Shopify, Square (owned by Block Inc.) and Lightspeed Commerce Inc. LSPD-T have collectively lent billions of dollars to merchants internationally in recent years and are increasing the financial services they provide.

All these companies – whether financial institutions or digital providers – are hoping that becoming a one-stop-shop will help them win and retain their merchant customers.

Alec Morley, TD’s senior vice-president of Canadian small business banking, said the bank had to build on its point-of-sale (POS) products to remain relevant for businesses.

“We were stuck in the old, physical, POS world,” he said. “And we needed to start investing and get to a place where we’re really wholly functional for our small-business owners.”

He singled out Shopify as their biggest competitor in this space, but said the store-building tools available through BigCommerce would be just as sophisticated.

“I think it’s good, too, just to have some more competition in this space, for e-commerce,” Mr. Morley said. “Shopify has done an amazing job, they’re absolutely leaders, globally.”

Rick Watson, an e-commerce expert and founder of RMW Commerce Consulting in New York, said that BigCommerce has been like “Shopify’s little brother” in the market, and the partnership with TD made sense for them.

He said an undercurrent to the deal is that it also gives TD a stronger toehold in online payment processing, which threatens to be dominated by Shopify’s close relationship with Stripe Inc.

“The more power Shopify has, the less these payment processors have control of their own destiny and the more they are subject to the whims of whatever Shopify says,” Mr. Watson said. “A payment processor, or a bank in this case, really benefits from a kind of multipolar world where there are lots of e-commerce platforms.”

Although Shopify is perhaps best known for its webstore-building tools, it is the payments part of the business that generates most of its revenue. In the second quarter of this year, the company generated $2-billion in revenue, of which $1.5-billion came from “merchant solutions” – which includes transaction fees and interest from lending. That was a 19-per-cent increase from the same quarter last year, and about 60 per cent over the quarter two years ago, according to filings.

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