FinTech and e-commerce: An emerging partnership

By Puja Sharma

In the current era of finance industry research, financial technology is one of the most widely used terms. FinTech refers to the use of modern, innovative technology in finance. Innovative and disruptive technologies are used to provide financial services. Providing innovative and secured financial services, FinTech caters to the investor’s need for more security. Additionally, it has emerged due to the need for affordable financial services that provide mobility and a faster delivery system.

FinTech has always been a part of e-commerce. Online shops require digital payment systems to run. While Amazon and Shopify develop their integrated payment solutions, Squarespace and BigCommerce rely on fintech partners, such as Square and Stripe, to provide merchants with payment solutions. However different their approaches maybe, all of these companies, excluding Amazon, are typically B2B companies, which don’t directly affect consumers.

We tend to think of B2B and B2C companies as separate entities, and what enterprise companies do usually recedes into the backend, invisible to consumers. However, in recent years, new developments at the intersection of eCommerce infrastructure and fintech services have indicated a potential shift of the integration point in the eCommerce value chain, which will enable eCommerce-oriented B2C companies to design consumer-facing products that may transform online checkout into a key consumer touchpoint and influence the behaviour of shoppers.

Digitalisation has irrevocably changed business and individual behavior. Digitalisation has changed the way people manage their finances and their buying habits, but what is more important is that it has given a tremendous boost to industry integration, generating a wide spectrum of new opportunities for further development.

Among the most successful adopters of fast-evolving technologies, FinTech made its way into the dynamic market and created a variety of products and services that breathed new life into numerous businesses, including e-commerce.

FinTech partners provide digital payment solutions that make running an online business possible. However, since e-commerce continues to evolve without interruption, and the revolution continues to shape it, fintech solutions for e-commerce go far beyond regular payment options.

As an alternative option to credit cards and other forms of financing, BNPL solutions were designed to allow shoppers to purchase their products and pay in a predetermined number of installments over time. These solutions are often offered to customers with little to no interest rates and hidden fees, meaning no additional cost to the customer.

E-commerce and BNPL

In some countries, customers can order a physical or virtual BNPL card, allowing them to buy now and pay later from retailers who do not typically offer this option. Purchases are charged to their account with the opportunity to pay immediately in 30 days or via financing.

Though most BNPL transactions are with online retailers, traditional brick-and-mortar retailers can also offer BNPL payment plans. This option usually involves the customer generating a QR code within their BNPL app, which is then scanned at the point of sale. The retailer gets the credit and the customer gets to pay later.

Choosing how and when they pay — without accruing interest — can increase spending power and allow customers to determine their financial schedules.

It’s no surprise that due to FinTech developments, many companies can already offer 0% interest on online loans directly at checkout to allow consumers to get large purchases without the limits. As a result, consumers can now spend money on things they would not acquire if they had no such option.

In this regard, another significant aspect of the beneficial partnership with FinTechs is linked to continuous innovation that enables vendors to transform the way they run their businesses. Payment strategies and a wider range of payment options directly impact customer preferences and their behavior, which constantly pushes merchants to improve their buyers’ customer experience and develop and test new offerings to remain best in class.