Shopify is seeking regulatory approvals across the U.S. to act as a money transmitter and provider of prepaid access, according to government records viewed by The Information. The company has already obtained licenses in 18 states and Puerto Rico while applications are under review in remaining states including California and New York.
The licenses would let Shopify hold and move merchant funds itself rather than rely on partners like Stripe or PayPal, giving it more control over how money moves through its platform and the potential to generate more revenue from the transactions it processes for merchants. This could lead to the company offering new capabilities like merchant-to-merchant payments or even its own end-to-end payment processing, adding more margin to its payments business.
Technically, the licenses could also allow Shopify to let customers hold money in their Shop Pay accounts like a digital wallet, instead of Shop Pay just serving as a payment method, which would put Shop Pay in competition with Venmo, Cash App, and other consumer payment apps.
A Shopify spokesperson said:
“Shopify has provided financial products and payment services for years. Obtaining licenses will allow us to keep building on our existing tools that help merchants run their business. Our payment partnerships are foundational to that work, and millions of merchants rely on the infrastructure we've built together.”
While in the process of obtaining licenses, Shopify is also hiring for roles to build out a “money movement platform,” including a Luxembourg-based position requiring experience in BIN sponsorship, which lets fintechs tap into a bank's infrastructure.
Seems like a smart move. Why hasn't Shopify done this sooner?
Pushing deeper into financial services could increase Shopify's margin on payment transactions by cutting out intermediaries, but it comes with compliance staffing and other costs such as KYC verification systems, audit teams, and capital reserves required by state regulators. Perhaps, with Shopify's GMV nearing $380B last year (an almost 30% increase from 2024), it's just now starting to make financial sense to explore bringing things in-house.
Plus, with Shopify's Merchant Solutions business (which includes payment processing) responsible for 75% of its total revenue, it's smart not to have such an integral part of its business exclusively in the hands of another company.
Last but not least, obtaining money transmitter licenses would enable Shopify to act as the primary middleman between its merchants and AI shopping platforms, rather than splitting that role with a third-party payment processor.