Recent musings on payments as it relates to $SHOP + $FB: first some basics, then a few thoughts on recent developments

TLDR: Capturing % of GMV great for SHOP (already well appreciated), but perhaps even better for FB (still early days, unlikely to see impact until Q3 this year)

1) $SHOP launched Shopify Payments in mid 2013 and this substantially changed the trajectory of its business, which previously didn’t scale (directly) with the GMV running through its platform

Shopify Payments today is ~75% of SHOP’s faster growing non-subscription revenue

2) Shopify Payments currently drives ~50% of $SHOP revenue and is enabled by 2/3+ of all SHOP merchants (in 🇺🇸 90%) accounting for nearly 1/2 of GMV generated on SHOP digital store fronts

As we all know, Shopify Payments is powered by Stripe, so not available where Stripe is not

3) Per filings, $SHOP charges ~275 bps gross yield (rack rate is 2.4-2.9% + $0.30 depending on which subscription plan a merchant chooses) and makes ~90-100 bps net yield on Shopify Payments, after interchange and processing fees paid to Stripe and downstream (WFC/FISV)

4) For the < 1/3 of $SHOP merchants and 1/2+ of GMV not on Shopify Payments, the merchant brings its own 3rd party payment processor

In this scenario, SHOP only captures a nominal transaction fee on the non-Shopify Payments GMV (~25bps on blended basis)

H/t @JerryCap