Every business requires a bank to manage its finances efficiently. Whether you’re running a startup, launching an online storefront with Shopify, or have a multi-million dollar eCommerce business, choosing the right bank is crucial.
You need a bank that will not only simplify your finances but also provide tools that can help your business grow. These banks often provide financial tools, discounts for various business tools, small business financing, and other perks. However, with several business bank accounts in the market, determining which bank best fits your needs can be challenging.
For this reason, we’ve compiled key details that can help you choose from the best banks for eCommerce businesses. We’ll explore their services, fees, security, and other aspects to help you make an informed decision. You’ll also learn about the things to consider when choosing the best business checking account for your eCommerce.
Let’s dive in!
What is an eCommerce Business?
An eCommerce business is a company that buys and sells goods and services over the Internet. In other words, it’s a business model that allows customers to browse, select, and pay for products or services online.
eCommerce businesses can range from small retail shops to large multinational corporations, and they typically operate through websites, mobile applications, or social media platforms.
The growth of eCommerce has transformed how businesses operate, offering a convenient and accessible platform for entrepreneurs to reach a global audience and streamline their operations.
Some Examples of eCommerce Businesses
Several businesses have made it big in the eCommerce industry. Some of them include Amazon, eBay, and Etsy. eCommerce businesses fall into various categories, including the following:
Online Marketplaces
These websites facilitate the buying and selling of goods and services between merchants and customers. Some small business owners list their products and services within these marketplaces.
Business owners can grow their email lists and promote their products to get more traction. However, the online marketplace can do some of the work for you. These marketplaces have algorithms that generate more demand for products that are performing well. Freelancers can list their services in online marketplaces.
Digital Products
Businesses that sell digital products, such as software, music, and videos, fall into this category. These products often have high profit margins. Some platforms let you create digital products on their websites. You can list them and receive a relatively high percentage of each sale. Online business owners can earn more money with digital products by creating their own websites and driving traffic to them.
Subscription Services
These businesses offer subscription-based services. The subscription business model allows companies to generate monthly recurring revenue. It’s one of the best options for generating revenue since you will have a baseline and can attract new customers to increase revenue. eCommerce business owners can also raise the prices of their subscription packages to increase the average value per customer.
Dropshipping
These businesses sell products without keeping an inventory. Products are shipped directly from the supplier to the customer. Dropshipping can make eCommerce more manageable for startup companies and reduce costs.
Are There Banks Specifically for eCommerce Businesses?
While there are no banks specifically designed exclusively for eCommerce businesses, there are financial institutions catering to the unique needs of eCommerce businesses.
These banks understand the specific challenges that eCommerce businesses face, such as the need to process a high volume of transactions, manage cash flow, and secure payment processing solutions.
Some traditional banks and fintech companies offer eCommerce-specific financial solutions. However, it’s important to research and compare the best banks for eCommerce businesses to find the one that fits your needs.
Does Your eCommerce Business Need a Bank?
Every business — eCommerce and other industries — needs a bank. It’s a great resource for sole proprietorships, LLCs, and other business structures.
A bank provides a secure and convenient way to manage your business’s financial activities, including tracking cash flow, paying suppliers, and managing payroll. Business bank accounts let you build your business credit score and access more financing than you could with a personal bank account.
In addition, a dedicated business account lets you keep your personal and business finances separate, which is vital for accounting and tax purposes. You can also protect your personal assets if your business gets involved in a lawsuit.
You should choose the best bank for your eCommerce business to manage your finances effectively and provide a secure payment gateway. Business owners can consider traditional banks, a credit union, and online banks.
Things to Consider When Choosing the Best Bank for eCommerce Businesses
With several banks in the market, choosing the best bank for an eCommerce business can be overwhelming. Here are important factors to consider when shopping for the best bank for your business.
Your Business Needs
The first thing to keep in mind when shopping for a bank is your business needs. Understanding your needs can help you choose the right bank. For example, startups usually look to keep costs at a minimum, so free business checking accounts may be helpful. On the other hand, more established companies may go for major banks to maintain their reputation.
Some banks have membership plans or let you access more perks if you choose an optional subscription plan. These banks may compensate for their monthly costs with partner discounts. Some banks make it possible to save thousands of dollars on tools and software your eCommerce business may need in the future.
Not all banks are created the same. That’s why you should keep your needs at the forefront. By doing this, you’ll be able to find a bank that meets your different needs.
Fees and Pricing
Most business bank accounts charge monthly maintenance fees, ATM fees, non-sufficient fund fees, and other incidental fees. However, some banks may waive these fees if you meet certain requirements, such as maintaining a minimum daily or monthly balance or setting a specific number of deposits per month.
If you want to save as much money as possible on your business banking, consider online-only banks, as they don’t charge monthly fees. Financial technology companies run these banks and can offer perks like lower foreign exchange fees for international payments and have no minimum deposit requirements. The best digital banks can help you save a lot of money while accessing business bank accounts with higher APYs.
Make sure you read the fine print of the bank’s fees and pricing beforehand. When in doubt, request a full schedule of fees before opening an account.
Convenience and Ease-of-use
The best bank for eCommerce businesses is one that’s easy to use and offers convenience. Does it have online banking or a mobile app? Can you write checks against your checking account? What are other users saying about the bank?
Read reviews from previous customers to get insights into the bank’s mobile app user experience. App store reviews, Better Business Bureau ratings, Trustpilot, and Reddit threads are some of the places you can visit to see how customers feel about a particular bank.
A seamless user experience will reduce headaches when it’s time to request funding or access cash. It should also be easy to apply for important financial products like business credit cards, debit cards, and business lines of credit.
If you are unsure if a bank is right for you, it’s possible to get started with a free account. Most banks don’t charge fees for opening accounts, especially if you narrow your search to digital banks.
Support for Different Currencies
eCommerce business owners can work with customers from anywhere in the world. There aren’t many limits, if any, for who can buy your product or service. Make sure your bank accepts transactions in United States Dollars, Euros, Yen, Chinese Yuan, and other currencies.
Many banks offer support for fiat currencies and do the conversions for you. Some business owners may also want to accept cryptocurrencies as a form of payment. This requirement will significantly narrow the possible banks that you can work with. Support for numerous currencies becomes more valuable for businesses that regularly do commerce with customers around the world.
Transaction Speeds and Limits
Many banks impose transaction limits on business checking accounts. You may have to pay a small fee if you exceed that limit. Depending on your business transaction needs, considering how fast you can transfer funds and to what limit is crucial.
You don’t want to do business with a bank that will bring your operations to a halt because you’ve hit your daily transaction limit. You can lose a lot of revenue this way, especially during the holiday season.
If you know you conduct higher volumes of transactions, look for a bank that allows unlimited transactions to avoid fees. Business owners can choose from many banks that don’t penalize your business for generating more sales than expected.
Global Accessibility
Being able to access your business checking or savings account from anywhere is a crucial thing to consider when choosing a bank for your eCommerce business. If you want to manage your finances on the go, make sure you can access online and mobile banking. The bank should have a mobile app. It’s become a standard feature that many traditional banks have incorporated into their business strategies.
Having 24/7 access to your bank account helps you keep tabs on your business finances and provides easy access to funds to help with the everyday running of the business.
Payment Integrations
Running an eCommerce business requires more than just a standard business bank account. You need a bank that can integrate your other business software systems. For example, integrating accounting software like QuickBooks, Wave, or Expensify into your business bank account is crucial. You can streamline your taxes and stay on top of business and personal expenses.
Before settling on a specific bank, find out whether you can sync your existing business software. The more software and tools you can sync, the more you can streamline your business finances. Keeping everything in one dashboard will save you considerable time and can help you pinpoint opportunities for improvement for your company.
Cash Withdrawals
Traditional banks make it easy to withdraw cash. You can visit your local branch and request funds from your account. However, this process can get more complicated with online banks. Some digital banks let you withdraw funds fee-free from thousands of ATMs that are within their networks.
However, other banks may prohibit cash withdrawals. The workaround for these banks is to purchase a money order and then cash in your money order. However, that’s a bad user experience. It shouldn’t take numerous steps beyond what is necessary to access cash at a bank or an ATM. Some businesses do not need cash withdrawals to operate, but it’s good to know that you can withdraw cash seamlessly if necessary.
Low Minimum Deposit Requirement
eCommerce business owners who are just getting started may not have a lot of funds for a minimum deposit. They may also want to avoid tying up too much of their money with a new bank before getting familiar with its features.
Many business bank accounts do not have minimum deposit requirements. You can get started with no money and add funds to your bank account through a personal or business bank account. The best bank accounts often make it as easy as possible for business owners to start accounts.
FDIC Membership
The FDIC insures bank accounts up to $250,000. Some banks have accounts that are insured beyond $250,000, but it is essential to work with a financial institution that is a member of the FDIC.
Not every fintech company can become a member of the FDIC. However, these same firms offer bank accounts and other financial products through their partnerships with FDIC members.
Access to Business and Reporting Tools
A business bank that offers access to business and reporting tools can make it easier to run a business. For instance, a business checking account may have bookkeeping features that automate profit and loss statements and income and expense reports. Some banks generate tax returns for you and calculate deductibles.
Many business bank accounts let you monitor your spending and see how your cash gets spread across multiple categories. This information allows business owners to keep costs low and look for ways to improve their profit margins. Sole proprietors and corporations can greatly benefit from having the right business tools and resources.
Frequency of Transactions
Some banks limit how many transactions you can receive each month. These banks may charge a small fee for each additional transaction. While it’s nice to know there isn’t a cap for banks that charge extra fees, those costs can add up for growing companies.
Other financial institutions offer unlimited transactions, which can help business owners who generate a lot of sales and frequently pull funds out of their accounts to cover expenses. Business owners should assess where they are with their companies and where they may be in a few years. Your eCommerce business may fall within a bank’s transaction limit. However, if your company grows and exceeds the limit, you may have to contend with higher fees or rejected orders. Entrepreneurs should map out their long-term goals before choosing a bank that limits the number of monthly transactions or has additional fees involved.
Flexible Business Hours
You may have questions about a bank’s financial products or request information about an offer. You’ll have to contact customer support to receive answers, but not every bank has 24/7 support.
Some service providers only have customer support on weekdays, which offers less flexibility if you need help on a weekend. It’s also possible for different types of customer service to be available at different times. For instance, phone support may only be available on weekdays from 9 am to 9 pm Eastern, while live chat is available 24/7.
Business owners should consider if they need to reach a representative on a Saturday morning or if they will do most of their communication during the weekday. If you don’t want to work with a bank that isn’t available on the weekends, you will have to narrow your search to banks with 24/7 customer service.
Fraud Protection and Security
You should only work with a bank that has FDIC insurance, but that’s not the only way you can keep your funds safe. Many banks have fraud protection and security features that add extra barriers in front of hackers. Two-step authentication, verification questions, and encryption technology are some of the resources banks can use to protect their customers’ data.
Online security is an essential component of banking. It’s always been this way, but hackers are getting smarter. Business owners should only consider working with banks that prioritize keeping them safe from cyber-attacks while providing customers with zero liability for unauthorized purchases.
Online Banking
Some people want to visit mortar banks or credit unions in their area and inquire with professionals in person. eCommerce business owners may want this advantage, but others may prefer to work with an online banking solution.
Virtual banks tend to offer better rates for their savings accounts since they have less overhead. These banks don’t have to contend with as many staff members or real estate properties. You can find quality banking services with both options, but it’s important to determine if you value the in-person experience or want the opportunity to receive better perks.
Even if you prefer a brick-and-mortar bank, you should still assess its online banking features. Perks like free cash deposits, check deposits via your smartphone, and investment accounts can go a long way. If you do business with a local bank, consider how frequently you visit your branch. Some people have accounts with in-person banks but almost never visit a branch. You can still keep some of your money in a local bank, but prioritize a digital bank if you want additional perks.
Access to eCommerce Financing
Most online store owners need frequent access to eCommerce financing. The extra capital helps business owners buy inventory, invest in advertising, and scale up their operations. Some banks offer several financial products, such as installment loans, credit lines, and credit cards, to make extra cash more accessible.
Other banks have fewer options and may require that you have an excellent credit score before you can get financing. It’s important to consider what type of financing you can qualify for and assess banks based on their financial products.
If you do not have the best credit score, you may want to narrow your search to online banks that provide financing for borrowers with bad credit. Banks with alternative methods of financing, like revenue-based financing and invoice factoring, can also be valuable resources for people who have less-than-perfect credit.
It’s crucial to compare rates for each bank. Some banks offer a range of where your APR can fall if you get a loan from them. Reading online reviews can also help you gauge how much you will have to pay. The term length is also a big deal, as a 5-year small business loan has higher monthly payments than a 10-year loan, assuming everything else is equal.
Another alternative for eCommerce financing is Stenn. They provide a comprehensive funding solution specially designed for eCommerce businesses seeking to access capital without the limitations typically associated with traditional loans from banks. With Stenn’s revenue-based financing solution, eCommerce businesses can benefit from a tailored approach that caters to their specific needs and growth objectives. Fill out this simple form to discover how Stenn can help you finance your eCommerce business growth.
The Bottom Line: Managing eCommerce Business Funds
Finding the best bank for your eCommerce business comes down to your needs. Knowing what you want from a bank before doing any research will speed up the process. As you compare banks, you will get a better idea of what makes the perfect experience for your business. When choosing the best bank for eCommerce businesses, consider fees, accessibility, payment integrations, and other factors.
The bank you choose can make or break your business finances. As such, you need to take your time and compare your options while keeping your needs at the forefront. You can open up accounts with multiple banks to gauge how your favorites work, but you will probably end up doing most of your business from a single bank account. Taking time with this step and comparing your top choices can help you find the right bank for your needs.
