Just like in the merchant service industry, we are seeing major shifts in the financial services model within banks and technology companies who are quickly establishing themselves as offering more than just being able to process transactions or add items to an online shopping cart. With the rise of technology in companies such as Shopify, Stripe, and Square we are seeing a huge increase in the value of the analytic data that these companies continue to be able to obtain. If we look forward into the remainder of the 2020’s I believe that we are going to continuously see strong movement by forward thinking technology companies to go beyond providing services that they specialize in and instead, grow into new areas that compliment their already established product offerings.

Similar to the Point of Sale Industry there are players that aren’t as transparent or forth-write when it comes to explaining costs and fees, which in turn allows business owners the ability to make an educated decision. I think we are seeing cultural shifts where companies are establishing strong business practices and ethics that can translate across a lot of industries. An example of this would be seeing large players such as Apple, who started off offering computers and have since moved off into other avenues such as entertainment and digital wallets. If you are a leader in one particular category I feel that there is nothing to prevent you from taking your company’s core competencies and values and then taking those down different avenues of business. 

We are also seeing a lot of talk and a lot of buzz about open banking that is gaining momentum from Europe and now those conversations are travelling across to North America. What this means is that the traditional financial institutions have broken trust, such as back in 2008 when the lending crisis occurred, and these mistakes in turn are forcing financial institutions to make adjustments. This means creating a larger focus on customers by putting them first and also a heavier focus on technology. 

For SONA, we continue to be forward thinking in the fact that we have tried very hard to establish ourselves as a strong ethical company in the payment space and we believe that we have the ability to disrupt the common reputation of the industry by focusing on building that culture. We do this, not only by focusing on that, but also by promoting the benefits of the technology we offer and how it can help businesses. A natural transition for us, just like some of the other tech giants that are in the market such as Shopify, Stripe, and Square that are all moving into more of the financial side of business and extending capital to small business, we are looking forward to being able to do the same. The reason why, above anything else, that we are looking to offer these aspects to businesses is because we make it our mission to do the right thing and offer the best to our customers. If we can extend capital to business which then helps them to grow and hire more people, it means we can help do the best we can to help those companies thrive just as we have helped them with their merchant services. 

So what are some of the things you should consider being a small or medium size business who is looking at alternative lending or requesting capital from a technology company? I recommend that you look at some of the same areas that we would advise you on in regards to merchant services. With transparency; look at the total cost. Look at what’s being advanced, what the total amount is and when it is expected to be repaid. How are repayments being done? Are they being done as a percentage of sales so that the sales are lower so that you’re paying a smaller amount or if they’re higher, you’re paying a higher amount? Ask questions such as what is the factoring rate because you’re not going to hear about interest rates in a merchant cash advance or capital advance program because it’s not a traditional loan, it’s an advance on future receivables so make the time to find out what that factoring rate is. Look at the terms and conditions of the agreement and make sure that you find out who is responsible if in the event of a business shutdown like we have seen throughout the Global pandemic and how would that affect the advance? Most importantly, write those answers down and have questions prepared as you get into those discussions because just like with merchant services there are a lot of companies that focus on themselves first and disclose details later. It’s important that as an operator, you have all of the information needed to make an educated decision.

I can’t stress enough; Don’t take the capital if you don’t need it. With all of the types of capital advance programs that are available, they are always going to come at a higher cost of capital because the technology companies are relying on the analytics data of the business  to make the determination whether the business can shoulder the burden of the advance. However, any way that you look at that advance or capital, it carries a higher cost so as a business owner you need to be very strategic in thinking about what the return on investment will be for the capital that you will be getting back. That has to be factored into the decision on whether it is wise to take the advance or not.

Since its inception, SONA has focused only on forming alliances and partnerships with those who match our values. Whether it’s a loyalty company, one that offers gift cards, or an e-commerce gateway company, the same principle holds true to those who are working in the cash advance area. If, as an existing or potential customer, you are interested in that service by all means contact us, we are only ever going to align you with a company that we feel has your best interests at heart. 

Ryan O’Leary – CEO