Payability, a digital SMB financer, has seen its financing portfolio surge 50% since the start of the pandemic, CEO Keith Smith told Bank Innovation. The company offers an invoice factoring product and pays advances of clients’ sales in exchange for a portion of the total.

“Our offerings are tailored specifically for e-commerce businesses and SMBs that sell their products online,” Smith said. “With our financing, they are able to manage their cash flow and expand their business rather than wait for their receivables.” He added the company has financed more than $300 million since the start of the pandemic, and its customer base has almost doubled. Payability has financed more than $2.5 billion since its 2015 founding.

The New York-based startup is developing a payments product for its small business clients called “Vendor Pay,” slated to launch by yearend. Although Smith said the company didn’t have details on exactly how it will work at this time — the product has been in the works for six months — the goal is to eliminate credit card fees that can be costly for small businesses paying vendors thousands of dollars at a time, he said.

Vendor Pay “will help our customers pay their upstream suppliers without friction at a low cost,” Smith said.

Payability, which plans to expand its services to Canada and Europe in the next 18 months, charges a standard fee of 2% of sales for its product called Instant Access, that pays merchants within 24 hours, and between 0.3% and 1% per week for its Instant Advance product, Smith said. The Payability credit card gives its users a 2% cash rebate for all the transactions made via the card.

Since the start of the pandemic, e-commerce sales have surged 40% according to Digital Commerce 360, a think tank. People are shopping online, bolstering e-commerce businesses despite economic uncertainty.

“More than 204 million consumers in the U.S. age 14 and older have made an online purchase during COVID-19,” said Craig Kirsner, president at Stuart Estate Planning, a wealth management firm. “Before the pandemic, online shopping made up 16% of all retail shopping. In March and April of 2020, it has jumped dramatically to 27% of retail shopping.”

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Total e-commerce sales skyrocketed 81% year over year in May, with a 23% increase in e-commerce transaction volume for the same month, said Erika Dietrich, vice president of global fraud prevention risk services at ACI Worldwide.

Average transaction amount for online purchases increased to $68 after lockdown from $46 before the pandemic, according to Megan Enright, senior associate at Mission North, a data and communications company. Payability’s average financing, meanwhile, is about $50,000, Smith said.

The demand for e-commerce trade and businesses has gained a huge traction and the demand will steadily increase in the coming time, Dietrich added.

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