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Shopify's Merchant Solutions Growth Accelerates: More Upside Ahead?
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Key Takeaways
Shopify's Merchant Solutions revenues jumped 37% to $2.78 billion in the second quarter.
Shopify Payments penetration rose to 68% of GMV, with processed GMV climbing 38% to $78.1 billion.
International GMV rose 37%, while B2B GMV surged 76%, expanding Shopify's merchant-services base.
Shopify (SHOP - Free Report) is benefiting from strong growth in Merchant Solutions revenues, supported by rising Gross Merchandise Value (GMV), increasing Shopify Payments penetration and expanding adoption of its financial and commerce services. In the second quarter of 2026, Merchant Solutions revenues jumped 37% year over year to $2.78 billion, representing 78% of total revenues. Shopify’s overall GMV climbed 32% to $115.6 billion, providing a larger transaction base from which the company can generate payment processing, currency conversion, partner referral and other merchant-related revenues.
Shopify Payments remains the biggest driver. Payments penetration reached 68% of GMV in the second quarter, up from 64% a year earlier, while GMV processed through Shopify Payments increased 38% to $78.1 billion from $56.6 billion. The increase generated an additional $624 million in Shopify Payments revenues from payment-processing and currency-conversion fees. Steady expansion in payments penetration has been a key catalyst. Payments penetration has increased from 60% in the first quarter of 2024 to 68% in the second quarter of 2026.
International expansion offers significant growth opportunity. Shopify Payments is now available in 40 countries following its launch in the UAE, while penetration in Europe increased more than 350 basis points year over year. The company is also adding local payment methods, including in Mexico. Shop Pay GMV increased 53% year over year, supported by additional local payment options and growing adoption of Shop Pay Installments. Meanwhile, international GMV increased 37%, offline GMV rose 32% and B2B GMV surged 76%, widening the transaction base for Shopify’s merchant services.
Apart from payments, Merchant Solutions revenues are supported by Shopify Capital and other financial products, partner referral fees, shipping labels, POS hardware, App Store advertising and Shop Campaigns. Shopify’s agentic-commerce push could provide another longer-term tailwind. Management said AI-driven shopping still routes transactions through merchant infrastructure and Shop Pay, helping Shopify preserve its economics even as product discovery increasingly starts on AI platforms. This creates opportunities for rising merchant sales to continue translating into payments and other Merchant Solutions revenues.
Shopify Faces Tough Competition
The competitive intensity in the payments domain remains high for Shopify, with Block (XYZ - Free Report) and PayPal (PYPL - Free Report) standing out as key challengers.
PayPal is challenging Shopify’s merchant-solutions business by expanding beyond branded checkout into a broader payment-processing and value-added-services platform. Through Braintree, PayPal is targeting marketplaces, platforms and large e-commerce enterprises with payment processing, payouts, Risk as a Service, payment optimization and embedded-finance solutions. The company is also working to unify Braintree, PayPal Complete Payments and Hyperwallet onto a single foundation, which should make it easier for merchants to integrate and scale multiple payment capabilities.
Block is challenging Shopify through Square’s increasingly comprehensive payments and commerce ecosystem. The company has expanded field sales and has more than 200 active independent sales organization partners, helping it reach merchants beyond its traditional self-service customer base. Block is particularly pushing into larger sellers and the mid-market, where growth exceeded 20%, while strengthening its offerings across food and beverage, retail and services. Its platform combines payments with payroll, marketing, loyalty, Square Loans, Square Savings and credit-card offerings, increasing cross-selling opportunities.
Shopify shares have lost 7.9% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 21.3%.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 10.65X compared with the broader sector’s 6.14X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $1.89 per share, unchanged over the past 30 days. This suggests 61.54% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
Shopify's Merchant Solutions Growth Accelerates: More Upside Ahead?
Key Takeaways
Shopify (SHOP - Free Report) is benefiting from strong growth in Merchant Solutions revenues, supported by rising Gross Merchandise Value (GMV), increasing Shopify Payments penetration and expanding adoption of its financial and commerce services. In the second quarter of 2026, Merchant Solutions revenues jumped 37% year over year to $2.78 billion, representing 78% of total revenues. Shopify’s overall GMV climbed 32% to $115.6 billion, providing a larger transaction base from which the company can generate payment processing, currency conversion, partner referral and other merchant-related revenues.
Shopify Payments remains the biggest driver. Payments penetration reached 68% of GMV in the second quarter, up from 64% a year earlier, while GMV processed through Shopify Payments increased 38% to $78.1 billion from $56.6 billion. The increase generated an additional $624 million in Shopify Payments revenues from payment-processing and currency-conversion fees. Steady expansion in payments penetration has been a key catalyst. Payments penetration has increased from 60% in the first quarter of 2024 to 68% in the second quarter of 2026.
International expansion offers significant growth opportunity. Shopify Payments is now available in 40 countries following its launch in the UAE, while penetration in Europe increased more than 350 basis points year over year. The company is also adding local payment methods, including in Mexico. Shop Pay GMV increased 53% year over year, supported by additional local payment options and growing adoption of Shop Pay Installments. Meanwhile, international GMV increased 37%, offline GMV rose 32% and B2B GMV surged 76%, widening the transaction base for Shopify’s merchant services.
Apart from payments, Merchant Solutions revenues are supported by Shopify Capital and other financial products, partner referral fees, shipping labels, POS hardware, App Store advertising and Shop Campaigns. Shopify’s agentic-commerce push could provide another longer-term tailwind. Management said AI-driven shopping still routes transactions through merchant infrastructure and Shop Pay, helping Shopify preserve its economics even as product discovery increasingly starts on AI platforms. This creates opportunities for rising merchant sales to continue translating into payments and other Merchant Solutions revenues.
Shopify Faces Tough Competition
The competitive intensity in the payments domain remains high for Shopify, with Block (XYZ - Free Report) and PayPal (PYPL - Free Report) standing out as key challengers.
PayPal is challenging Shopify’s merchant-solutions business by expanding beyond branded checkout into a broader payment-processing and value-added-services platform. Through Braintree, PayPal is targeting marketplaces, platforms and large e-commerce enterprises with payment processing, payouts, Risk as a Service, payment optimization and embedded-finance solutions. The company is also working to unify Braintree, PayPal Complete Payments and Hyperwallet onto a single foundation, which should make it easier for merchants to integrate and scale multiple payment capabilities.
Block is challenging Shopify through Square’s increasingly comprehensive payments and commerce ecosystem. The company has expanded field sales and has more than 200 active independent sales organization partners, helping it reach merchants beyond its traditional self-service customer base. Block is particularly pushing into larger sellers and the mid-market, where growth exceeded 20%, while strengthening its offerings across food and beverage, retail and services. Its platform combines payments with payroll, marketing, loyalty, Square Loans, Square Savings and credit-card offerings, increasing cross-selling opportunities.
SHOP’s Share Price Performance, Valuation & Estimates
Shopify shares have lost 7.9% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 21.3%.
SHOP’s YTD Price Performance
Image Source: Zacks Investment Research
Shopify stock is overvalued, with a forward 12-month price/sales of 10.65X compared with the broader sector’s 6.14X. SHOP has a Value Score of F.
SHOP’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $1.89 per share, unchanged over the past 30 days. This suggests 61.54% year-over-year growth.
Shopify Inc. Price and Consensus
Shopify Inc. price-consensus-chart | Shopify Inc. Quote
Shopify currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.