Originally published May 23rd, 2023
Last updated May 20th, 2025
eCommerce merchants have always struggled to receive funding from traditional lenders, in large part because they lack assets that can be used as collateral. With an uncertain global economy, finding money has become more difficult. Rising interest rates and high inflation have made consumers more purposeful in their spending. Rising interest rates and high inflation have made consumers more purposeful in their spending. Combined, these factors present a challenging environment for eCommerce businesses and small businesses alike. Access to scalable funding solutions like revenue-based financing is becoming essential for ecommerce businesses navigating unstable economic conditions.
Merchants will need to explore new markets and alternative financial services or lenders if they want to expand their businesses. In an unpredictable market, ready access to real-time cash flow and liquidity is crucial to bridge the gaps that may arise in a tight financial market. Many startups turn to credit cards for short-term financing. Alternative lenders like Onramp Funds offer fast approval processes without requiring a personal credit check or traditional bank account documentation.
Although 65% of small businesses use credit cards, only 50% use a business card. The other 50% use their personal debit cards or credit cards for business expenses, which can be risky. It's never a good idea to use personal credit cards for business purposes. It puts your bank account at risk, and it complicates identifying business expenses for invoicing and tax purposes. Using personal credit for business expenses can negatively affect credit score, limit funding options, and hinder optimization of your financial operations.
However, ecommerce businesses may have difficulty finding a business credit card with reasonable interest rates, forcing them to use their personal credit to stay afloat. All that changes with better options. Onramp offers an alternative to credit cards that can protect your personal and business financial health and payment methods. Let's compare these two options. Unlike high-interest credit cards, Onramp Funds enables online sellers to maintain healthy cash flow through predictable, sales-based repayment terms.
When do Businesses Use Credit Cards?
As an eCommerce startup, business owners may not require added labor, but wages can become a leading expense as the company grows and hires employees. Making payroll and paying taxes can leave little money available for inventory or new equipment. Outsourcing workflows such as accounting or logistics can also eat up cash flow. Without access to ready payouts, merchants may turn to credit cards to cover other expenses. Ecommerce sellers on Shopify, BigCommerce, or WooCommerce often struggle with delayed payouts, which makes short-term funding critical.
Business advisors caution against using credit cards for long-term financing or large purchases. Large purchases increase balances and monthly payments. Long-term expenses at high-interest rates impact cash flow. Multiple payment methods for business expenses can quickly overextend financial resources and impact credit checks and credit history. Maintaining consistent monthly sales is difficult when interest charges and unpredictable credit card fees cut into margins.
Related: Why Use Revenue-Based Financing Instead of Debt Financing
In 2022, 74% of small businesses carried a balance on their credit cards. Of that 74%, 34% had less than $100,000, and 7% owed more than $1 million. The remaining 33% carried balances between $100,000 and $1 million. As of January 2023, the average interest rate for a business credit card was 20.24%. If central banks continue to raise interest rates, the repayment costs will also increase. The high cost of borrowing through credit cards can become unsustainable for SMBs trying to scale or invest in new product lines.
Clearly, ecommerce merchants need an alternative to business credit cards. They need a cost-effective solution that helps bridge the gaps in cash flow with low transaction fees and flexible repayment terms with no annual fees. Onramp Funds’ solution provides merchants with fiat to fill those gaps without significantly impacting cash flow. With ecommerce funding from Onramp, you can invest in inventory, marketing, or workflow automation without the strain of traditional business loans.
Why eCommerce Merchants Should Use Onramp
Business advisors suggest using a business credit card to build credit, earn rewards, and make large purchases. They recommend business owners choose service providers wisely and not overspend. Controlling spending is easier said than done.
If limiting credit card usage were easy, 74% of merchants wouldn't carry balances. It's too easy to pull out a credit card when cash flow is in short supply. No matter the good intentions, the balance isn't paid in full. More expenses add to the balance until the monthly payment is disrupting financial health.
With Onramp Funds’ solution, business owners can avoid the credit card merry-go-round and maintain a healthy cash flow to enable growth. Here are four essential ways Onramp differs from credit cards.
Onramp Doesn’t Charge Interest
Today's variable interest rates on credit cards range from 9.99% to 34.99% for good to excellent credit rates. For most eCommerce merchants, the rates hover around the average of 20.24% unless the business lacks a strong credit history. For merchants with fair to poor credit, interest rates jump to 26.74% or higher. Since all cards carry a variable rate, be prepared for an increase if payments are missed or credit scores drop.
Onramp Funds does not charge interest on the borrowed amount. Merchants don’t have to calculate repayment plus interest. There’s no stressing about payment schedules or minimum payments—repayment is set when funds are released.
Onramp Offers Flexible Repayment Schedules
Every 30 days, a credit card payment is due. But for ecommerce merchants, variable payments make cash flow forecasting difficult. What was a $200 payment might jump to $600, creating a need to rely on short-term credit or loans.
With Onramp Funds, repayment schedules are tied to sales. As payment service providers process sales, Onramp automatically takes a percentage as repayment. The percentage never changes.
This structure helps maintain a positive cash flow, making Onramp Funds a more sustainable financial services solution for startups and entrepreneurs.
Onramp Doesn’t Assess Late or Transaction Fees
Fees can add up with credit cards—including transaction fees, late fees, and currency exchange costs. By contrast, Onramp Funds uses a flat 1% processing fee.
Late Fees
Credit card issuers may charge up to $30 for a late payment and $41 for any other late payments within a six-month period. The fees are automatically adjusted for inflation but are capped at 100% of the late payment amount. Too many late payments not only hurt a company's credit history—they add to the repayment balance.
With Onramp, there's no such thing as a late payment fee. A percentage of each sale lowers the amount due until the balance is paid. No late fees are added to the balance, extending the length of repayment.
Transaction Fees
Credit cards charge for certain transactions. This can be 3% or more, especially when buying from international service providers or sellers on amazon. That doesn’t include exchange rate fluctuation.
Credit card cash advances carry even higher fees, ranging from 3% to 5%. Some merchants may need multiple cash advances to reach their funding needs.
Related: The Importance of Borrowing and Spending Only What You Need to Maintain Healthy eCommerce Finances
If they use a credit card issued in US dollars, for example, a 3% transaction fee would be assessed if the seller were paid in Euros. That does not include any adjustments as a result of the exchange rate.
Credit card cash advances are processed at a rate of 3% to 5% per cash advance. Since many cards limit cash advance amounts, merchants may find they need several transactions to receive the amount they want.
Onramp charges a predictable 1% processing fee per transaction. Period.
Get Fast, Personalized Service and Grow Your Business with Onramp
Onramp works with each merchant to structure a plan that fits their unique situation. Business owners can receive cash in minutes. No waiting for lengthy credit checks or physical cards. With Onramp, eCommerce merchants can avoid:
- Overspending
- Late or transaction fees
- High-interest rates
- Rigid repayment schedules
Instead, they gain access to a user-friendly, cost-effective, and scalable solution for their financial health. If you're ready to streamline workflows, improve cash flow, and unlock growth with minimal risk management headaches, let’s get started with Onramp Funds.
