Shopify Payments: Simplifying Financial Management on Shopify

 As a top e-commerce platform, Shopify significantly influences its users and partner companies, including payment gateways and credit card processors. In this article, we'll explore the features and fees of Shopify Payments - Shopify's own payments engine, and how it compares to other popular payment processors.

We also explain why this is a great payment processor for some companies but not the greatest idea for others. So whether you're a Shopify user or are considering using Shopify for your business, you'll have a better understanding of what Shopify Payments has to offer.

What are Shopify Payments?

Shopify Payments is Shopify's own payment service, which simplifies online transactions and payment acceptance for businesses. Powered by Stripe, a trusted name in online payments, Shopify Payments ensures security and reliability. 

One standout feature of Shopify Payments is its seamless integration, requiring no additional fees beyond connecting your Stripe account. It supports multiple currencies, catering to customers worldwide.

Shopify Payments operates similarly to Stripe, PayPal, and Authorize.net. Once linked to your online store, it processes payments by verifying the payment method and communicating with the bank, all within seconds. Accepted payments are then deposited directly into your bank account.

What sets Shopify Payments apart is its merchant-focused approach, allowing buyers to use major credit cards such as Mastercard, American Express, Visa, and more, along with convenient options like Apple Pay and Google Pay.

With Shopify Payments, businesses can effortlessly accept online payments while enjoying cost savings on transaction fees.

=>> See also: What is Shop Pay and how does it work?

The pros and cons of Shopify Payments

Pros of Shopify Payments

• Seamless Integration: Shopify Payments seamlessly integrates with your Shopify dashboard, offering the simplicity and processing speed of Stripe. Installation is quick, and you can monitor sales without switching to a separate dashboard.
• No Additional Transaction Fees: Unlike most other payment gateways, Shopify doesn't charge extra transaction fees if you use Shopify Payments, saving you money.
• Competitive Processing Fees: Opting for a higher-level Shopify plan can provide better processing fees compared to many competitors.
• Automatic Setup: Shopify Payments is automatically set up with your Shopify store, allowing you to easily track orders and payments through the integrated platform.
• Multi-Currency Support: With Shopify Payments, you can sell in different currencies, even if they don't match your bank's currency. Transaction fees can be competitive depending on your plan and transaction volume.

Cons of Shopify Payments

• Monthly Subscription Fee: Shopify Payments charges a monthly subscription fee in addition to transaction fees, unlike many competitors who only charge transaction fees. Advanced plans can cost up to $299 per month for an annual plan.
• Limited Country Availability: Only certain countries can use Shopify Payments, restricting access for merchants in some regions.
• Platform Exclusivity: Shopify Payments is exclusive to the Shopify eCommerce platform, limiting flexibility for merchants who may want to use other platforms.
• Account Holds: Accounts may be placed on hold or frozen in cases of suspected fraud or policy violations, impacting business operations.

How much do Shopify Payments fees? Are there any extra fees?

Shopify Payments eliminates many of the fees you pay with third-party payment gateways. However, you still have to pay some additional fees to use Shopify Payments.

First, the cost of Shopify (the actual e-commerce platform) plans to use Shopify Payments on your store. Prices of the packages are as follows:

• Shopify Starter – $5 per month.
• Shopify Lite – $9 per month.
• Shopify Basic – $25 per month.
• Shopify – $65 per month.
• Shopify Advanced - $399 per month
• Shopify Plus – Starting from $2,300 per month for a 3-year term

For more detailed information, please refer to this article:Shopify pricing: Which plans are for you?

Next, transaction fees and credit card fees should be factored in. While Shopify Payments doesn't add extra transaction fees, you'll still incur standard credit card processing fees, typical among all payment processors. Opting for a higher-tier Shopify plan could potentially offer better rates.

For comparison, other payment processors usually impose a standard flat fee of 2.9% + $0.30 for online payments. Opting for Shopify, especially with the Shopify or Advanced Shopify plans, can offer a more favorable arrangement.

• Currency Conversion Market Rate: This fee reflects the average market rate for currency conversion with no added margin. It fluctuates frequently and depends on the currency being converted.
• Currency conversion fee: This is the actual currency conversion fee charged by Shopify. Based on store location: 2% for all countries outside the US and 1.5% for stores in the US.
• Chargebacks: This applies when a customer requests a refund for a processed transaction. (Standard fee is $15 USD per chargeback)
• Returns: Shopify does not impose a refund fee, but you won't receive a refund for the credit card transaction fee associated with the returned transaction.
• Data retrieval fee: This applies to requests to access transaction data beyond what is provided in the Shopify admin. (Fees are calculated based on data volume and complexity)
• Account closure fee: This applies when you close your Shopify store or terminate Shopify Payments. ($200 USD)
• Late payment processing fee: Applicable to overdue payments. (Fees are calculated based on the amount owed and the number of days overdue).

Who can use Shopify Payments? Is Shopify Payments right for you?

Who can use Shopify Payments?

Most Shopify users can access Shopify Payments, but there are some limitations to consider.

Firstly, Shopify Payments is available only in select countries, currently around 17, including the United States, United Kingdom, Australia, Canada, Germany, Japan, and others,... If your country isn't on the list, you'll need to choose from Shopify's other supported payment gateways.

Additionally, certain business categories are prohibited from using Shopify Payments based on country-specific regulations. For instance, in the US, prohibited business types include legal services, adult content, gambling, drugs, multi-level marketing, and more.

Is Shopify Payments right for you?

Want to know if Shopify Payments is right for you? Let's look at the following 3 criteria:

• Have you used Shopify yet? Which plan do you choose in Shopify?
• In which area do you sell? Does Shopify Payments support regions?
• What products do you sell? Is it on Shopify's illegal list?

After considering all the above criteria, why wouldn't you use Shopify Payments when it almost significantly cuts transaction fees and credit card fees? Not to mention, it's all consolidated into your Shopify dashboard with a setup process that takes minutes. That's why I recommend using Shopify Payments if possible.

Alternatively, you can look elsewhere for a payment gateway if you're not in a supported country.

If you want to get started with Shopify and Shopify Payments, you can follow our full Shopify Tutorial: How to Start a Shopify Store for Beginners

How does Shopify Payments work?

Shopify Payments streamlines the payment process for your online store. Here's a step-by-step breakdown:

First, create a Stripe account to establish the backbone of Shopify Payments, enabling secure transaction management for your store. 

Next, connect your bank account to your Stripe account for direct fund transfers, ensuring quick and seamless access to your earnings. 

Then, enable Shopify Payments within your dashboard to begin accepting credit card payments. Follow simple steps to integrate it with your store and ensure secure transactions. 

Once activated, you can effortlessly accept credit card payments from customers worldwide, supporting major card networks like Visa, Mastercard, and American Express. 

Finally, once payments are processed, funds are deposited directly into your Shopify store. Monitor your earnings and withdraw them to your linked bank account whenever convenient.

It's important to note that Shopify Payments availability depends on the country you operate in. If Stripe is supported in your country, you can leverage Shopify Payments for seamless payment processing. 

However, if Stripe isn't available, alternative payment methods like PayPal and Square can serve as viable options for accepting credit card payments from your customers.

How to set up Shopify Payments

Setting up Shopify Payments on your Shopify store is very easy. Follow these steps:

• Step 1: Go to the Shopify Store admin homepage, and select "Settings" in the bottom left corner.

• Step 2: After opening "Settings", choose "Payments" > click the "Activate Shopify Payments" button to activate.

• Step 3: Select the "Business type" options. Then, fill in all necessary verification and personal information in the form including details, address,..then click "Submit for verification"

• Step 4: Finish by entering the routing number and account number from your bank account.

• Step 5:  Click the Complete Account Setup button to complete the process.

Best payment method for Shopify

Shopify also has other alternative payment options to give customers more variety.

Some popular payment methods you can use for your Shopify Store are as follows:

• Shopify Payments (also known as Shop Pay)
• Paypal
• Stripes
• square
• Klarna
• AmazonPay

 You can enable Shopify Payments to add more payment method buttons that appear at checkout, including PayPal.

In addition, Shopify supports numerous alternative payment providers, many of which offer functionalities similar to Shopify Payments. However, there are also unique processing options available, including support for cryptocurrency and mobile payments, among others.

Ultimately, all Shopify stores offer manual payment methods, which can include options like bank deposits and money orders. These methods can be configured within the Payment Settings section of Shopify.

Each payment method has its own set of fees and features. So do your research before deciding which one is right for your business.