What Is Shopify Payments? Why Every Shopify Store Should Use It

What Is Shopify Payments? Why Every Shopify Store Should Use It

Choosing the right payment gateway is a crucial step for any online business. Shopify Payments, Shopify’s built-in payment processor, offers a seamless way to accept payments without relying on third-party providers. But how does it work, and is it the best option for your store?

In this guide, Nextsky breaks down everything you need to know about Shopify Payments, from its features and fees to eligibility requirements.

What is Shopify Payments? How Does It Work?

What is Shopify Payments?

Shopify Payments is Shopify’s built-in payment gateway, designed to simplify payment processing for merchants. Instead of setting up a third-party payment provider, creating a merchant account, and manually entering credentials, Shopify Payments allows businesses to start accepting payments instantly upon store setup.

shopify payments

With Shopify Payments, merchants can process payments from:

  • Credit & debit cards (Visa, Mastercard, American Express, Discover)
  • Digital wallets (Apple Pay, Google Pay, Shop Pay)
  • Local payment methods (availability depends on the country)

Additionally, merchants using Shopify Payments are not charged extra transaction fees on orders processed through Shopify Payments, Shop Pay, Shop Pay Installments, and PayPal Express. Shopify Plus users also benefit from waived transaction fees for all other payment methods.

💡 Important Notes Before Using Shopify Payments:

  • Shopify Payments is only available in certain countries and regions.
  • Merchants must enable two-step authentication for security.
  • Payout schedules depend on the chosen method (bank transfer or Shopify Balance).

How Does Shopify Payments Work?

The payment process with Shopify Payments follows these steps:

  • 1️⃣ Customer Checkout: The buyer enters payment details during checkout.
  • 2️⃣ Payment Processing: Shopify Payments securely transfers the payment request to the card issuer for authorization.
  • 3️⃣ Fund Settlement: Once approved, funds are processed and held temporarily before being deposited into the merchant’s balance.
  • 4️⃣ Payout to Merchant: Shopify initiates payouts, transferring earnings to the merchant’s bank account or Shopify Balance.

Shopify provides two main payout options:

  • Bank Deposit: Funds are transferred directly to the merchant’s bank, typically within 1-3 business days.
  • Shopify Balance: Merchants get faster access to funds with a digital account that supports spending, transfers, and ATM withdrawals.

Unlike third-party gateways, Shopify Payments streamlines fund transfers, reduces processing delays, and consolidates payment tracking within the Shopify admin panel. This seamless integration allows merchants to focus on growing their business instead of managing multiple payment platforms.

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

Shopify Payments Fees

Payment Processing Fees

Shopify Payments does not charge additional transaction fees when used, but merchants still need to pay credit card processing fees. Below is a breakdown of fees by Shopify plan:

Shopify Plan Online Payment Processing Fee In-Person Payment Processing Fee
Shopify Starter 5.0% + 30¢ Not supported
Basic Shopify 2.9% + 30¢ 2.6% + 10¢
Shopify 2.7% + 30¢ 2.5% + 10¢
Advanced Shopify 2.5% + 30¢ 2.4% + 10¢
Shopify Plus 2.15% + 30¢ 2.4% + 10¢ (or lower, based on negotiation)
  • Shopify Starter has a higher fee since it is designed for merchants selling exclusively through social media and messaging platforms.
  • Shopify Plus merchants can negotiate lower processing fees depending on their sales volume.

Transaction Fees

If you choose not to use Shopify Payments and opt for an external payment gateway, Shopify applies an additional transaction fee:

Shopify Plan Third-Party Payment Gateway Fee
Shopify Starter 5.0% + the gateway’s standard processing fee
Basic Shopify 2.0% + the gateway’s standard processing fee
Shopify 1.0% + the gateway’s standard processing fee
Advanced Shopify 0.6% + the gateway’s standard processing fee
Shopify Plus 0.15% + the gateway’s standard processing fee (negotiable)

Chargeback Fees

A chargeback occurs when a customer disputes a payment with their bank. When this happens, the bank charges a $15 fee in the U.S. (fees vary by country).

  • Shopify covers the chargeback fee only if you win the dispute.
  • If the customer wins or you choose not to contest the chargeback, you will be responsible for the fee.

You can track and manage chargebacks directly in your Shopify admin.

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

Shopify Payments Eligibility & Requirements

Supported Countries

Shopify Payments is available only in certain countries. If your business is located outside of these regions, you must choose a third-party payment provider.

As of now, Shopify Payments supports businesses in the following countries:

  1. United States
  2. United Kingdom
  3. Australia
  4. Germany
  5. Canada
  6. France
  7. Netherlands
  8. Italy
  9. Spain
  10. Japan
  11. New Zealand
  12. Ireland
  13. Singapore
  14. Hong Kong SAR
  15. Sweden
  16. Denmark
  17. Norway
  18. Belgium
  19. Austria
  20. Switzerland
  21. Finland
  22. Portugal
  23. Mexico
  24. Czechia
  25. Poland
  26. Greece
  27. Romania
  28. Lithuania
  29. Estonia
  30. Latvia
  31. Slovenia
  32. Hungary
  33. Bulgaria
  34. Cyprus
  35. Malta
  36. Croatia

This list is subject to change. For the most up-to-date information on supported countries and any specific requirements for each region, visit Shopify’s official page: Shopify Payments Supported Countries.

Prohibited Businesses and Products

Not all businesses can use Shopify Payments. Certain industries and products are prohibited due to legal regulations and Shopify's own policies. Commonly restricted categories include:

  • Regulated or illegal products: Firearms, ammunition, explosives, tobacco, cannabis, prescription drugs, and medical devices.
  • Financial services: Cryptocurrency exchanges, money transfers, credit repair services.
  • Adult content: Adult entertainment, explicit media, sex toys.
  • Pseudo pharmaceuticals: Unverified health supplements, alternative medicines.
  • Gambling services: Lotteries, sweepstakes, betting platforms.
  • Counterfeit goods: Fake designer brands, unauthorized digital media.

If your business falls under any of these categories, you’ll need to find an alternative payment gateway.

Account Security Requirements: Two-Step Authentication

To use Shopify Payments, you must enable two-step authentication (2FA) on your Shopify account. This is a security requirement that helps prevent unauthorized access and financial fraud.

Without two-step authentication, your account may be at risk, and Shopify may place your payouts on hold. Enabling 2FA is straightforward:

  1. Go to your Shopify admin panel.
  2. Navigate to Settings > Security.
  3. Enable Two-Step Authentication using SMS, an authentication app, or another secure method.

By meeting these eligibility requirements and security measures, you can ensure smooth transactions and secure payouts with Shopify Payments.

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.

shopify payment set up

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

shopify payment setup

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"

shopify business information

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

shopify payments set up

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

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

Pros & Cons of Shopify Payments

Pros Cons
No transaction fees – Save on extra fees charged by third-party payment providers. Limited availability – Only available in certain countries.
Seamless integration – Manage payments, orders, and reports within Shopify. Restricted industries – Some products and services are not eligible.
Faster payouts – Get funds quickly, especially with Shopify Balance. Chargeback fees – $15 per dispute if you lose the claim.
Supports multiple payment methods – Accepts credit cards, Apple Pay, Google Pay, and more. Potential account holds – Shopify may freeze funds for policy violations or suspicious activity.
Multi-currency support – Sell in different currencies for global customers. Shopify exclusive – Cannot be used outside of Shopify.

💡 Conclusion: Shopify Payments is ideal for businesses wanting simplified payments, lower costs, and faster payouts. However, check eligibility based on location and industry before enabling it.

Shopify Payments vs. Third-Party Payment Gateways

Shopify does not require you to use Shopify Payments. You can choose from over 100 different payment gateways, offering flexibility in accepting payments. Below is a comparison of Shopify Payments and popular alternatives:

Payment Gateway Comparison

Payment Gateway Transaction Fees Accepted Payment Methods
Shopify Payments No additional transaction fees (except for certain plans), processing fees vary based on your Shopify plan Visa, MasterCard, American Express, Apple Pay, Shop Pay, Google Pay, PayPal, and more
Stripe 2.9% + 30¢ per card transaction, 0.8% for ACH direct debit Visa, MasterCard, American Express, AliPay, Klarna, iDEAL, SEPA, and more
Square 2.9% + 30¢ per online transaction, 2.6% + 30¢ for higher plans Apple Pay, Cash App, Visa, MasterCard, Discover, American Express
PayPal 2.59% + fixed fee for alternative payments, 2.99% + fixed fee for credit card payments Visa, MasterCard, Discover, Venmo, PayPal, and digital wallets
Apple Pay No additional processing fees Major credit and debit cards from leading financial institutions
Amazon Pay 2.9% domestic, 3.9% international, plus a $0.30 authorization fee per transaction Visa, MasterCard, American Express, Discover, JCB, Diners Club
Meta Pay (Facebook Pay) No additional processing fees, only the regular payment processor fees Major credit and debit cards, PayPal, Shop Pay
Google Pay Fees range from 1.5% to 4%, with a $0.31 or 1.5% charge for debit card transactions Visa, MasterCard, American Express, Discover, JCB

When to Use Shopify Payments?

  • Avoiding additional transaction fees
  • Seamless Shopify integration
  • Fast payouts (especially with Shopify Balance)
  • Businesses in supported countries

When to Choose a Third-Party Payment Gateway?

  • Businesses in unsupported Shopify Payments regions
  • Selling restricted products under Shopify Payments policies
  • Accepting specific payment methods not available in Shopify Payments
  • Using the same payment provider across multiple platforms

=>> Read more: How Does Shopify Pay You? Understanding the Payment Process

Shopify Payments is a powerful, hassle-free solution for handling transactions on Shopify. By eliminating third-party fees and offering seamless integration, it helps merchants streamline their operations and maximize profits. However, eligibility restrictions and regional availability may require some businesses to explore alternative gateways. If you're looking for expert guidance on optimizing your Shopify store, Nextsky is here to help.

Frequently Asked Questions (FAQs)

Does Shopify Payments charge extra transaction fees?

No, Shopify Payments does not charge extra transaction fees. However, if you use a third-party payment gateway, Shopify will apply additional fees based on your plan.

How long does it take to receive payouts from Shopify Payments?

Payout times depend on your country, but in most cases, Shopify Payments transfers funds to your bank account within 2-3 business days (for U.S. merchants). Some countries may have longer processing times.

Why is my Shopify Payments account on hold?

Your account may be on hold due to verification issues, suspicious activity, or policy violations. Check your Shopify admin for notifications or contact Shopify Support to resolve the issue.

Does Shopify Payments support Buy Now, Pay Later (BNPL) options?

Yes, Shopify Payments integrates with Shop Pay Installments (in the U.S.), allowing customers to split payments into interest-free installments.

Can I capture multiple payments on a single order using Shopify Payments?

No, you cannot capture multiple payments on a single order using Shopify Payments. Each order can only have one payment captured, and it cannot exceed the authorized amount for that order. If customers wish to add more products after placing an order, they must create a new order.

Can I use PayPal alongside Shopify Payments?

Yes! You can enable both Shopify Payments and PayPal at the same time, allowing customers to choose their preferred payment method at checkout.

What should I do if Shopify Payments is not available in my country?

If Shopify Payments isn’t supported in your country, you’ll need to use a third-party payment provider like PayPal, Stripe, or another local payment gateway.

How can I prevent chargebacks when using Shopify Payments?

To reduce chargebacks, make sure to provide clear product descriptions, accurate shipping times, and excellent customer service. Shopify also offers built-in fraud analysis tools to help detect suspicious orders.