All You Need To Know About Shopify Payments

The setup procedure takes only a few minutes and consolidates everything onto the Shopify dashboard.Whether you’re just starting your online business or looking to simplify your payment processing, Shopify Payments offers a convenient, secure, and integrated solution for accepting payments from your customers. In this blog, we’ll cover everything you need to know about Shopify Payments, including its features, benefits, fees, and setup process. By the end of this article, you’ll have a complete understanding of how Shopify Payments works and whether it’s the right payment solution for your business.

What Is Shopify Payments?

In simple terms, Shopify’s payment gateway for managing online transactions is known as Shopify Payments, eliminating the need for third-party payment gateways or service providers. Powered by Stripe, Shopify Payments is highly secure and reliable and does not require any additional fees to use. And since it is merchant-facing, buyers can use almost every major credit card to process payments, such as; Mastercard, American Express, Apple Pay, Google Pay, Discover, Shop Pay, and Visa.

How much does Shopify Payments cost?

Before we discuss how much payments on Shopify cost, let’s go through how much it actually costs to use Shopify as an eCommerce platform. 

• Shopify Starter – $5 per month
• Basic Shopify – $25 per month
• Shopify – $65 per month
• Advanced Shopify – $399 per month
• Shopify Plus – Starts from $2,000 per month

These are the plans currently being offered by Shopify. To learn more, click here: Shopify Pricing.

Now that we’ve discussed how much Shopify costs, let’s move onto discussing how much Shopify Payment transactions and credit card fee costs.

• Basic Shopify will cost you 2.9% of your total revenue + $0.30 for every online transaction.
• Shopify plan will cost you 2.6% of your total revenue + $0.30 of every online transaction.
• Advanced Shopify plan will cost you about 2.4% of your total revenue + $0.30 of online transaction.

Other payment processors usually charge a flat rate of 2.9% exclusive of per transaction fee, so you’re actually getting a pretty good deal. 

Who can use Shopify Payments?

Almost all Shopify store owners can utilize Shopify Payment services as they are available in a lot of countries such as the USA, UK, Australia, Canada, Germany, Japan, Belgium, Hong Kong SAR, Italy, Netherlands, New Zealand, Spain, and more. You can find the full list here. If you’re trying to activate Shopify Payments from a country that is not present on the list, you won’t be able to. So instead of Shopify payments gateway, you’ll have to opt for a Shopify supported third-party payment gateway to handle payments and transactions.

How does the payment processing work?

As we mentioned before, Shopify Payments uses Stripe processing system to process payments. Think of it as a built-in, slightly tailored, Stripe processing system that is renamed to Shopify and use it to process and record all transactions on your Shopify store in real-time. View these transactions on the Shopify dashboard. Monitor and check each transaction for fraud, legitimacy, and if your bank has approved the payment. If everything is clear, deposit the money into your account. Note that the deposit time may vary based on the country.

Shopify Payments vs Third-Party Payment Processors

While Shopify has support for over a hundred different payment processors, it is important to clarify that if you use a third-party payment processor instead of Shopify Payments, you will be charged an extra fee. How much you are charged is dependent on what Shopify Plan you are subscribed to. 

For example; Basic Shopify charges you a rate of 2.0%, Shopify charges you a rate of 1.0%, and Advanced Shopify charges you a rate of 0.5%.

Note: You will only be charged this fee if you have completely disabled Shopify Payments. 

How To Set-Up Shopify Payments

Setting up and configuring Shopify payments is an extremely easy task. All you have to do is begin by clicking on the Settings button which can be found in the bottom left-hand corner of the screen. You will find all payment related details and options under this tab. Once you’ve followed through this step, find and click the Payments button on the dashboard. Now you will be greeted by two options, either Shopify Payments or Complete Account Setup, depending on whether or not you have already begun the process. You can proceed ahead by filling in all the required information including verification details, personal information, business details, and banking information such as routing number and account number. Once you’re finished entering in all the required information, just click on the Complete Account Setup button to finish the process.

The Pros & Cons Of Shopify Payments

Just like how everything entails its own set of pros and cons, Shopify Payments is of no exception. In this section, we’ll be discussing the pros and cons store owners face when processing store transactions and payments.

Pros

• There’s no denying that Shopify Payments eliminates the need for integrating a third-party payment service and once you’re finished setting up, your finances automatically sync with your sales and inventory.
• Since Shopify eCommerce platform and Shopify Payments are both offered by the same company, it helps streamline the user checkout process. When using Shopify Payments, your customers won’t be bounced or redirected to another page or platform to complete the payment process, unlike with third-party payment service providers. This helps significantly enhance the customer experience and reduces the chances of abandoned carts. Apart from benefiting your customers, Shopify Payments helps store owners keep track of all their sales, orders, and payments from a centralized dashboard which is not the case when using third-party service providers.
• As we had mentioned before, when using third-party payment service providers on your Shopify store, Shopify will charge you a small transaction fee. How much you pay is dependent on what subscription plan you have chosen for Shopify. Even if the fee is as low as 0.5%, it can still rack up to hundreds of thousands of dollars. But this fee is not applicable if you use Shopify Payments.
• This is another significant advantage Shopify Payments has over PayPal, one of its primary rivals. While Shopify Payments and Shopify POS can be completely integrated, PayPal does not allow POS payments. Sales from your physical stores and online are included in the unified company data.
• You can still use other payment processors if you decide against Shopify Payments. In fact, Shopify offers more than 100 different payment options. Customers will have additional alternatives to check out as a result of increased Shopify payments options. Users can, for instance, select PayPal at the checkout in addition to a credit card or American Express.

Cons

• Despite the fact that anyone can build a Shopify store, only a few countries are currently supported by Shopify Payments. In order to expand to a new nation, Shopify must confirm that the Shopify version in that nation complies with local laws. As a result, you would have to wait a very long period. Shopify forces you to select another accepted payment method if you operate your online business in another nation.
• Shopify has extensive Terms and Conditions which you must comply with and a long list of prohibited products you cannot sell if you wish to operate a store on Shopify. Shopify will terminate your store and account if you break any of these policies or start selling a prohibited product. So make sure you’re not doing or selling anything illegal.
• A chargeback is when a payer of an online credit card transaction receives their money back. A chargeback indicates that you have just lost an order and could be subject to further charges. Of course, one of a tiny online business’s main worries is how to safeguard itself from chargebacks. Your next payout in your Shopify Payments Account will immediately be reduced by $15 (the exact amount varies depending on the country) if a customer contacts their bank to dispute a charge made through your store. If you successfully file a chargeback, Shopify will return you the $15, but the likelihood is extremely slim.
• Shopify Payments will always freeze your payment until the issue has been resolved. You will receive your money in the following settlement if the decision is reached soon. But it is possible that the investigation will take longer. The majority of customer complaints in the Shopify Community result from payments being frozen for months.

Is Shopify Payments The Right Choice For You?

The question still remains, should you, or should you not use Shopify Payments? How do you even tell if Shopify Payments is the right choice for you. Just tick the checklist we’ve prepared for you below to figure out if Shopify Payments is the right choice for you.

• You now utilize Shopify as your eCommerce platform or intend to do so.
• You operate and sell or wish to operate and sell from a region or country that is supported by Shopify.
• You do not offer any of the goods or services that are present on Shopify’s list of prohibited items.

If you check off all three items on the list above, it would be foolish not to take Shopify Payments into account. If you are not in a supported country or if you would prefer to utilize an eCommerce platform like WooCommerce, Volusion, or BigCommerce, you may want to search elsewhere for a payment gateway.

In addition, Shopify Payments rates and transaction fees in credit cards are drastically lowered. The setup procedure takes only a few minutes and consolidates everything onto the Shopify dashboard. Because of these factors, we heartily endorse Shopify Payments to all businesses utilizing Shopify and operating in the supported nations and business categories.

FAQs

1) Do I have to choose a payment gateway?

Yes, you need to choose a payment gateway for your Shopify store. A payment gateway is a service that securely processes the transactions between your customers and your business by allowing your customers to securely make payments using credit cards, PayPal, Apple Pay, or other payment methods. Shopify offers several payment gateway options including Shopify Payments, PayPal, and Stripe. You can choose the payment gateway that best fits your business needs and requirements.

2) Do I have to choose between Shopify Payments and a third-party payment gateway?

A) No, you don’t have to choose between Shopify Payments and a third-party payment gateway. You can use both in your Shopify store, and offer your customers the option to choose their preferred payment method at checkout. Shopify Payments is a payment gateway provided by Shopify, but you can also integrate other third-party payment gateways such as PayPal, Stripe, and more. Each payment gateway has its own fees, features, and limitations, so it’s important to evaluate and compare each one to determine which is the best option for your business.

3) How long does it take to receive a payment from Shopify?

The time it takes to receive a payment from Shopify depends on several factors, including the payment gateway you use, your payment settings, and your location.

For Shopify Payments, the standard payout schedule is 2 business days for the United States, Canada, Australia, and the United Kingdom, and 7 business days for other countries. This means that payments will be deposited into your bank account two or seven business days after the payment is processed.

For other third-party payment gateways, the payout schedule can vary. For example, PayPal usually takes 1-2 business days to deposit payments into your account, while Stripe typically takes 2-7 business days.

It’s important to note that some payment gateways may have a hold period on funds to help ensure that the payment is not fraudulent, which can affect the time it takes to receive the payment. It’s always a good idea to check with the specific payment gateway you use for their payout schedule and any holds that may apply.

4) Why is my Shopify Payments account on hold?

There can be several reasons why your Shopify Payments account may be on hold. Some common reasons include:

• Verification issues: Shopify may need additional information from you to verify your identity or business information.
• Fraud or high-risk transactions: Shopify may place your account on hold if they detect suspicious activity or high-risk transactions.
• Compliance issues: Shopify may hold your account if they find that you are not following their terms of service or other legal requirements.
• Chargebacks: A high number of chargebacks can cause your Shopify Payments account to be placed on hold.

If your Shopify Payments account is on hold, you can contact Shopify Support for more information and to resolve the issue. It’s important to address the issue as soon as possible to prevent further delays in receiving your payments.

5) What happens when a Shopify Payments refund is made?

When a refund is made through Shopify Payments, the original payment made by the customer is reversed, and the customer’s payment card or account is credited for the refund amount. The refunded amount will then be deducted from your Shopify Payments account balance, and if your account balance does not have enough funds to cover the refund, the remaining amount will be taken from your next payout.

It’s important to note that refund Shopify payments can take several days to process, and the time it takes to receive the refund may vary depending on the payment gateway used by the customer. Additionally, some payment gateways may charge a fee for processing refunds. Thus, it’s important to review the terms and conditions of your payment gateway to understand any fees that may apply.

6) Can I change rounding conversion rates?

Yes, you can change rounding conversion rates in your Shopify store. Shopify provides an option to round the conversion rate of your prices to the nearest integer. You can choose to enable or disable this feature in your store settings.

To change the rounding conversion rate in Shopify:

1. Go to the Shopify Admin Panel.
2. Click on the “Settings” tab and then select “Checkout.”
3. Scroll down to the “Currency Conversion” section.
4. Change the setting for “Round prices to the nearest:” to the desired number of decimal places.

By changing the rounding conversion rate, you can control the precision of your prices in different currencies. However, it’s important to note that rounding can also affect the total price of an order. Hence, so you should evaluate and test the impact of rounding on your prices before making changes.