What is ‘Shopify Payments’?
Shopify Payments is Shopify's very own payment service. Shopify payments allows your business to accept payments online without the need of a third party payment gateway. It is an integrated payment service that comes with your Shopify plan – all you need to do is activate Shopify payments on the payments page in the settings of your Shopify store.
How Shopify simplified the online payment process
The checkout process for businesses is one of the most crucial parts of the shopping experience. The reason for this is simple, it's when and where payments happen. Therefore, your checkout experience needs to be as friendly, seamless and secure as possible.
Before Shopify Payments existed, payment solutions were always third party payment methods that redirected online visitors to a separate payment pages to complete their transaction. Not only was this more time consuming for online buyers but it also cost your business more in transaction fees.
Naturally, Shopify has to charge you a fee for processing your online store payments. They are rendering you an additional service and therefore need to be compensated for it.
Shopify has various pricing plans. They range in price and therefore range in functionality. The standard Shopify payments transaction fees are as follows:
- Shopify Basic costs $29 per month, with 2.9% + 30¢ per online transaction.
- Shopify plan costs $79 per month, with 2.6% + 30¢ per transaction.
- Advanced Shopify costs $299 per month, with 2.4% + 30¢ per transaction.
Now, if you use third party provider, then you will have to add on top of that:
- Basic Shopify – 2.0%
- Shopify – 1.0%
- Advanced Shopify – 0.5%
How Shopify Payments work
Firstly, you are only eligible to use Shopify payments if you have a Shopify store.
A great benefit of Shopify payments is how easy it is to set up.
You simply click on the bottom left corner on 'Settings' of your Shopify Admin. You then choose 'Payments' and that is where you complete the form for 'Shopify payments' and then say 'Complete account setup'.
Can you have Shopify Payments AND other payment gateways?
Yes, if you choose 'Shopify Payments' you can still have other payment methods on there too. The list of payment options or payment methods there are extensive and include:
Examples of payment providers:
Apple Pay, Google pay, Stripe, Amazon pay, Shop Pay, Meta Pay, PayPal etc.
With Shopify you are able to accept payments online that are made with credit cards and debit cards from Visa, MasterCard, AMEX, Cryptocurrency etc.
How does the payout work with Shopify Payments?
Shopify payments simply transfers funds from Shopify payments to the bank account that you have specified on the payment provider page in your Shopify store.
How long does the payout take with Shopify payments?
It depends on the pay period. The length of your pay period depends on the country where your store is based. If you have a Shopify Balance account, then payments can usually be transferred within one working day. The payments take around 24-72 hours to show up in your Bank accounts, after they are sent by the customers. As we said before though, the duration of the pay period varies from country to country.
If you would like to know more about the details of pay periods, how to action refunds, Shop Pay installments then take a look at Shopify's help page here.
Who can benefit from Shopify Payments?
Online store owners who use Shopify as their eCommerce platform can use Shopify payments.
- If you have a Shopify Balance account, or bank account that is a full checking account.
- Your bank account must match with your country or region that you have on your Shopify payout currency choice.
- Your bank account needs to accept electronic monetary transfers.
The one thing that Shopify payments is available to online stores in certain countries.
These countries include:
Pros of Shopify Payments
Simple setup
Shopify payments is already integrated in the Shopify software, so it's an easy setup! Activate your Shopify payments by entering your payment information in a matter of minutes and immediately start accepting payments and skip lengthy third party activation steps.
Shopify Payment comes with your account, so just activate it!
Many Payment methods included
Just because you have Shopify payments, does not mean that you cannot receive money online through other payment methods. Increase your cash flow by having useful payment solutions at your disposal.
With Shopify payments you will still be able to accept payments online as you are used to from credit cards, debit card, voucher payments etc.
Whether customers pay using MasterCard, VISA, AMEX is irrelevant as they are all accepted. Online users can also pay via PayPal, Google Pay, Apple Pay, through their Amazon account etc.
Save on transaction fees
A percent here or there doesn't sound like much, but it does affect your bottom line. With Shopify payments, Shopify charges you less in transaction fees per transaction as you are using their payment providers, as opposed to only having a third party provider. They reward you with this by not charging the additional transaction fee percentage.
Shopify payments works with Shopify POS
Shopify POS is the Point of sale system that allows Shopify merchants to sell offline and accept payments wherever they find themselves. Whether they are selling at their retail store or start selling at a pop-up market, Shopify POS works regardless.
Now to make matters even better, Shopify payments is integrated with Shopify POS. This means that the sales made through your online store and offline payments are merged. Therefore, all of your sales data is unified.
Shopify payments security
Shopify takes their security and the security of their merchant accounts very seriously. Before Shopify accepts payments, they automatically check two things.
- AVS – this is the filter that determines the match or partial match of the consumer's address information.
- CVV – are the three or four numbers at the back of a card.
Cons of Shopify payments
Now, whilst Shopify payments is a great alternative, there are naturally certain drawbacks to anything that is this good.
- Shopify Payments is not available in every country
- Shopify Payments comes with rather strict terms and conditions that exclude certain businesses (e.g. adult products, regulated industries like tobacco, medication, aged restricted products and even more vague descriptions like "high risk businesses'’). They can also change these restricted businesses after registration, so it's possible to be kicked out overnight.
- Funds can be suddenly frozen while they investigate errors or suspicious activity – e.g. in combination with the restrictions. In that case you won't have access to your money.
- Shopify Payments fees can be less competitive when you run a high revenue store (other payment processors will provide better conditions the more revenue you collect through them). When you start selling, this is offset by the fact that Shopify doesn't charge you a commission on your sales but just the Shopify Payments fee, but as you grow, you might hit the point where it makes sense financially to pay the Shopify commission and a third parties payment fees, as it is still cheaper than just the Shopify payments fee
- There is a rather high fee on chargebacks (chargebacks can occur for example, when a customer says their credit card was stolen or they simply changed their mind)
- Shopify payments comes with limited transparency and reporting capabilities
- Other payment providers offer better integrations with accounting & tax software
Some alternatives to Shopify payments
- Stripe (although Shopify Payments is essentially Stripe with a coat of paint on it, as Stripe powers Shopify payments, you can still integrate with Stripe directly)
Concluding thoughts
Shopify payments is some stellar software that has revolutionized the world of online payments and how these are processed. It has truly become one of the major payment methods. Shopify payments can process payments easily and safely.
The only catch is that you need to have a Shopify account. If you do not already have a Shopify account, why not try Shopify! You can try Shopify free of charge – all you need to do is hit 'start free trial' here.
As Shopify Partners, we're avid fans of Shopify payments, as we see the great benefits and savings for businesses. However, we do understand that this payment solution might not be the best fit for you. Which is why the alternatives that we have listed are also great options to look into.
