Shopify & Ecommerce

Now that you've decided to build your online store with Shopify, you might be wondering about your customers' payment options.

Paypal, Stripe, Google Pay, as well as credit card payment services like American Express and Mastercard are the most popular options for customers transacting online.

However, despite the large number of third-party providers supported by Shopify, there is a much simpler optionβ€”Shopify Payments!

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Shopify Payments is a payment gateway solution that offers consumers and businesses a straightforward method of conducting e-commerce transactions without leaving the Shopify site.

But what exactly does Shopify Payments mean for merchants on this rapidly growing e-commerce platform?

  • What Is Shopify Payments? πŸ™‹
  • How Does Shopify Payments Work? πŸ€”
  • How To Set Up And Activate Shopify Payments πŸ’³
  • Shopify Payments Supported Countries And Regions 🌎
  • Shopify Payments Features πŸ™†
  • Cost of Using Shopify Payments πŸ€‘
  • Shopify Payments Vs. Third-Party Payment Gateways πŸ†š
  • How To Get Paid In Different Currencies With Shopify Payments πŸ’Έ
  • 7 Benefits Of Using Shopify Payments πŸ’β€β™€οΈ
  • Conclusion πŸ‘‰
  • What Is Shopify Payments? πŸ™‹

    Shopify Payments is an in-house payment processor that allows your customers to pay directly from major credit cards (Visa, Mastercard, and American Express) as well as Apple Pay and other approved methods straight to your business's bank account.

    However, Shopify Payments is not only for online purchases. Store owners can also use this integrated transactional system to process in-person payments as well with the Shopify Point of Sale (POS) system.

    Shopify Payments is set as the default payment option for any online store on the eCommerce platform unless the country they are operating from doesn't allow it, in which case Paypal is the secondary default.

    Once your customers have filled in their credit card or other digital payment details, Shopify Payments will manage the entire process to ensure the money arrives in your account within three to five business days.

    As a payment solution, Shopify Payments takes the cake for ease of use, but how exactly does this integrated payment system work?

    How Does Shopify Payments Work? πŸ€”

    Shopify Payments use the same technology as the Stripe payment processor however, Shopify Payments is exclusively for Shopify store owners.

    Stripe provides the back-end processing that powers Shopify Payments and enables the platform to encrypt customers' credit and debit card details as well as send them to the relevant financial institutions for approval of transactions.

    Consumers can also use Stripe as a payment method; however, Shopify Payments is more convenient for businesses than Stripe or other third-party payment providers since it is already integrated into your store's dashboard.

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    Most e-commerce merchants would only choose Stripe over Shopify Payments if Shopify Payments wasn't available to them. 

    Besides ease of use, Shopify Payments also have a lower monthly cost, and most merchants will have their eye on preventing cash flow problems.

    Now that we're clued up on the technical side of things, let's talk about how you can set up Shopify Payments for your store.

    How To Set Up And Activate Shopify Payments πŸ’³

    Setting up and adjusting Shopify Payments to meet your business's needs is fairly simple.

    The first time you set up Shopify Payments, you'll need the following documents on hand:

    • Your banking details - this is for the account you want to receive payments into.
    • Employer Identification Number (EIN) / Federal Tax ID

    Once you have the documents, you can set up Shopify Payments by heading to the settings tab and selecting payments. From there, you choose your Shopify Payments as your desired provider and click activate.

    Shopify Payments Tab

    The following screens will prompt you to enter your banking and business details, after which you'll be set up for receiving funds through Shopify Payments.

    There are no setup fees for Shopify Payments, but you'll need to be on one of Shopify's monthly pricing plans to use it.

    Some countries may require additional documentation to complete this process, and it's also important to note that Shopify Payments is only available in the following regions.

    Shopify Payments Supported Countries And Regions 🌎

    While Shopify Payments has a lot of benefits, it is only available to online shops in certain countries. These include:

    • Australia
    • Austria
    • Belgium
    • Canada
    • Denmark
    • France
    • Germany
    • Hong Kong SAR
    • Ireland
    • Italy
    • Japan
    • Netherlands
    • New Zealand
    • Singapore
    • Spain
    • Sweden
    • United Kingdom
    • United Stated
    • Puerto Rico

    Shopify Payments Features πŸ™†

    Once you set up Shopify Payments, you can adjust the settings to meet your business's and customers' needs. Shopify Payments offer the following functions for personalization and ease of use.

    Fraud Prevention

    With Shopify Payments, you can perform advanced fraud checks to verify the validity of an order. Two main fraud filters are used to prevent suspicious activity; AVS and CVV.

    via Tenor
    • CVV - CVV or Card Verification Value is the three or four-digit number found on the back of a credit or debit card. It ensures the customer has the card in their possession when they're using it to complete a transaction.
    • AVS - AVS or Address Verification System compares the customer's billing address with information on file by their bank. This is a good measure in preventing potential cases of digital fraud.

    Customer Billing Customization

    Shopify payments also allow businesses to change the information customers see on their billing statements.

    Adding personal details such as contact numbers is effective in improving your relationship with customers as they have a direct line to communicate their feelings and queries to you.

    This section can be updated under the Shopify Payments tab by selecting Manage and then Customer Billing Statement.

    Payout Notifications

    There is also an option for receiving notifications every time a payout is made to your account.

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    This is helpful for reviewing each order and can be activated under the Manage section of Shopify Payments by choosing Payout Details >> Payout Schedule >> Enable Notifications.

    Cost of Using Shopify Payments πŸ€‘

    Shopify Payments is not free to use; however, interested business owners and solopreneurs can use the 14-day free trial option to set up and start selling in their store immediately without any payments.

    To use Shopify Payments, you'll need to have one of the following Shopify subscription plans for your online or brick-and-mortar store.

    • Starter – $5/month
    • Basic Shopify – $29/month
    • Shopify – $79/month
    • Advanced Shopify – $299/month
    • Shopify Plus – $2,000+/month

    The prices above are just for using the eCommerce platform. With Shopify Payments' terms of service, there are other processing fees to pay per transaction, but luckily, they are much more cost-effective than third-party payment gates.

    For the Starter Plan, store owners will have to pay a 5% transaction fee (this is charged by Shopify for using the service) as well as an additional 2.9% + 30c credit card rate. At physical stores, the credit card fees are 2.7% and 0c.

    If businesses choose the Basic Plan or higher, transaction fees are waivered as long as Shopify Payments is being used as the payment provider.

    There are credit card fees that apply, but they vary according to your Shopify plan.

    Shopify Price Plans

    In addition to the above costs, Β physical stores can also purchase a POS system as an add-on for $89/month per active store.

    Now that we know how Shopify Payments stack up in terms of cost let's find how that compares to third-party payment provider fees and services.

    Shopify Payments Vs. Third-Party Payment Gateways πŸ†š

    Shopify allows stores to use over 100 third-party payment gateways, some of which include:

    • Amazon Pay
    • Stripe
    • PayPal Express Checkout
    • PayPal Payflow Pro
    • Coinbase Commerce
    • BitPay
    • 2Checkout
    • QuickBooks Payments
    • Sage Payment Solutions
    • Zip
    • Paysafe
    • OpenNode - Bitcoin Payments

    The third-party payment providers vary depending on the country you're from and can not be used together with Shopify Payments (with the exception of PayPal and Amazon Pay).

    Depending on which plan you choose, you'll also have to pay transaction fees:

    • Basic Shopify – 2%
    • Shopify – 1%
    • Advanced Shopify – 0.5%

    The average credit card cost per transaction ranges between 1.3% to 3.5% (+ 10c.)

    Choosing between Shopify Payments and providers like PayPal is a no-brainer when it comes to pricing. Shopify Payments offer a better deal but only if you're on the Basic Plan and higher.

    In terms of consumer preferences, Shopify Payments is also more preferential since customer details can be entered and payments made without leaving the site.

    How To Get Paid In Different Currencies With Shopify Payments πŸ’Έ

    When targeting a global market, you have to factor in the different currencies and even virtual currencies that will come into play during purchases.

    With Shopify Payments, you can get paid in a currency that's not your local currency by changing your Payout Currency under the Payment Providers tab in your store's dashboard.

    You also have the option of modifying the currency of the products on your store's interface if you begin to notice you have more international customers and want to improve their buying journey.

    Unfortunately, this option is not really possible for in-person transactions, but it's highly unlikely that you would need it.

    7 Benefits Of Using Shopify Payments πŸ’β€β™€οΈ

    Shopify Payments is a popular payment method, and not just because it's set as the default for Shopify stores in countries where it's active.

    It offers a host of benefits such as:

    1. No Third-Party Transaction Fees

    Despite Shopify having a range of additional payment methods, using Shopify Payments is still the best option.

    By using Shopify Payments, you pay zero commission fees if you're subscribed to any of the price plans besides the Starter ($9/month).

    Whereas, with third-party payment gateways, there is an additional payment of 0.5 to 2% in commission for all transactions through Shopify.

    It's also beneficial that Shopify Payments use a flat rate for online credit card transactions, with the Advanced Plan offering a reasonable credit card rate of 2.4% + 30 cents per transaction.

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    Having a list of payment gateways on Shopify is nice, but being able to cut costs with Shopify Payments is better.

    2. Smooth Mobile Interface

    Shopify Payments is optimized for mobile devices, which is extremely convenient for consumers who want to make credit card payments or use Google Pay on their smartphones.

    It also accelerates revenue generation for the business since global mobile usage statistics show that the amount of mobile shoppers grows exponentially each financial year.

    via Tenor

    In fact, most consumers wouldn't use stores that aren't properly optimized for mobiles, and as the working class moves into the Gen Z demographic, it's definitely something for all businesses to think about.

    3. Customers Don't Have To Leave The Site

    Since Shopify Payments is an in-house payment provider, customers can complete their transactions on the site instead of leaving to enter their personal details on a secondary payment solution.

    This is helpful for older shoppers who might not always understand how online payments work or even consumers who are using digital payment options for the first time.

    It could also prevent cart abandonment due to the simplicity of the checkout process.

    4. Shoppers Can Pay In Installments

    Shopify introduced Shop Pay Installments to help businesses generate repeat purchases and stay competitive with their prices.

    Shop Pay Installments allows customers to settle their credit in smaller monthly payments by offering a comprehensive and highly intuitive interface that shows them how much they need to pay each month and when those payments would be debited.

    Shop Pay Installments

    At the moment, this 'buy now, pay later' option can increase an average order value by 50%, which is a significant sales boost for merchants.

    At the moment, Shop Pay is only available in the US and requires your store's selling currency needs to be in USD.

    5. Pay And Receive In Multiple Currencies

    Shopify allows businesses to set up multiple currencies on their sites, enabling international customers to see the prices in their local currency.

    This gives e-commerce merchants the advantage of improving shopping experiences for a larger percentage of the global market.

    6. Fraud Analysis

    Shopify Payments have excellent fraud prevention methods and a fraud analysis feature to deal with online credit card transactions.

    It prevents potential chargeback fees by flagging suspicious orders on your dashboard and gives you the option of whether you want to fulfill them or send a refund.

    Shopify has a $15 chargeback fee regardless of the nature of the reversal, so having the fraud analysis feature is a definite nice to have.

    It can also help in rectifying chargeback disputes as the feature automatically flags the level of fraud suspected and provides reasons why.

    7. Offline Sales

    Shopify Payments have an integrated POS system (at an additional cost) that businesses can use for in-person payments.

    With this feature, Shopify Payments card readers can support offline sales giving it a huge advantage over other third-party solutions.

    However, it's important to note that most Shopify stores are digital, so an active internet connection will be required for online payments.

    Conclusion πŸ‘‰

    Shopify Payments is a top integrated payment solution for merchants using Shopify for their online or physical stores.

    Since it is designed exclusively for Shopify customers, it offers a more intuitive interface as well as improved convenience for shoppers.

    Merchants also have lowered transaction rates per purchase when using Shopify Payments over third-party payment gateways.

    Even with a variety of payment methods on Shopify, Shopify Payments will tick all the boxes your store needs for easy customer payments.

    The only negative we can think of is that Shopify Payments is not yet available in certain regions. Hopefully, this will change as more users adopt Shopify for their businesses.

    But if Shopify Payments is an option for you, then it's definitely the best to use on this ecommerce platform.

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