Are you looking for a Shopify Payments review that simplifies the ins and outs of this online retail payment platform? We’ve got good news for you!
We’ve got all the details about using Shopify Payments for your store. This comprehensive Shopify Payments review and guide will explain what Shopify Payments is.
We’ll also look at how it works and what you need to get started with Shopify Payments. Our assessment will also highlight the pros and cons of the Shopify Payments platform.
Finally, we’ll do a Shopify Payments comparison review with Stripe to help you decide on the best option for your online business.
What Is Shopify Payments?
For any online business functioning on Shopify, one of the fundamental first steps to take is to figure out how you’re going to manage payments.
How will you receive payments from customers? What methods will you use to collect payment information securely?
These and other payment-related questions should remain top of your mind as a Shopify merchant.
Shopify Payments is a platform made precisely for this task.
It is a payment portal or payment provider created by Shopify for Shopify sales. It is also the default payment option for all Shopify traders, handling all aspects of payment, from customer credit card info to finalizing the transaction.
How Does Shopify Payments Work?
Shopify Payments is a Shopify product. It works seamlessly with the e-commerce giant. You’ll find that it pairs well with both Shopify and Shopify Plus. Shopify Payments automatically gathers payments made by customers and deposits them to the store owners.
So, it plays the role of the middle man, monitoring checkouts, transactions, and other payment aspects. This role includes ensuring the security of transactions to detect fraud or suspicious factors pointing to fake orders, card info, or payments.
The platform transfers the money made from your payment gateway through sales and orders up to two days after the customer pays. This amount can take anywhere from 24 to 72 hours (or more, depending on your location) to reflect in your bank account.
If you’d prefer to receive payouts like these in bulk, you can adjust your settings. You can set your payouts to weekly or monthly transfers.
How To Set Up A Shopify Payments Account
Since the platform is a development of Shopify itself (almost like a Shopify feature, really), it is easy to set up an account.
You have to be a Shopify merchant, of course, and submit a few documents. Overall, the sign-up process won’t take you longer than a few minutes, a far cry from other payment portals.
To set it up:
- Sign in to your Shopify through the backend.
- Find ‘Payment providers’ in your settings and select it.
- Choose ‘Complete your Shopify Payments setup.’
- Insert your info, business and product details, banking information.
That’s all you need to do to set up a Shopify Payments account.
From here, Shopify Payments reviews your submitted documents and information and shares their decision on your approval.
Often, this is a positive approval. However, if you fail to comply with the terms of the service, they may retract their permission and terminate your account.
Shopify Payments Review: The Pros & Cons
Here are the positives and negatives of choosing Shopify Payments as your default payment provider:
The Pros Of Using Shopify Payments
Simple Set Up And Integration
In just four steps, you can begin to use this payment gateway. You don’t even have to go back and forth between sites.
Everything you need is right on your Shopify dashboard. You’re guaranteed a product that integrates and works well since Shopify developed the Shopify Payments platform.
Diverse Payment Capabilities
Shopify Payments allows your customers to pay via their preferred method. This includes credit or debit cards, manual transfers, Paypal, Google Pay, Apple Pay, Shop Pay’s pay later system.
Zero Transaction Fees
Zero transaction fees are a fantastic bonus that Shopify uses to convince merchants to choose their payment gateway.
While other portals charge varying fees for each transaction, Shopify Payments has a zero transaction fee rate no matter the payment method selected by the customer. However, there are still credit card processing fees.
The Cons Of Using Shopify Payments
Although Shopify Payments is a viable and excellent option for online store owners, it also has a couple of significant flaws or drawbacks that you need to consider.
Unfortunately, chargebacks will happen. A customer buys a product, and you ship everything, but they change their mind or say their card was stolen. It’s just a reality of business.
But even more unfortunate is the cost this has on you as the shop owner.
Shopify claims they get billed $15 for every chargeback, and your store has to foot that bill.
This is a hefty cost and a significant downside for the platform. Not only do you have to pay this amount, but Shopify Payments often freezes your funds while they resolve chargeback issues.
Limited Use Countries
Only 17 countries can use Shopify Payments. If you don’t run a store in any of these countries, you don’t even have the option to use Shopify’s payment gateway:
- Hong Kong (city)
- The Netherlands
- New Zealand
- the United Kingdom
- the United States
However, Shopify is constantly expanding this list. Growing this list takes a while, though. Shopify needs to create a version of its services that remains compliant with the specific country’s regulations.
Limited Use Industries
Shopify Payments also abides by some of Stripe’s policies, including limits like no nudity, which may restrict some industries.
Furthermore, there are products and services you cannot sell in some locations, like virtual currency in Australia.
Shopify also has standard products and services that they prohibit, including
- Virtual currency
- Investment and credit services
- Stored value
- Drugs and drug paraphernalia
- Illegal or regulated goods or services
- Adult content, products, or services
Spontaneous Funds Freezing
The platform is also known to freeze the movement of funds into your account.
Generally, this will happen if they investigate suspicious activity or transactions, disputes, or even chargeback mistakes. Unfortunately, this can happen suddenly, putting a hold on your business capabilities.
Terms & Conditions Compliance
As mentioned before, Shopify Payments retains the right to revoke their approval of your account. So, to keep the money flowing (literally), you’ll have to follow their rules.
Shopify Payments Review: Features
The platform’s excellent features are one of the main reasons merchants love Shopify Payments.
The payment gateway offers a wide array of features for a relatively low monthly cost. Here are some notable features we wanted to highlight in this Shopify Payments review:
- Shop Pay: If you understand how to use Google Pay and Apple Pay, you’ll get how Shop Pay works. The feature saves customer payment information securely, making it accessible for future purchases and speeding up the checkout process.
- Chargeback Management: Yes, Shopify Payments’ chargeback system leaves a lot to be desired, but it has one upside. They handle the process for you by putting together the relevant information and dealing with the banks.
- Omnichannel Sales: Shopify Payments works hand-in-hand with Shopify’s omnichannel functionalities. Shopify has numerous products and services that allow merchants to integrate in-person and online sales. You can make sales through social media platforms like Facebook and Instagram. With Shopify’s point of sale (POS) system, you can complete physical payments through mobile devices. The system also syncs your online and physical store inventory.
- Security And PCI Compliance: Shopify and Shopify Payments have comprehensive fraud analysis policies to help stave off suspicious payments and behavior. Users also have access to 3D secure checkouts with decreasing fraudulent cases. Shopify Payments is also PCI compliant.
- Customer Support: This includes user forums where merchants can engage with other users and find user-friendly solutions and tips. Shopify representatives also engage in a discussion where relevant. Additional customer support channels include email, live chat, and phone calls.
- Knowledge Base: Another form of support provided for payment portal users is a knowledge base. This is an online database where you can find frequently asked questions and other information to help you use Payments.
Shopify Fees & Rates
Let’s take a look at the fees inherent in using Shopify. Shopify (not Shopify Payments) has two basic fees involved in receiving payments: processing and transaction fees.
Shopify Processing Fees
The credit card processing fee is the amount your payment provider deducts for completing transactions for your store.
This fee is for the provider’s actions, including transferring information and data from buyers to sellers and banks. This processing fee varies with the chosen provider.
Shopify Transaction Fees
The second fee, the transaction fee, is collected by Shopify from your revenue. This is regardless of the customer’s payment option at checkout (Paypal, credit card, Shop Pay, manual transfer, etc.).
This cost also varies depending on your store’s Shopify plan. You’d have to pay 2%, 1%, and 0.5% of your revenue on Shopify Basic, Standard, and Advanced.
However, if you use Shopify Payments as your payment portal, Shopify removes this fee.
Shopify Payments Review: Shopify Payments vs. Stripe
Shopify Payments may be the default option for merchants to use for their Shopify payments, but it does have competition. Store owners can opt to use third-party payment platforms instead.
There are various choices on the market for online store payments.
Popular amongst these are Stripe and Paypal. Both are viable options and pose serious competition to Shopify Payments. Read our Paypal vs. Shopify Payments review if you want to use Paypal.
Let’s compare Shopify Payments to Stripe and see what the numbers reveal.
Shopify Payments supports 130 currencies. In contrast, Stripe supports 135.
Shopify offers the following payment types:
- Google Pay, Apple Pay, Shop Pay, Paypal for accelerated checkout
- Manual payments (i.e., Bank transfers, COD, or EFT)
- Shop Pay (Buy Now, Pay Later system)
- Standard credit or debit card payments
On the other hand, we find that Stripe offers these payment types:
- Virtual wallets
- Klarna and Afterpay (Buy Now, Pay Later systems)
- ACH wire, credit, and debit payments
- Standard credit and debit card payments.
Stripe works in 37 countries, while Shopify Payments only work in 17 countries.
Stripe Powers Shopify Payments
It almost feels ironic, but Stripe powers Shopify Payments. This means the Shopify portal uses Stripe’s processing technology.
For some, this may depict Shopify as a lower-grade Stripe knockoff, and this isn’t hard to believe, considering some of Stripe’s superior offerings.
Stripe is accessible to more countries and currencies, for example.
However, we feel Shopify can hold its ground in this battle.
Its best characteristic is its ease of use, which makes it attractive to most merchants. It has a simple setup, and it’s made for and by Shopify. What more could you ask for?
Our Final Thoughts
As with most things in life, Shopify Payments has its good and bad qualities.
On the fantastic side, it’s easy to use and integrate with your Shopify store, has a zero transaction fee, and offers diverse payment methods.
Shopify Payments also has exceptional features, giving you the best payment support for Shopify’s range of store features like POS. These are substantial wins for most merchants.
On the other hand, its cons include numerous location and industry restrictions, chargeback complications, and fund freezing. These limit the businesses that can use Payments even if they want to.
Overall, we view Shopify Payments as an excellent option for your online store’s payments. It’s hassle-free, convenient, and great for beginners, too!
And if you need an accounting solution to automatically reconcile your Shopify sales with your accounting solution, like Xero, check out Reconcilely.
Accurate reconciliation is critical if you want to properly manage your online store.
Luckily, there’s an easy solution for automated reconciliation.
All you have to do is integrate a Shopify Payments reconciliation app, and you’re good to go. Reconcilely will track all incoming and outgoing funds and create automated invoices for each one.
That way, you always know what each amount in your accounting book is for. No unnecessary errors and no ‘missing’ amounts!