Shopify Payments Review: Pros, Cons, Alternatives

Shopify Payments is an integrated payment service that allows you to accept payments almost immediately after signing up for a Shopify subscription. Shopify Payments doesn’t require you to create a third party provider to accept online or in-person payments. The service is included in all Shopify subscription plans and there is no monthly fee.

Shopify Payments offers flexible payment methods and competitive processing rates, making it an ideal choice for businesses that are using Shopify for an e-commerce platform or point-of-sale system.

This payment service is not available in all countries, however, and it doesn’t work with businesses in certain high-risk industries. Shopify may place payment holds on funds, which is not unusual among payment service providers.

Nerdy tip: Shopify Payments is available only to Shopify users. You should consider other payment providers if you are looking to use an alternative e-commerce platform. NerdWallet’s guide best credit cards processing companies has more information.

Shopify Ecommerce

Shopify

  • Flat-rate, transparent processing rates.

  • Easy and quick to set up.

  • No setup fees, cancellation fees or additional monthly fees.

  • Automatically integrated with Shopify e-commerce and point-of-sale.

  • Can accept a variety of payment methods and different currencies.

  • Available only in certain countries and regions.

  • Not available to businesses in specific industries, such as cryptocurrency, cannabis and gambling, among others.

  • Shopify can place a hold on your funds at its discretion.

Processing rates

Varies based on the Shopify plan you choose.

Rates start at:

  • 2.9% + 30 cents per transaction for online payments.

  • 2.7% per transaction for in-person payments.

Accepted payment methods

Visa, Mastercard, American Express, JCB, Discover, Elo, Diners Club debit and credit cards, PayPal, Apple Pay, Facebook Pay, Google Pay, and Amazon Pay.

Compatibility

  • Accept payments through Shopify online sales channels, including your online store, Facebook and Instagram.

  • Embed a buy button on your existing website and accept payments using Shopify.

  • Use an iOS or Android smart device paired with a Shopify card reader to accept payments in person.

Contract length

No set contract length. Shopify Payments can be stopped at any time without a cancellation fee.

Payout timing

Funds are sent to your bank account two business days after a customer places an order with your store. It is possible that funds may not appear in your bank account immediately. Banks can take 24 to 72 hours to process deposits.

Shopify also gives you the option to set up payouts on a weekly or monthly schedule.

Customer support

24/7 customer support through email and live chat included with all Shopify plans. With the Basic Shopify plan or higher, you also receive 24/7 phone support.

How to set up Shopify Payments

Once you sign up for a Shopify account, you can automatically accept customer credit cards using Shopify Payments. However, to continue using this payment service provider, you need to complete the setup of your Shopify Payments account within 21 days of making your first sale. If you don’t set up your account within those 21 days, payment will be refunded to your customer.

Before you begin the setup process, Shopify recommends first choosing your store currency. You can change your store currency in the “general” section of the settings menu. This will designate the currency that you’ll use for pricing products and creating reports.

After choosing your currency, you can navigate back to the settings menu and click “payments.” The payments screen will prompt you to complete your setup for Shopify Payments.

To complete your account setup, you’ll need to provide basic information about you and your business, including:

  • Your business type.

  • Your employer identification number or Social Security number (depending on your entity type).

  • Your business address.

  • Your business’s legal name.

  • Your name, job title, date of birth and address.

  • The last four digits of your Social Security number.

  • The name and email address of anyone who owns 25% or more of your business, plus how much they own.

  • Description of your business.

  • How you want your store to appear on customer billing statements.

  • Your bank account information.

Your bank account must be a checking account (savings accounts are not eligible) that can accept electronic transfers and use the payout currency of your region.

Once you’ve submitted this information, you should receive approval almost instantly. Shopify may ask you to provide additional documentation if they have any questions about your account. Once your setup is complete, you can modify your payout notifications, add tax information, and implement fraud prevention checks.

Shopify charges flat-rate payment processing fees that don’t change based on the type of card your customer uses. The rates that you pay will depend on whether you subscribe to Shopify or if your customer pays in person.

The chart below shows the costs of the different Shopify subscription plans and their respective payment processing fees.

Shopify Ecommerce

Shopify

Shopify plan

Monthly cost

Online payments

In-person payments

Shopify Lite

$9.

2.9% + 30 cents per transaction.

2.7% per transaction.

Basic Shopify

$29.

2.9% + 30 cents per transaction.

2.7% per transaction.

Shopify

$79.

2.6% + 30 cents per transaction.

2.5% per transaction.

Advanced Shopify

$299.

2.4% + 30 cents per transaction.

2.4% per transaction.

Shopify Plus

Starting at $2,000 per month or quote-based for businesses with high-volume sales.

Quote-based; varies by location.

Quote-based; varies by location.

Unlike some payment processors, Shopify does not charge any additional monthly fees for use of Shopify Payments. There are also no cancellation or setup fees. If you experience a chargeback, Shopify will charge a $15 fee. Shopify will reimburse the fee if you win the chargeback.

For businesses that use a third-party payment provider instead of Shopify Payments, Shopify will charge a transaction fee above the credit card processing fees you pay to your provider. Shopify Payments users do not have to pay this transaction fee.

Benefits of Shopify Payments

Flexible checkout and payment methods

With Shopify Payments, you can allow customers to use a variety of payment methods, including credit cards, debit cards and even PayPal. Customers don’t have to leave your website to place an order and submit payment — plus, Shopify is Level 1 PCI-compliant and uses 256-bit SSL certificates to keep customer data secure.

Shopify Payments also gives you the ability to customize your checkout page into different languages, sell in multiple currencies and implement accelerated checkout so returning customers can complete their orders more quickly. Shopify also generates a mobile-optimized shopping basket checkout for customers who place orders using their mobile phones.

Seamless integration, easy to set up

Shopify Payments is integrated with all Shopify subscriptions, making it easy for you to start accepting and processing customer payments after launching your store. Shopify Payments requires you to provide some basic information about your business and yourself. However, approval can be granted almost immediately. This is similar to applying for a bank account for a business.

Unlike some payment gateways, you don’t have to apply for a separate merchant account to use Shopify Payments, and you don’t need to verify that your payment provider is compatible with your e-commerce platform or point-of-sale system.

Plus, because Shopify Payments is built into the Shopify platform, you can track both your orders and payments, customize your payout schedule, enable fraud filters, and perform fraud analysis to help you identify suspicious transactions — all within your account.

Transparent, flat-rate fees

The payment processing fees you receive with Shopify Payments are transparent, flat rate and don’t change based on the type of card your customer uses. For American Express credit cards, rates may differ between providers. )

Additionally, Shopify’s rates are competitive in the marketplace for both in-person and online payments, and you can access lower rates by upgrading your subscription. Shopify charges at the online payment rate. This is in contrast to Square, which charges a separate and higher rate for manual keyed-in payments.

Drawbacks of Shopify Payments

Held funds

Shopify can hold the payout of your funds at its discretion, as well as suspend your use of its payment services. These actions may occur when Shopify determines your business is not eligible for Shopify Payments accounts, if you are deemed to be a significant credit or fraud risk, or if Shopify finds that you have violated the Shopify Payments Terms and Conditions.

If a hold is placed on your account, you’ll receive an email with additional information. You can reply directly to the email and contact the Shopify team to resolve the problem. Payment holds are not unusual among payment service providers such as Shopify. However, many Shopify customers and reviewers have shared their payment hold experiences on the Shopify forum and online review websites.

Not available to all businesses

Although Shopify is available to small-business owners all over the world — and currently has merchants in over 100 countries — Shopify Payments is available only in 17 countries and regions. Shopify Payments is currently available in the United States and Puerto Rico. However, it is not available in other U.S. territories or countries in South America.

Additionally, Shopify restricts the use of its payments service based on industry — prohibiting businesses it deems high risk from account approval. Here are just a few of the types of businesses that are ineligible from using Shopify Payments:

  • Real estate opportunities.

  • Crowdfunding.

  • Cryptocurrency.

  • Internet gaming.

  • Cannabis dispensaries and related businesses.

  • Telemedicine and telehealth services.

  • Travel reservation services and clubs.

  • Social media activity, such as the sale of followers.

If your business is ineligible for Shopify Payments for any reason, you can use a third-party provider to accept credit card payments. Shopify will charge an additional transaction fee if your business is not eligible for Shopify Payments.

Alternatives to Shopify Payments

Stripe

Fees:

  • Online card and wallet payments: 2.9% + 30 cents per transaction.

  • In-person card payments: 2.7% + 5 cents per transaction.

Pros:

Stripe is actually the payment processor that powers Shopify Payments. For businesses who want to customize their online payments experience, Stripe is an excellent choice. With Stripe, you have access to a robust developer platform, 24/7 customer support and a variety of payment methods.

For businesses that want a more streamlined checkout option, Stripe offers out-of-the-box integrations with e-commerce platforms, accounting software and more — including Shopify.

Cons:

To make the most of Stripe, you’ll need some developer knowledge or developer assistance. Stripe is a great online payment processor, but businesses who are more focused on in-person sales might find a better provider.

If you decide to use Stripe with Shopify, you’ll have to pay Shopify’s additional transaction fee on top of the fees that Stripe charges — making the standard Stripe fees much less competitive.

Randa Kriss, https://www.nerdwallet.com/article/small-business/shopify-payments-review Read More

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