Shopify Payments – Cutting Out Card Transactions Middlemen

Josep Garcia

By Josep

Shopify Payments Review

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If you were to type “ecommerce” into Google, like I just did, you’d only be a couple of clicks away from a link to Shopify.

It didn’t surprise me. Shopify is truly the leading ecommerce solution these days, and not just thanks to their online marketing techniques. In fact, they regularly top the list of the best ecommerce builders we’ve tested, for their ease of use, flexibility, and customer support, amongst others.

However, one sore point always used to be card payments processing. You needed to use a third-party solution, which was expensive and complicated, as it meant going through another dashboard. Plus, Shopify charged you an extra fee.

Could this all be a thing of the past now that they offer their own payment solution? To find out, I’ve tested Shopify Payments to see if it makes sense for you to use them.

Shopify Payments Overview

Shopify Payments lets Shopify users accept card payments without having to integrate third parties. Fees are: 30¢ for every online card transactions, plus 2.9% to 2.4% depending on your plan. In-person transaction fees are 2.7% to 2.4%.

Shopify is a platform for building and running an online store (and now brick and mortar too). But for payments, historically, you needed to use something called a payment gateway.

What is Shopify Payments?

Put simply, it’s a third-party service that manages all the steps between the time a user types in their card information into your checkout page, up until the money reaches your bank account. It was usually PayPal, Stripe or Square.

shopify payments lp

Now Shopify Payments cuts out the middleman. They decided they could do a better job of it for their users. (Or, to be precise, they partnered with Stripe for that.)

I found out that this was mostly advantageous. But there are still things I believe you should consider before going ahead and selecting their solution.

Pros of Shopify Payments

  • Seamless integration: it all takes place right in your Shopify dashboard. No need to log into another platform to see where your funds are.
  • Removes extra transaction fees: This is Shopify’s sneaky way of making you choose their solution. But it’s a good incentive.
  • Can use other payment providers: using Shopify payments isn’t exclusive, so you can still let users pay through other gateways like PayPal.

Cons of Shopify Payments

Shopify Payments Fees

The first thing to note is that using Shopify Payments removes the commission Shopify usually takes on top of gateway fees. It is 2% (Basic Shopify), 1% (Shopify) and 0,5% (Advanced Shopify).

That is true even if you activate Shopify Payments, and customers end up choosing PayPal at checkout. So a big reason to activate Shopify Payments for free.

But you still have to pay for each transaction! Here’s how it looks, depending on your plan and payment method.

Basic Shopify Shopify Advanced Shopify
Monthly cost $26 $71 $235
Online credit card transaction fees 2.9% + 30¢ 2.6% + 30¢ 2.4% + 30¢
In-person credit card fees 2.7% 2.5% 2.4%

And now that you’ve got all the numbers laid out, let’s talk about what you should consider before using Shopify Payments.

Shopify Payments Vs PayPal

While you can use both Shopify Payments and PayPal, the transaction fees for the latter are somewhat different. In the US, for instance, it’s 2.9% of the US-based transactions, plus a fixed fee (usually under 50¢) depending on the currency. However, accepting payments coming from outside the US is 4.4% plus the small fixed fee(!).

For currencies other than $US (e.g.British Pounds) PayPal charges a variable fee (e.g. 3.4%+20p to 1.9%+20p) depending on your monthly sales volume.

  • Bear in mind that PayPal have fees for converting currencies. If you sell in multiple countries, this could incur significant extra charges.
  • There is a small discount on transactions for non-profit US businesses and NGOs (2.2% plus fixed fee).
  • POS payments aren’t supported with PayPal.
  • Also, the great advantage is that with Shopify Payments customers stay on your website at all times. With PayPal, they are redirected to the platform, which can decrease the conversion rate (even if there is an option to pay without logging in – not everyone sees it).
  • There is also the dreaded Paypal Buyer Protection, which is great if you are on the buyer’s side. If you are a merchant, however, it can lead to numerous claims from customers. Paypal is known to generally side with customers rather than sellers.

shopify payments and paypal

Shall I then enable PayPal then?

I would recommend it. It doesn’t cost extra, and some people really like it. It can increase the trustworthiness of your site and help your conversion rate. Merchants do complain about the big PayPal button at checkout, but that’s a requirement from them, so you’ll have to live with it.

What’s the Deal with Stripe vs Shopify Payments?

Shopify Payments are indeed processed by Stripe. But you can still set up a different Stripe account to take card payments. In either case, it means abiding to Stripe’s terms of service, which includes, amongst others:

About the nudity clause, some users mentioned getting flagged for strange reasons. They suspect websites are scanned by bots, with little human oversight to check if their products are indeed raunchy.

This is where some people say it’s better to consider setting up an independent Stripe account. They claim it’s easier to speak to someone at Stripe than Shopify Payments – which means better customer support in case something goes wrong.

Chargebacks are also another area where users believe Stripe’s system is more merchant-focused. We’ll discuss them in detail below.

Can Everyone Use Shopify Payments?

Not really. As noted in the Cons section, Shopify Payments isn’t available everywhere. However, the list of countries where it is supported seems to increase every year.

But location isn’t the only constraint. Depending on the territory where you operate, there are varying services / products you are not allowed to sell, such as virtual currencies in Australia or Government services in Germany, for instance. IP infringements everywhere are a big no-no. Make sure to check the small print here.

How do I Set it Up?

Nothing could be easier. Provided you’re already a Shopify user, just prepare a few documents like your bank account number. It won’t take more than a few minutes to get started – which is incredibly fast compared with other gateways.

Here an overview of the process:

1- Login into your Shopify backend

2- Under settings select ‘Payment providers’

3- Click under ‘complete your Shopify Payments setup’

4- Fill in your Business details, Personal details, product details and banking information

After you send all this information it will be reviewed and (hopefully) approved so you can start processing payments with Shopify’s gateway.

shopify payments form

One thing to note, however, is that because Shopify is quick to let you use Shopify Payments, they can also terminate it at a moment’s notice (if they find out violate their terms of service).

How does Shopify Payments Process Funds?

This is the coolest part about Shopify Payments. You can track your money in real-time, directly from your Shopify dashboard. So no more need to log into an external platform every time.

Shopify Payments Dashboard

As for timing, funds usually takes 3 business days to reach your bank account (for US users). It can take longer depending on your location (for instance, 7 days for Canadian users).

One negative: Shopify sometimes freezes funds while they resolve disputes, chargebacks or suspicious activity. This can be a bummer, as it lacks transparency and can be really frustrating for legitimate merchants.

Does Shopify Payments Work with Multiple Currencies?

Yes, Shopify Payments comes with support for multiple currencies. Prices are automatically converted based on:

  • Current currency rate
  • Your rounding rule

The first one is pretty straightforward. It’s also worth noting Shopify doesn’t overcharge or uses hidden fees, unlike PayPal.

Shopify Payments Multi-currency Rounding Rules

Rounding rules are a useful tool to make your prices look neat to customers when conversion rates vary a lot. So for instance, you can decide that all prices should end in 0.99 or 0.90, no matter how far the conversion takes it.

What Happens When I Sell in Person?

Shopify Payments is also the ideal gateway when you process cards in person. In fact, if you use Shopify’s recommended card readers, it might be the only option.

shopify pos

Like with enabling multiple currencies, POS (Point of Sale ) payments are only available to users on the Shopify Plan or higher. Sadly, you won’t be able to use Shopify Payments for in-person payments outside the US, Canada, UK and Ireland.

The fees, as stated earlier, are 2.7% (Basic Shopify), 2.5% (Shopify), 2.4% (Advanced Shopify).

What About the Dreaded Chargebacks?

Unfortunately, chargebacks are a pain for any store owner – and particularly ecommerces. In case you need a primer, this is what happens:

  • Someone buys something on your store
  • You ship it
  • They say they card was stolen / changed their mind
  • You lose an item, and the funds are returned

But here’s the kicker:

  • Shopify charges you $15 everytime this happens.
  • Your funds might be frozen if it happens a lot

Chargebacks are the number one complaint from Shopify Payments users. Many believe the fraud prevention system is inadequate, and recommend using PayPal instead for their better technology. However, US-based shop owners using Shopify Payments may be eligible for Shopify’s Fraud Protect service, which offers chargeback protection on some purchases.

Shopify Payments – Final Takeaways

I always think payment gateways are a pain. They are complex and opaque, and you need to research a ton of options to feel like you don’t get screwed over. It takes a lot of the fun away from setting up your first online store.

So in that respect, the biggest advantage of Shopify Payments is the transparency. It’s straightforward, easy to set up, and with clear fees.

The only bad surprise could be with fraud. If you believe your store is high-risk in terms of fraud, then be very careful with the chargeback fees.

Finally, it’s clear Shopify want you to use their payment solution. If you’re already a Shopify user, that’s great. But removing the standard transaction fee makes it look like you’re saving money. In fact, there could be more affordable alternatives, so it’s worth investigating other ecommerce options (if you’re not a Shopify user yet).

> Check out Shopify Payments


Can I use other payment providers?

Yes. It’s possible to set up Shopify Payments, and still let users choose PayPal at checkout, for instance.

Shopify Payments Setup

Will I be double-billed for using two providers?

No, you are only charged based on the gateway your customer chooses at checkout.

What other gateways are there?

Most famous ones include, Stripe and PayPal. But there is a ton more to choose from, depending on your country.

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Josep Garcia

Content Manager

Hi there, I am Josep Garcia. Since 2014 I've been testing and writing about website builders and hosting services, and I share all my learnings at Today I am not an active staff member anymore, but I do hope you enjoyed this article. And if you have any questions, please leave me a comment below.

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