Business

What is Shopify Payment? Guide, Pros & Cons

Panna Kemenes

06.03.23 (updated more than 1 year ago)

Read time 6 minutes

Shopify is an all-in-one ecommerce platform that supports you in every aspect of building your online store. It’s the third-largest online retailer in the US.¹ From 2020 to 2022, Shopify had a Gross Payments Volume (GPV) of $34.2 billion USD.²

But what is Shopify Payments, then?

In this article, we’re breaking down the details, pros and cons of Shopify Payments, to see if it would benefit your business.

At the end, we’ll also suggest a way you can save on currency conversion fees when using Wise Business with Shopify Payments.

Receive Shopify payments with Wise

What is Shopify Payments?

Shopify Payments is a payment service provider that enables you to accept payments almost instantly after having signed up.³ With Shopify Payments, you’ll be able to accept all major payment methods, as well as offer local currencies - an attractive feature to increase customer conversion.⁴

Shopify Payments integrates with your ecommerce Shopify store. This saves you from having to enter third-party payment provider credentials into Shopify.

That said, Shopify Payments is supported only in certain countries, with specific business requirements for each. Additionally, in order to use Shopify Payments, you’ll need to activate two-factor authentication on your Shopify account.⁴

Is Shopify Payment safe?

In short, yes - Shopify Payments is a safe payment service provider.

Shopify is certified at Level 1 PCI DSS (Payment Card Industry Data Security Standard) compliant.⁵ This is the highest PCI level, for merchants processing more than 6 million card transactions annual.⁶ PCI compliance automatically extends to all Shopify stores.

On top of this, Shopify uses enhanced fraud analysis indicators. Specifically, they use two fraud filters: Card Verification Value (CVV) and Address Verification System (AVS).⁷ This helps protect your store from fraudulent payments.

What does Shopify Payments charge?

Here’s a price overview of the different Shopify plans on offer, as well as the transaction fees they charge.

Plan	Cost per month (USD)	Transaction fees
Shopify Starter⁸	$5	5%
Basic Shopify	$24	2%
Shopify	$69	1%
Advanced Shopify	$299	0.5%
Shopify Plus	$2,000 or custom	Custom (quote based)⁹

You can try Shopify free of charge for a 3-day trial. You can also opt for their Starter Plan and pay only $1 USD per month for your first three months, increasing to $5 USD thereafter.⁹

There are also no setup or cancellation fees when using Shopify - only their monthly subscription fee.⁹

Shopify Payments itself is free of charge and comes as an integrated tool with every Shopify subscription plan.

Transaction fees

The transaction fee is what you’ll need to pay to Shopify every time a transaction takes place. ⁹

But the good news is that if you use Shopify Payments as your payment service provider, then you won’t have to pay anything in transaction fees.⁹

Shopify only charges you a transaction fee when you use a third-party payment provider.

That said, this only applies to the Shopify Basic, Shopify and Advanced Shopify plans. For Shopify Starter members, you’ll have to pay the 5% transaction fee regardless of the payment provider you use. ⁸

Processing fees

When using Shopify Payments, you’ll be charged a credit card processing fee per card transaction.

The processing fee covers the risk and handling costs involved in processing the transaction. How much you’ll pay in processing fees depends on the Shopify plan you’re subscribed to, as well as the type of card used and whether it’s an international or domestic card.⁹ ¹⁰

Additional fees

Shopify gives you the ability to sell in your customer’s local currency. When your customer then makes a purchase, you’ll have to pay an additional currency conversion fee.¹⁰

The currency conversion fee is what Shopify charges you when the currency you accept a payment in is different from your payout currency.

If your business is based in the US, you’ll be charged a currency conversion fee of 1.5% on all international transactions. If your business is based outside the US, then you’ll pay 2%.¹⁰

Likewise, if you’re accepting credit card payments, then it’s likely you’ll experience a chargeback at some point.

A chargeback happens when one of your customers disputes one of the charges on their credit card. If their bank decides to make a chargeback, they’ll take the disputed funds from you, as well as charge you a chargeback fee.

The Shopify chargeback fee is $15 USD.¹¹

But, you can make an appeal on a chargeback. And if you’re successful, you’ll be refunded the payment as well as the chargeback fee.¹¹

Additionally, every paid Shopify plan comes with Shopify POS Lite. Shopify POS Lite gives you a mobile POS system, order and product management, and the ability to build customer profiles.⁹

However, if you want to access more advanced POS features, such as inventory management, analytics and scalability, then you can upgrade to Shopify POS Pro. This comes with an extra fee of $89 USD per month per location.⁹

What is the requirement to use Shopify Payments?

To start using Shopify Payments, you’ll first need to check if it’s available in your location and what the regional requirements are.⁴

Luckily for US-based businesses, Shopify Payments is available.⁴

But not all types of US businesses are eligible. On the list of prohibited Shopify business types in the US are:

Financial and professional services - such as investment, credit or legal services
Intellectual Property Infringement, regulated or illegal products and services - such gambling, adult content and services, or cannabis dispensaries
Products or services prohibited by law or by Shopify’s financial partners - such as pseudo pharmaceuticals, aggregation or high risk businesses
Unfair, predatory, or deceptive practices - such as get-rich-quick schemes¹²

Once you’ve confirmed that your business’ type is eligible, you’ll need to check that you have an eligible bank account. An eligible bank account is a US based full checking account with ACH transfer functionality.⁴

After checking your eligibility, you’ll need to set up two-factor authentication in order to use Shopify Payments.⁴

You can then go ahead and activate Shopify Payments. To do this, you’ll need to:

Go to “Settings” from your Shopify Admin
Select “Payments”
If you have a third-party credit card payment provider activated, then select “Activate Shopify Payments” in the Shopify Payments box as well as in the dialog. This will deactivate other credit card payment providers on your account
If you don’t have a third-party credit card payment provider, then go straight to selecting “Complete account setup” in the Shopify Payments section¹³

After doing this, you can enter the required information about your store, as well as your banking and personal information. Shopify’s partners will use this information to verify your personal and business identity.¹³

Pros and cons of Shopify Payments

Now that we’ve discussed all the features, it’s time to do a final pros vs cons comparison of Shopify Payments.

Shopify Payment Pros	Shopify Payment Cons
Fraud protection - the use of CVV and AVS fraud filters protects your store against fraudulent payments PCI-compliant - Shopify Payments is certified at Level 1 PCI DSS, the highest level, making credit card transactions secure. PCI compliance automatically extends to all Shopify stores No transaction fees - when using Shopify Payments as your payment service provider, you won’t have to pay any transaction fees, saving you compared to when using third-party payment providers Easy to integrate - if you already run your online store with Shopify, then using Shopify Payments is easy to integrate into your store and allows you to manage everything from the one place POS system - all Shopify subscription plans come with Shopify POS Lite. This gives you access to basic POS features, such as an in-store mobile POS system, order and product management, and the ability to build customer profiles. You also have the opportunity to upgrade to more advanced POS features for an extra $89 USD per month per location	Monthly fees for more advanced plans - Shopify’s monthly subscription fees increase for Advanced Shopify and Shopify Plus - $299 USD and $2,000 USD, respectively.

Shopify Payment Pros

Shopify Payment Cons

Fraud protection - the use of CVV and AVS fraud filters protects your store against fraudulent payments

PCI-compliant

No transaction fees - when using Shopify Payments as your payment service provider, you won’t have to pay any transaction fees, saving you compared to when using third-party payment providers
Easy to integrate - if you already run your online store with Shopify, then using Shopify Payments is easy to integrate into your store and allows you to manage everything from the one place
POS system - all Shopify subscription plans come with Shopify POS Lite. This gives you access to basic POS features, such as an in-store mobile POS system, order and product management, and the ability to build customer profiles. You also have the opportunity to upgrade to more advanced POS features for an extra $89 USD per month per location

Monthly fees for more advanced plans - Shopify’s monthly subscription fees increase for Advanced Shopify and Shopify Plus - $299 USD and $2,000 USD, respectively.

Why should I use Shopify Payments?

Shopify Payments is an easy payment service provider to integrate into your store. You can accept all major payment methods, while selling in local currencies. On top of this, you can translate your store translated into multiple languages.¹⁴

If you have a Shopify account, using Shopify Payments is a logical way to keep costs down and life easy.

You’ll be exempt from having to pay transaction fees when using Shopify Payments. Likewise, Shopify Payments is free of charge to integrate and use. This could save you a lot compared to having to pay for and integrate a third party payment provider.

Additionally, as it’s integrated into Shopify, you can keep track of everything all from the one place. This simplifies your business operations.

Receive international payments from Shopify with Wise

If you’re regularly receiving payments in foreign currencies, then opening a Wise Business account could save you money. Wise Business is a smart online banking alternative that helps manage your business finances in multiple currencies.

With Wise Business, you can connect your account to Shopify to get paid in a range of currencies.

Get started with Wise Business today

You’ll get access to up to 10 local account details, enabling you to receive like a local, without currency conversion or cross border fees.

You can then spend, send and convert the money in your Wise Business account at the real, mid-market rate, with no hidden fees and high mark-ups.

Sources:

All sources checked March 6, 2023.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.