Payment gateways, also known as online payment processors, are integral to every online store. Without them you wouldn't be able to take payment from your customers. Depending where you are in the world there are hundreds to choose from. There is no one perfect solution as there are advantages and disadvantages with each one. I will provide an overview of some of the more popular Shopify payment gateways.
Note this list is limited to Shopify and there may be gateways available to you which do not feature on the list. The first factor you need to take into account when choosing your payment gateway is your location. For a good breakdown of available payment gateways in your region, have a look on Shopify.
Cost is the next biggest factor. This will dictate your profit margins and how you price your products. Don't just look at rates per transaction, also look at monthly payments which some payment processors charge. You will have to work out if a higher transaction rate and no monthly costs works out cheaper or more expensive than a lower rate with a monthly transaction fee.
There is no one size fits all solution, but if you are just starting up I would go for a gateway with no cost and once your orders reach a decent level you could revisit your options to see which is more profitable for you.
Set up time
The time taken to get your payment gateway up and running varies between providers. For example, PayPal can be set up in less than a day, whereas Sage pay can take around 4-5 weeks. Because of this, when setting up your online store, don't leave selecting or setting up your payment gateway for when the site is complete. So what are the options? There are dozens of providers available; in this article we'll take a look at the pros and cons of some of the main players for Shopify merchants of all sizes.
1. Shopify Payments
If you are using Shopify, their own payment platform is definitely worth taking a look at. Shopify already charge a standard 2.2% transaction fee to use the platform, which doesn't apply if you select their gateway, effectively halving your transaction fee cost. The process to set up is quick, as you can get going by just filling out a form. Prices vary depending on which Shopify plan you are on. Payments can take up to 3 business days to reach you. You also get a free Card reader too, enabling you to take physical payments!
As a payment gateway developed by an ecommerce provider it comes with a number of advantages. This includes better integration into your store's backend, and lower transaction rates. Here are some reasons provided by Shopify for using their own payment gateway:
- No more Shopify plan transaction fees
- Lower costs with an online credit card rate of 2.2% + 20p (Basic), 1.9% + 20p (Shopify), or 1.6% + 20p (Advanced Shopify), and no hidden charges or extra fees
- Identify suspicious orders with built-in risk tools unique to Shopify Payments
- Manage orders, payments and payouts directly within Shopify
We can't talk about payment-gateways without talking about the Goliath that is PayPal. So big is this payment gateway that it has outgrown its parent company eBay to become its own entity. PayPal can be set up in less than a day and has options for free and paid merchant accounts. It also has a great support system should you run into any problems.
Paypal has two tiers of charges:
- 1.9% + 20p per transaction (sales volume of up to £55,000 per month) or
- 3.4% of all transactions + 20p (sales volume less than £1,500 per month)
so you will have to factor that in when you are calculating margins.
It also has mobile optimised checkout, accepts international payments and enables customers to pay you directly through their PayPal account.
Set up in 1989, Worldpay is possibly the 2nd biggest payment gateway platform after PayPal. Worldpay is accessible in nearly 120 countries and they have a helpful support and sales team.
Worldpay have three options when it comes to fees:
- Pay as you go: £25 set up fee, 10p per transaction.
- Fixed monthly: from £49.99 including transactions up to a defined threshold.
- Standard: Monthly fee of £19.95, 10p per transaction. Separate debit and credit transaction rates.
Shopify's integration with Stripe allows merchants to easily set up payments for their store. It's a popular solution as it integrates easily, has a clear pricing structure and the ability to set up recurring billing and direct debits.
With no set up or monthly fees, with Stripe you pay by transaction:
- 1.4% + 20p for European cards
- 2.9% + 20p for non-European
- For direct debits in Europe, you pay 1% of the transaction (capped at £5) + 20p.
Klarna has helped thousands of merchants allow their customers to take advantage of a 'buy now pay later' purchase model. But how does it work for merchants?
Offer your customers the ability to split the cost into 3 interest-free instalments
Offer your customers up to 36 months to pay
Offer your customers an extra 30 days to pay
It uses a simple 'per transaction' structure which reduces with increased sales volume.
It helps get your customers through the checkout, giving them flexible payment options, at no risk to the merchant. Even if a customer defaults, the merchant still gets the money - the risk is on Klarna.
The benefit to merchants is that having Klarna as your payment solutions leads to a 44% increase in orders and a 68% increase in order volume.
Another big advantage is that whether or not the customer ends up paying, Klarna already transfers the money to the merchant for the transaction.
6. Amazon Pay
So many people have an Amazon account nowadays, and this option allows customers to pay on your store using their Amazon details, making it quick and easy for them to buy using a name that they already trust.
However, their fees need to be carefully considered as they can hammer low volume merchants, and when your customers buy from you using this gateway, it can take a few days to reach your account.
- 3.4% + 20p if your store is transacting less than £1,500 per month, or
- 1.4% + 20p for higher volume stores selling over £55,000 per month.
7. Sage Pay
Sage Pay is a popular Shopify payment platform here in the UK which also allows your customers to also pay via PayPal if they so wish. Sage pay has a couple of different pricing options:
- The lowest is £19.90 for 350 transactions.
- The next step is £45 for a further 500 transactions.
- A bespoke corporate plan is also available in which the fees are tailored to you. This is required if you have more than 3,000 monthly transactions.
It can take around 4-5 weeks to create a Sagepay account and they will do a variety of checks on your website such as payment logos on your cart page and contact phone details on your website. They may also speak with your developer for payment processing tests. Learn more about Sage Pay.
So as you can see, there are lots of options to weigh up when selecting your chosen Shopify payment gateway, so ensure you do your research and find out the key items below:
- Account set up time
- Transaction fee options and how they affect your profit margins
- Length of time it takes to receive your payments
- Protection against fraudulent payments
- Technical support system.
As ever, if you have any questions, please get in touch. We've built over 500 Shopify sites and can bring yours to life.