What Is Shopify Payments?
Shopify Payments was first launched on 12th August, 2013 and is Shopify’s own full stack payments solution that helps merchants of all sizes and complexities connect, convert and retain customers with seamless checkout experience, omnichannel capabilities and tools to build for scale. It is the default payment gateway for your Shopify store and allows merchants to accept payments online and in-person through multiple payment methods, including credit cards, debit cards, Apple Pay, Amazon Pay, gift cards and more. Eliminating the need for merchants to use a third-party payment gateway.
To summarise, the Shopify Payments stack is a group of technologies that work together to maximise revenue and growth through improved checkout conversion, and customer LTV.
But it’s not just a payment gateway in the traditional sense like providers such as Worldpay. So what can you do with it?
Why use Shopify Payments?
A. Sell anywhere: It is a unified payment solution. If a brand is on Shopify they can process payments on retail POS (point of sale), social and the Shop channel.
B. Convert buyers faster: Shopify checkout converts 15% better on average than other solutions. It also gives access to 27 million shoppers in EMEA with the Shop Pay digital wallet.
C. Integrate seamlessly: run your entire business including payments, orders, fraud and inventory. It also gives access to tools to help grow your business which we will cover later.
Examples of Shopify Payments Transaction Fees
Shopify Payments charges a percentage-based transaction fee which varies depending on your Shopify pricing plan and the nature of the transaction.
Online Credit Card Rates:
Basic Shopify Plan: 2.9% + 30¢ per transaction. Shopify Plan: 2.6% + 30¢ per transaction. Advanced Shopify Plan: 2.4% + 30¢ per transaction.
For in-person transactions using Shopify POS, the rates are slightly lower:
Basic Shopify Plan: 2.7% per transaction. Shopify Plan: 2.5% per transaction. Advanced Shopify Plan: 2.4% per transaction.
If you use a third-party payment gateway instead, Shopify adds additional transaction fees (e.g., 2.0% on Basic Shopify).
Shopify Payments Requirements
To utilise Shopify Payments gateway, you will need to check if your country is supported by Shopify Payments. It is currently available in 23 countries, here is the full list.
There are also other specific requirements for using Shopify Payments in the United Kingdom that you must meet to ensure compliance and seamless payment processing. This includes the following:
Prohibited businesses: Certain business types are not permitted to use Shopify Payments. It's essential to review the list of prohibited business categories specific to the UK to ensure your business qualifies.
Bank Account Type: You need a full current account with a bank in the United Kingdom
Currency: The account must operate in GBP (£).
Transfer Compatibility:Ensure your account is eligible for Faster Payments Service (FPS) transfers.
Identity Verification: Due to regulatory requirements aimed at preventing financial crimes, you're required to provide documentation to verify the identities of individuals associated with the business - Passport, driver's license, residence permit, citizen card or electoral ID, Validate UK.
Adherence: Ensure that your business operations comply with Shopify Payments' Terms of Service and Acceptable Use Policy.
How Does Shopify Payments Work?
When a customer makes a purchase, Shopify Payments processes the transaction securely. It supports major credit and debit cards (Visa, Mastercard, American Express) and alternative payment methods (Apple Pay, Google Pay, Shop Pay, etc.). Payments are automatically deposited into your business bank account.
By using Shopify Payments, merchants avoid extra transaction fees from external gateways, benefit from faster payouts, and access an integrated payment processing system directly within Shopify.
Benefits Of Using Shopify Payments For Merchants
1. Simple and Integrated
Shopify Payments is the fastest and easiest way to accept payment on Shopify, and can be enabled in one click from the admin panel. All major payment cards, Shop Pay and digital wallets are accessible in one click.
There’s no contract - it can be switched on and off as needed by the merchant.
It has a blended rate for payments: there are no hidden charges or scheme fees etc. This means you never have to worry about multiple charge types like:
- transaction charges
- premium charges - for intra-regional sales, for example
- other miscellaneous charges for things like admin fees, PCI compliance fees
Sometimes other providers can be misleading and will give a rate of, say, 0.4%, but when looked into thoroughly, it becomes apparent that there are additional charges that cumulatively make it much higher than 0.4%.
Shopify Payments allows businesses to expand their payment offering with over 1,000 integrated payment methods meaning it’s possible to mix and match to create the perfect offering based on that business’ needs. For example:
- choose a main payment gateway for credit cards and digital wallets
- add instalment and financing payment methods via a third party payment gateway
- enable additional local payment methods via a third payment gateway
The system allows for simplified reconciliation - this minimises the need to switch between systems, reducing manual errors and saving time.
It also streamlines processes with seamless integration between order management and payment processing, plus everything is automated to save time.
Finally, Shopify Payments includes realtime reporting - any refunds are processed and are instantly visible, for example.
2. Built to Convert
Shopify Payments offers tools that give access to a network of over 25 million known buyers who are ready to buy.
Shopify believes that guest checkouts are dying, with ‘identity-driven experiences’ on the rise. Last year, Shop Pay had 50% year on year growth.
Shopify Payments vs Shop Pay
Shopify Payments is not the same product as Shop Pay.
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Shopify Payments is an integrated payment processing service that lets businesses accept credit cards and other methods of payments after setting up a Shopify account and activating the feature.
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Shop Pay relies on Shopify Payments or third-party providers to process transactions.
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Shopify Payments is a payment processor
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Shop Pay is a digital wallet and accelerated checkout
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Shopify Payments - the customer enters their contact, shipping and billing info at the checkout. They do not know who is the processing payment
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Shop Pay - automatically remembers and applies the customer payment information
Shop Pay has one-tap checkout - this is a great conversion tool. Offering an accelerated payment method like Shop Pay increases conversion.
Studies have shown that even when not used, the mere presence of Shop Pay gives 5% higher conversion, with a 50% conversion lift when Shop Pay is used.
So…What is ‘Shop’?
Not to confuse things, but as well as Shopify Payments and Shop Pay, there is also Shop.
Shop is a shopping destination and delivery tracking app that's available to customers on iOS and Android. Customers can use the Shop app to track packages, discover new stores and products, make purchases using Shop Pay, and engage with your brand.
It could be best summarised as an integrated shopping experience designed to reach and retain more mobile customers.
It has more than 147,000 active shops in the UK, with 2 million monthly active users. For brands with a lot of mobile traffic, this is a free and easy way to capture that more effectively. Shopify Payments brands can use this too.
When users create an account in Shop, their details are saved and the information can then be used in the main online store.
3. Flexibility and Control
What extra features do you get with Shopify Payments?
Shopify Payments is more than just a gateway - it has tools to help to generate more demand, scale online businesses and protect your money. Some of its features include:
- Extended fraud control
- Vaulted cards for pre-orders, subscriptions and B2B
- Integrated POS (point of sale) payments
- Shop Pay, Google Pay and Shop
- Shopify Capital (in the UK) - founder-friendly capital - 100% online with minimal paperwork and no personal credit checks
- Multicurrency price lists for B2B and D2C
Fraud protection is included free for all merchants but those with Shopify Payments have enhanced features as listed here:
Fraud Features: Free to All Merchants
- Algorithm has been trained to detect fraud with over 10B transactions
- Fraud analysis with a score
- 3D secure - avid fraudulent chargebacks
- Fraud insights
- Flexible rules
- Allow and block lists
Fraud Features: Shopify Payments Exclusive
- In-checkout rules - filter and block fraudulent checkouts based on rules you define
- Card testing protection
- Advanced fraud insights
4. Go International
Shopify uses Markets which enables businesses to go international from a single Shopify store. Some features are available to all merchants, while some are only for those with Shopify Payments.
It’s the preferred payments solution for over 100,000 merchants in EMEA, and it enables businesses to sell and process payments in over 135 local currencies.
Combining Markets with Shopify Payments means additional benefits:
- domain redirection
- multi currency from single store
- included local payment methods such as Klarna and Bancontact
- dynamic tax-inclusive pricing
- automatic/manual conversion, rounding and price breakdown
It’s easy to build a flexible international payments strategy using Shopify’s payments ecosystem. It’s possible to choose from hundreds of integrated payment providers like Stripe, Braintree, sagePay, eWAY, Worldpay, PayU and many others.
5. Credible and Reliable
The platform is secure and compliant for peace of mind, and covers all 6 PCI standard categories. Support for 3DS 1.0 and 2.0 is included for free. It’s worth bearing in mind, when adding 3DS via third party providers, this can cost additional money per transaction.
- The platform has a fast and reliable infrastructure with 99.99% platform uptime
- Up to 4% higher rate of card authorisation success rate
- 87% transaction success rate
- 99.7% acceptance rate on orders
- 0.1 to 0.4% chargeback rate
6. Streamlined Checkout
Shopify enhances the checkout experience for your customers by making the process faster and more streamlined which can boost conversion rates. The solution has built-in fraud analysis to detect suspicious transactions and is fully integrated within Shopify, ensuring a smooth checkout. Shopify Payments also supports multiple payment methods, including the Shop Pay option that allows customers to make secure, one-tap purchases by auto-filling saved payment and shipping details. It's designed to simplify the checkout process for online shoppers and reduce cart abandonment.
7. Easy To Setup And Manage
Shopify Payments is fully integrated within Shopify’s dashboard, making setup and management simple. There is no need for third-party accounts or separate logins to track payments and funds are deposited directly into your bank account within 2–5 business days (varies by country). You don’t need to worry about transferring funds manually from an external payment processor.
8. Security and Protection
Shopify Payments is secure because Shopify is certified Level 1 PCI DSS compliant and all Shopify stores are automatically PCI compliant. PCI DSS stands for Payment Card Industry Data Security Standard. This means that Shopify uses the strictest standards to protect businesses that use its platform. The standard was created to reduce fraud by increasing controls around payment data.
How To Set Up Shopify Payments Gateway
- Log into to your Shopify admin
- Go to Settings > Payments
- Under Shopify Payments, click Activate Shopify Payments
- Enter your business details
- Provide a GBP bank account relevant currency for your country
- Verify your identity
- Configure your payment methods
- Set up your payout schedule
- Click save and you’re all set!
Shopify Payments Conclusion
You should now be in a position to understand what Shopify Payments is and how it works. One final note, when it comes to commercials: if your business makes over £6m in annual revenue, it’s probably a better financial decision for you to have your store on Shopify Plus with Shopify Payments. If you’re unsure, get in touch with us and we can advise on the plan and set up that makes most financial sense for you.
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