Shopify Payments – No More Fumbling with Payment Gateways

Last updated on February 17, 2017
shopify payments

See Shopify Payments
Shopify announced that they are launching “Shopify Payments” for U.S and Canadian based users (see the announcement here).

[UPDATE: Shopify Payments is now available to UK & Australian based merchants as well]

What does this mean to you?

Simplistically, Shopify Payments allow you to manage your payment gateway directly in Shopify’s user dashboard.  This makes life easier for you for you in a few different ways (more on that below).  A payment gateway is basically the institution that actually holds the money you receive when you make sales.

For example, these include PayPal, Stripe, Authorize.net, etc.  You can see a full list of payment gateways that work with Shopify here.

Let’s move on to how this can benefit you and your business.

1) You Can Track Your Money in Real-Time

Sure, you can also track your sales dollars when you log into PayPal (for example, or whichever payment gateway you’re using).  But then you will have to load up their website, sign in, click around to get to the right screens to get the right information.  We do this all the time ourselves, so we know it takes time.

With Shopify Payments, all the money-related information you want is displayed directly in Shopify’s dashboard.  This is very convenient especially when you manage your store on a daily basis, it’s nice to be able to see where your money is at in real-time with just a click.

Shopify Payments - Dashboard

You can see your payout schedule right away so you know when the money will be transferred into your bank.  Just note when the money from your  customers goes into Shopify Payments after you made a sale, it will be 3 days before the money is automatically transferred into your bank account (7 days for Canadian merchants).  The short delay is there mainly to ensure that there are sufficient funds to cover any refunds or chargebacks (more on chargebacks below).

Shopify Payments - Schedule

2) Shopify Transaction Fees Waived

So there might be some confusion here so I’ll clarify a few things for you.

If you are using the “Basic Shopify“, “Shopify” or “Advanced Shopify” plans, there are small transaction fees ranging from 0.5% to 2% per sale (more on this in our full Shopify review here).

If you decide to use Shopify Payments, these transaction fees will be completely waived, boosting your profit margins (more money in your pocket).

I think the reason for this is that Shopify is now earning payment gateway fees, instead of transaction fees.  Payment gateway fees are fees that you have to pay anyway for payment processors to help you collect money from your sales – there isn’t a way around this as a merchant.

For instance, if you are using PayPal, they charge you anywhere from 1.9% to 2.9% plus $0.30 per transaction, depending on how much sales you make per month.  Further, PayPal tends to have some hidden charges if you are transacting with a foreign country, so that adds up too if you sell internationally.

With Shopify Payments, the per payment gateway fee is very competitive across all payment gateways:

Shopify Payments - Payment Plans

There are no other hidden charges (a lot of other payment gateways carry hidden charges), so Shopify is pretty transparent on this.

So broadly speaking, at the end of the day, there isn’t a significant difference between using Shopify Payments or other payment gateways.  But the non-monetary benefit of using Shopify Payments is seamless integration (mentioned above), higher savings (waived transaction fees) and chargeback recovery (see below).

Shopify Pricing Review – see a much more in-depth discussion on Shopify’s pricing plans, including how they compares to PayPal.

3) Streamlined Chargeback Recovery Process

Chargebacks happen – they suck, we understand it as we’ve had those before too in our other businesses.

If you don’t know what a chargeback is, it’s when someone purchases a product from you, then files a complaint with their credit card company suggesting that they didn’t receive the product, never authorized the purchase, they got scammed, or whatever excuse they can come up with to cancel their transaction with you.

Like it or not, it’s just part of business.  Like it or not, you’ll have to deal with it.

We use PayPal in another business and what we have to do is log into PayPal, click on the dispute resolution dashboard, then go through the process of providing additional proof relevant to the transaction.  It’s definitely a time-suck when we’d rather be doing other things.

Shopify Payments - Chargeback recovery

What Shopify Payments allow you to do, is deal with all this hassle directly in Shopify’s dashboard.   Shopify will automatically provide responses that are custom generated from the order, shipping and customer details that you collected from the transaction.  This will save you a lot of time, seriously.

Shopify Payments – Other Details

Here are a few things to note:

  • If you use Shopify Payments as your primary payment gateway, you can still use PayPal as a backup just in case your customers prefer using PayPal.  Giving your customers more payment options  have proven to increase sales.
  • Shopify Payments is currently only available to US, Canadian, UK and Australian Shopify users / merchants.  Hopefully, the rest of the world soon after.
  • Applying for other payment gateways can be a hassle.  Not only do you have to provide a lot of information to them, sometimes it takes a long time (weeks) for them to approve.  With Shopify Payments, you are instantly approved – so you can start selling right away.

Shopify Payments – Conclusion

Shopify Payments is the first of its kind amongst e-commerce builders, so they are really taking the lead in providing more useful features to users such as yourself.

The feature is pretty awesome.  We are e-commerce owners ourselves, so the idea of integrating a payment gateway into a centralized dashboard will save a lot of our time.  Instead of spending a few minutes here and there dealing with administrative things, we can focus on other aspects of our business, without breaking any concentration.

Not only do you get real-time knowledge of where your money is at, when payments are, you also save money from having your Shopify transaction fees waived.  Sure, Shopify Payments do charge a payment gateway fee, but you have to pay this regardless of which payment gateway you use anyway.

This is a very thoughtful feature from Shopify.  As mentioned in our full Shopify Review (click here), we feel that Shopify is really good at helping you leverage off their technology, so you can focus on other important aspects of your business.

With Shopify Payments, this is completely aligned with that goal.

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Jeremy Wong

About Jeremy Wong

Maybe just like you, at first we didn't have a darn clue about how to build a website, nevermind write half a line of code if our life depended on it! We wanted to build a website to start a side business, and felt overwhelmed, confused & scared about how to actually do it, which builder to use, and making wrong decisions. After years of trials & errors using different website builders, we're here to share our experiences with you.

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Jeremy Wong

About Jeremy Wong

Maybe just like you, at first we didn't have a darn clue about how to build a website, nevermind write half a line of code if our life depended on it! We wanted to build a website to start a side business, and felt overwhelmed, confused & scared about how to actually do it, which builder to use, and making wrong decisions. After years of trials & errors using different website builders, we're here to share our experiences with you.

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38 Responses to Shopify Payments – No More Fumbling with Payment Gateways

  1. #

    A great help with useful videos, thanks alot

  2. #

    Hi! Do you know if Shopify Payments is available in Singapore?

    • Jeremy Wong
      #

      Hi Mel,

      I’m not entirely sure. Shopify Payments is powered by Stripe and Stripe is available in for Singaporean based merchants. You can see where Stripe is available here.

      However, based on Shopify’s latest support document, Shopify Payments is not yet available in Singapore. Perhaps you can try reaching out to Shopify’s support team to verify this?

      Let me know what you find out.

      Jeremy

  3. #

    SHOPIFY ABRUPT GATEWAY SHUTDOWN

    April 2017. I’ve have had a Shopify e commerce business for 2 years, spent at least $3,000 in customizations for my website and received my “pink slip” email this week from Shopify’s Olivia (Risk Analyst) as follows:

    “Olivia from the Business Operations Team,
    We value your business at Shopify but it looks like you are selling a product we can’t support on the Shopify Payments Gateway as it violates the Shopify Payments Terms of Service. We are unable to accept payments for pseudo pharmaceuticals (meaning any product that makes a health claim including things like supplements, vitamins, teeth whitening products, and many skin care products including skin brighteners, whiteners, lightening products, peels and products that contain hyaluronic acid, retinol, glycolic acid, kojic acid, vitamin C serums and hydroxy acids), as outlined here here
    We apologize for any inconvenience this may cause. We will pay out any current balance to your bank account and you can continue to use Shopify to power your business, but you will need to change to a different payment gateway in order to process payments for the products/services you currently offer”.

    AND…. I responded, telling her that this was bad business and extremely unprofessional on Shopify’s part to give no advance notice. I asked Olivia if, since we are now FORCED to not use Shopify Stripe payment gateway (0% transaction fee), will the Shopify 2% fee be waived on top of the new payment gateway fee? Her response as follows: (Sounds like a lawyer written form letter)

    “I’m sorry to hear that you are unhappy with the way things have been dealt with.
    Please know that we are very aware you have been working with us for some time, it is just as frustrating for us to have to turn away businesses like yours.
    Accounts come up for review at various processing stages for various reasons which is why we did not remove Shopify Payments as an available gateway sooner.
    Regrettably, Shopify Payments isn’t a feature of our plans; the terms of service for Shopify and Shopify Payments are different. Shopify Payments is available to use as a payment gateway for eligible stores in certain regions, but it is not guaranteed that you will have access to this with any of the Shopify plans. Currently, we are only able to waive transaction fees when Shopify Payments is activated and we don’t have any discounts to offer when a store has been deemed ineligible for the gateway by our banking partners.
    I am very sorry about this inconvenience but please know that this is not something we are going to be able to reverse unfortunately”.

    If you look at the Shopify prohibited products page. It displays this:

    Pseudo pharmaceuticals Pharmaceuticals and other products that make health claims.

    Health claims could include baby diaper rash creams, dry skin creams, acne creams, dandruff shampoos, conditioners to repair damaged hair, sunburn relief, sunscreens…the list is endless.

    Another payment gateway, 2checkout.com prohibited products page displays this:

    Pseudo-pharmaceuticals (anti-aging pills, sex nutrients, etc.)

    As for Shopify. I’m out of here (the sooner, the better) and I won’t recommend them to anyone. I’m seeing merchants citing major (250%+) fee hikes on BigCommerce also. I’m checking out other Payment Gateways, other e-commerce platforms and other options.

    It’s possible that Trust Commerce, NETbilling GGe4, Skip Jack, Sage Pay, EasyPayDirect and USA pay might be usable Gateways.

    I’m also searching for an attorney and possibly a class-action lawsuit.

    At this point, it appears that the vague and ambiguous Pseudo-pharmaceutical definition is left up to the discretion of whomever wants to use the term.

    • Jeremy Wong
      #

      Hey Terrea,

      Sorry to hear about this this happening to stores selling pseudo pharmaceutical products.

      I’ve laid out my thoughts in a comment dated March 27 2017 (just a few comments below).

      I suspect government agencies are cracking down on some merchants making unsubstantiated claims about their products, just like how the FTC (Federal Trade Commissions) was shutting down fake news websites a few years ago and imposing heavy penaltie. Some overly aggressive merchants were selling supplements and stating that some famous individuals who have persuasive powers (such as Oprah or Dr. Oz) endorsed such products when in fact they didn’t.

      I’m not saying that’s what you are doing, but I think in a lot of other cases, some customers made complaints against some ecommerce merchants leading to them being shut down.

      In any case, sorry to hear about your situation.

      Jeremy

  4. #

    If my company is in US, but the bank account is in other country (eg. Lithuania), can I use Shopify Payments?

    • Jeremy Wong
      #

      Hey Albert,

      I’m not entirely sure, actually. My gut feeling is that Shopify Payments (basically Stripe) only works with bank accounts in specific jurisdictions. So it’s not so much where your company is based, but where your bank account is based.

      See this page here.

      But it’s worth asking Shopify’s support team if you haven’t yet.

      Jeremy

  5. #

    Word of caution using Shopify’s payment gateway — THINGS HAVE CHANGED AS OF MARCH 20, 2017. Shopify is banning MANY shops if they are considered pseudo parmaceutical. For my business which is skincare products……..which contain hyaluronic acid, glycolic acid and retinol. I was told that I cannot use their gateway (stripe) because my products are against their TOS. This news came to me on March 20 and I had 48 hours before my customers could no longer purchase with me unless I changed my gateway. Nice notice Shopify. They still charge a 1% fee for not using their gateway…………….make sense to anyone?

    • Jeremy Wong
      #

      Hello Betty,

      Thanks for sharing this with us.

      Sorry to hear that this is happening to shops that are selling pseudo pharmaceutical products. I’m wondering if this is driven by FTC or FDA regulations? Perhaps certain government bodies are applying pressure on online selling platforms to help regulate the industry a bit?

      I can see how some merchants might be selling questionable products, or making questionable claims about their products (not referring to you in anyway, but just commerce in general!)

      Generally speaking, I’m pretty confident Shopify will have very good, legitimate reasons for their actions. Their action actually results in lost revenues for them, too!

      (Update: I just found this discussion thread here that discusses pseudo pharmaceutical products and payment processors. Apparently, other well known payment processors are also prohibiting selling of [certain] supplements)

      This is another good reason to have at least two payment processors handy. So if one goes down (it happens from time to time), you have another way for customers to pay. It’s good business / contingency practice. Plus, offering multiple payment options for customers is never a bad thing.

      Sorry to hear about this again!

      Jeremy

  6. #

    Can you please in detail describe to me how Shopify can down load into quick books? I already use quick books and we down load Volusion into it but we have to use a third party to this.

    • Jeremy Wong
      #

      Hi Sue,

      Shopify does integrate with Quickbooks. If you visit Shopify’s App Store and search for “Quickbooks”, you can then install the app to your Shopify store.

      Hope this helps.

      Jeremy

  7. #

    Thanks so much for your very helpful, thorough reviews Jeremy!!!

    • Jeremy Wong
      #

      You’re very welcome, Rebecca. Glad you find our guides helpful!

      Jeremy

  8. #

    Thank you for this great article with useful and detailed information!. We do payment processing everyday and also it is very important to at least understand how it works. Something that bothers me is just how safe and secure are our individual information when they are submitted to the numerous companies that approve our payment.

    • Jeremy Wong
      #

      Hello Robin,

      If you use a reputable payment processor, such as PayPal, Stripe, Square, etc, your customers’ information will be encrypted and protected. Even you, as the store owner, won’t be able to access these information. Generally speaking, I wouldn’t think of it as anything different than your customers purchasing something in a physical store with their credit cards.

      Jeremy

  9. #

    Hi, I’m trying to determine if Shopify Payments deposit every single transaction into your bank account individually, or if they make one lump dum daily deposit? Can you shed some light on this, please?

    • Jeremy Wong
      #

      Hi Kylie,

      I believe Shopify Payments is powered by Stripe. According to Stripe’s documentation, if you live in the US, the payment schedule is 2-days rolling. So when someone pays you on Day 1, it will be transferred into your bank account by Day 3.

      The number of days vary depending on which country you live in. Here is the documentation from Stripe.

      Jeremy

  10. #

    Being an owner of a similar site, I truly appreciate this information re: shopify payments.

  11. #

    I have read a lot about Shopify and am really impressed of what it can provides. Am wondering if Shopify would be a great choice for me to start up my business in the United Arab Emirates (UAE)
    In addition, can I find payment gateways here in the UAE that are supported by Shopify?

    Appreciate your support

    • Jeremy Wong
      #

      Hello Marwa,

      Shopify does support payment processors that work in the UAE. Take a look at this page here, and click on the link beside “United Arab Emirates”.

      It will show you a list of check out carts you can use.

      Shopify is a global ecommerce builder so it will work for merchants located in UAE, selling products locally and globally.

      Jeremy

  12. #

    Hi Jeremy. I’m a little confused. I’m planning to open an online store with shopify but then i’m wondering if they charge a transaction fee for bank transfer payments?

    When you say shopify payment gateways you mean paypal and etc. so that means they won’t charge a transaction fee if my customers use that? So that also means i don’t have to paypal the 2. Something fee they charge? 🙂

    • Jeremy Wong
      #

      Hi Mar,

      I’ll try to clarify what Shopify Payment is all about and how you can benefit from using it.

      Basically, whenever someone pays you for your product, you need to use a payment processor (such as PayPal) that will collect money from your customer, and deposit into your account. To perform this service, the payment processor will charge you a small % of the total purchasing price.

      In addition to a payment processing fee, a lot of online store builders also charge a transaction fee (also a small % of your overall sale). This fee typically helps support the bandwidth (think of it like electricity) that powers your website.

      So these two fees are different. One is charged by the payment processor (such as PayPal), and the other is charged by the online store builder (such as Shopify).

      So, if you choose to use Shopify Payments as your payment processor, they will waive the transaction fee from all your sales.

      So you will only need to pay a payment processing fee.

      If you decide to use PayPal to manage your payment collections, then Shopify will charge you a transaction fee. The transaction fee decreases as you move up to a higher plan. We’ve gone over this in our main review discussion here.

      But the best deal is still to use Shopify Payments to collect payments for you, and deposit the money into your bank account.

      Hope this clarifies things!

      Jeremy

  13. #

    Hello Friends!
    Good to see the paymnent gateway which is provided by the shopify and allow you to manage your payment gateway directly in the dashboard of shopify. It provides the customers the great options for e-commerce builders.

  14. #

    I am sorry but the delay from a customer making a payment to reaching my bank makes running my business difficult. This delay must be reduced, especially for small companies who rely on sales to buy additional stock.

    The current system truly is a difficult one for my company.

    • Jeremy Wong
      #

      Hi DaveMac,

      I understand your concerns, and it’s always challenging to manage your working capital / cash flow. Unfortunately that is the nature of merchant accounts, and they all take a few days before reaching your bank account. Even if you used PayPal, the transfer process will also take a few days.

      There isn’t a way to work around this (yet), unless you take cash payments or direct wire transfer payments from your customers into your bank account.

      Jeremy

      • #

        I am about to open an online store with Shopify. I like all of the features associated with Shopify payments but for a start-up selling items averaging $10-$15 a unit it seems that Dwolla is more cost-efficient at a flat rate of 25 cents for transactions over $10. Am I missing somethi8ng?

        • Jeremy Wong
          #

          Hello Sara,

          I think Dwolla has no transaction fees at all. Their lowest plan is $25 per month. With Shopify Payment, the payment processing fee is 2.9% + $0.30 for their Basic Plan (2.6% + $0.30 for their Pro plan and 2.4% + $0.30 for their Unlimited plan).

          So if you want to use Dwolla (I haven’t used them myself before so can’t offer more thoughts here), you should have a think about how many products you are going to sell, and project how much it will cost you if you used Shopify Payments to power your shopping cart.

          Basically, you are just projecting your average sales to see if it’s more economical to use Dwolla for it’s fixed $25 per month fee, or use Shopify Payments which charges you a little bit per transaction.

          Hope this helps!

          Jeremy

  15. #

    You can call it whatever you want, but to quote you, “you will just pay anywhere from 2.25% + $0.30 to 2.9% + $0.30 for every single sale you make” – that is a transaction fee.

    Sorry, but I find your ‘explanation’ to be confusing and circular.

    • Jeremy Wong
      #

      Kelly,

      That fee that you referenced (from my comment below) is indeed a transaction fee. But to be more exact, it is a transaction fee charged by payment processors (such as PayPal, Visa, Mastercard). These fees are inevitable if you want to use their services. No such thing as a free lunch, right? (I wish!)

      There is another fee, which is the online store builder “platform” fee, that some other platforms do charge whenever you make a sale. This fee is waived if you use Shopify Payments.

      This is completely separate from payment processor fees.

      Hope this clarifies things a bit more.

      Jeremy

  16. #

    ” Sure, Shopify Payments do charge a payment gateway fee, but you have to pay this regardless of which payment gateway you use anyway.” So if they charge a payment gateway fee, what am I saving again? I looked through your article again and I STILL don’t see the “Gateway fee” that they charge for using Shopify payments and how much it is. This reminds me of a board I was on ON the Shopify site where people were burdened in confusion over shopify’s convoluted fee policy statements and the lack of clarifying responses to their questions BY shopify.

    The impression that I get reading this article, shopify’s statements and the various comments by people using it is that they are NOT upfront about their fee structure before you sign up. that they don’t word things plainly in order to avoid confusion. The More I read about Shopify’s “fees” and “no fees” claim, the more CONFUSED I am.

    • Jeremy & Connie
      #

      Hey there,

      Let’s try to clarify this again and sorry if I wasn’t being clear enough!

      As a merchant, you will have to pay a “money processing” fee regardless of what you use – Shopify Payments, PayPal, Authorize.net, Stripe, etc. It’s a fee that you MUST pay when you process any sort of credit cards. So when you go grocery shopping and use your credit card, the merchant (the grocery store) will get charged a few % of your total bill. Nobody can avoid this as it is just the fee to enable people to use credit cards.

      There is another fee called “transaction” fee, which is 2% of anything you sell if you are on the “Basic” plan, or 1% if you are on the “Professional” plan, and 0% if you are on the “Unlimited” plan.

      I will tie all these together now, so hopefully it will make more sense.

      So how it works with Shopify, is that if you use their Shopify Payments service (instead of say PayPal or Authorize.net), is that they will waive the “transaction” fee (this is different from the “money processing” fee that I referred to above). So you no longer have to pay a 2% charge even if you are using their Basic plan.

      So what you have left, is that you will just pay anywhere from 2.25% + $0.30 to 2.9% + $0.30 for every single sale you make. Remember, this is the credit card processing fee, in which you will have to pay approximately the same amounts no matter which payment processor you use.

      So the incentive, is for users to use the Shopify Payments plan, which in addition to saving money (not having to pay “transaction fees”), all the payment information is build into your Shopify dashboard. So you don’t have to sign up for a 3rd party merchant account, or log in to get details, etc. Everything with Shopify Payments is baked into their central dashboard so makes managing your store much more pleasant. More details of benefits of Shopify Payments are discussed in my article above.

      Hopefully this clarifies things a bit.

      – Jeremy

      • #

        ie. Shopify is trying to monopolize the market by illegally (in Canada anyway) charging 2% – 0.50% (plan dependent) to their consumer (they call “merchants”) for using “external payment gateways”… so a 500k monthly revenue merchant generates 30k in profit for Shopify annually! Keep in mind this free revenue for them is over and above the charges for the actual services they provide. SCAM!

        • Jeremy Wong
          #

          Hi Adam,

          Thanks for your comment, but I’d have to disagree.

          You’re actually in full control of whether you’d like to use Shopify or not, so you don’t have to if you don’t want to pay their transaction fee. You have that choice.

          Further, the transaction fee drops to 0% if you just use their Shopify Payments solution, which is powered by Stripe (a leading payment processor).

          All this information is very transparent on Shopify’s website, so in my own view, it’s definitely not a scam.

          Further, they are a publicly traded company on both the Toronto Stock Exchange and New York Stock Exchange. So Shopify is a reputable company, from that perspective.

          Thanks for offering your view though!

          Jeremy

  17. #

    I recently switched to Shopify Payments. I feel the payment page is confusing to customers because it only shows PayPal and Google. The customer has to fill out information and click continue to get to the credit card page.

    Shopify responded to my email saying it was that way to make it easier for customers. I disagree.

    We have not had a single sale since changing.

    • Jeremy & Connie
      #

      Hi Linda,

      Thanks for sharing your experiences. That’s a great observation and I wonder what is the thinking behind this from Shopify’s perspective. Let’s see if others have any reactions to this, or if someone from Shopify can share some more insights.

      Thanks for adding to this discussion!

      – Jeremy

    • #

      HI Linda,

      We’re in the process of redesigning our checkout UI. I’m confident you’ll be happy with the results when we bring the changes to market in the months ahead. Good luck with your first sale on Shopify Payments!

      • Jeremy & Connie
        #

        Thanks for joining the discussion Louis, and for providing some insights improvements to come!

        We think the recent upgrades are fantastic! Looking forward to more.

        – Jeremy

    • #

      its 2014 and I am wondering if you still use Shopify payments….did they change anything and fix the problem or are you still experiencing the same issues and moved to a different payment service?