Shopify Payments Review
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- Date Established
- 2006
- Location
- Canada
Pros
- Predictable flat-rate pricing
- No early termination fee
- All-in-one payments
- Good for eCommerce
- Multicurrency acceptance
Cons
- Sudden account terminations possible
- Funding holds are common
Overview
The Shopify platform as a whole is one of our highest-rated shopping cart solutions, primarily because it provides an all-inclusive solution to a wide range of merchants. One relatively low monthly rate gives you access to Shopify’s hosting, security, administrative abilities, customer service features, inventory management features, social selling and shipping features, web design tools, and more.
With the addition of Shopify Payments, an integrated payment processor, you’ll take advantage of Shopify’s built-in payment processing features almost immediately, with no long application process required. And because of that, you won’t have to worry about integrating an outside provider, and Shopify waives its shopping cart transaction fees.
However, despite its convenience, Shopify Payments is not perfect. We’ll explore the risks and some of the more common complaints with Shopify Payments in this post.
In this article, we’ll be discussing payment service providers (PSPs). If you’re new to the world of payment processing, we’d love to help get you oriented. Download our free ebook, The Beginner’s Guide to Payment Processing, to get started.
Table of Contents
Products & Services
Merchants who sign up for Shopify for their online selling can also elect to use Shopify’s in-house credit card processor, Shopify Payments. Shopify Payments is made possible through a partnership with Stripe, and it is now available in addition to around 100 alternative third-party gateways (such as PayPal).
One of the benefits to Shopify Payments is that it takes just a few minutes to sign up and start taking payments. There is no need to integrate a third-party processor or coordinate payments with a separate company. It’s easy to get started, too. All you have to do is select Shopify Payments in your admin and add your banking information, Employer Identification Number (EIN), and the average price and shipping time for your orders. All of your transactions and payouts that come through your store via Shopify Payments are easily viewed and managed from within your main Shopify dashboard.
Shopify Payments is undoubtedly a convenient solution for Shopify merchants; however, there are a few drawbacks to the platform. The biggest shortcoming is the inherent account instability that comes with a payment service provider (PSP), such as PayPal, Square, Shopify Payments, and Stripe (which is the back-end processor for Shopify Payments). Payment service providers (also called third-party processors or sometimes aggregators) frequently accept merchants before officially reviewing them to ensure they are eligible. Then, when these PSPs do review merchants — and find them ineligible for service — they place holds on funds and even terminate non-compliant accounts without warning. The best way to avoid this risk is to read up on a PSP’s terms of service and acceptable use policy before signing up.
Despite the potential instability with third-party processors, the truth is that many businesses would not be able to start taking payments without them because their volume is too low or they don’t have an established business. Third-party processors make it more accessible to sign up, but keep in mind that you’ll need to follow the guidelines and be honest about your business model. Keeping your chargebacks to a minimum also helps prevent funding holds or an automatic reserve. Check out our Friendly Fraud Survival Guide: How Small Businesses Can Reduce Their Chargebacks & Save Money.
The last potential drawback probably won’t affect most of our readers — Shopify Payment’s limited availability. Shopify Payments is only available to Shopify users based in select countries, including the US, the UK, Canada, Australia, and more (see the full list of eligible countries on Shopify’s website). Furthermore, Shopify Payments is not a good option for high-risk merchants.
That said, Shopify Payments works great for most merchants. We think that Shopify Payments is best for Shopify merchants who want a convenient, omnichannel platform with room to grow — including accepting international currencies with automatic currency conversion.
What products and services can you expect from Shopify Payments? Let’s take a look at its core product offerings below:
- Omnichannel Platform: Over the years, Shopify has evolved from an online-only service to a full omnichannel package. You can use Shopify’s multiple products and services to set up a site and sell online and in-person. You don’t even need to set up a full online shop to sell on Facebook and Instagram with Shopify Lite.
- Shopify POS: Shopify’s point of sale system allows you to process in-person transactions on a mobile device or a tablet, and it syncs inventory information between your online and brick-and-mortar stores.
- Shopify Card Readers: You can purchase one of Shopify’s proprietary chip readers, including the following: Tap & Chip Reader ($49) with an optional dock ($39) or case ($19) and the Chip & Swipe Reader ($29).
- Hardware & Accessories: Shopify offers countertop solutions, including a Retail Kit, which includes the Retail Stand, Tap and Chip Card Reader, and accessories. These can also be purchased separately. Additional hardware accessories include compatible barcode scanners, printers, cash drawers, and more.
- Hardware Rentals: Shopify has partnered with Fello to offer hardware rentals. Available hardware includes tablets, tablet stands, card readers, barcode scanners, cash drawers, and receipt printers. These rental options are an excellent solution for seasonal sellers or for merchants who need to be able to process payments during short-term events or conferences. You can choose a rental period (starting at just one day!) and get a quote online. Although we are often wary of long-term hardware leases because of their predatory agreements and excessive rates, these short-term rentals are reasonably priced and flexible. What’s more, Fello has a good track record for providing rentals. I have not seen any complaints online regarding hardware rentals from Shopify.
- Shopify Pay: Shopify Pay is an accelerated eCommerce checkout solution that you can easily enable when you use Shopify Payments. Shopify Pay allows customers to save their payment information for future purchases securely. Then, when customers return to purchase at any Shopify store (including yours), the checkout process goes by much faster, resulting in fewer abandoned carts for you. Read our full article on Shopify Pay to learn more.
- Developer Tools: Shopify Payments provides API documentation and step-by-step guides.
- Security Features & PCI Compliance: Shopify Payments is PCI compliant, and there are no additional fees related to compliance. Also, users of Shopify Payments get access to 3D Secure Checkout, which reduces fraudulent purchases by requiring customers to verify their identity.
- Chargeback Management: When you are issued a chargeback, Shopify will compile evidence and send it to the bank on your behalf. Shopify’s fraud analysis features should also hopefully reduce the number of chargebacks that you have to contest.
- Shopify Shipping: This is a built-in shipping suite that provides tools to calculate real-time shipping rates, buy and print shipping labels, and track your shipments. Shopify Shipping is a somewhat new feature, and it’s free for all accounts, but it is only available for orders shipped from the US and Canada.
- Checkout Options: Because of social distancing and other constraints in a COVID world, Shopify updated the checkout flow experience so that you can offer what you need to stay safe and still sell to your customers. While this feature is technically separate from the payment screen and Shopify Payments specifically, it will be incredibly helpful to utilize these updates in the Shopify platform, so we wanted to include these updated features for you to take full advantage:
- Local & Curbside Pickup: Merchants can now allow options in the checkout for picking up orders in-store, curbside, or from any other location. Additionally, notifications on the updated Shopify POS app lets your store see when a buyer has arrived for curbside pickup.
- Local Delivery: In all countries, merchants will soon be able to define their local delivery area by zip code and postal code or by radius. This update also lets you add local delivery fees and minimum order amounts for delivery.
These products and services are a great asset for many sellers, especially those who use Shopify to sell across multiple channels. Because it is truly a feature-rich solution, Shopify earns an excellent rating in the Products & Services category.
Fees & Rates
There are two main financial advantages to using Shopify Payments in conjunction with Shopify:
- No Shopify Transaction Fee: Shopify will waive the 0.5%-2.0% commission it would otherwise charge on each of your sales. Plus, if you do use Shopify Payments, you can also use PayPal Express without incurring Shopify’s transaction fees. You’ll just pay the Shopify Payments or PayPal transaction fees, depending on which option your customer uses to check out.
- Discounted Payment Processing: Most flat-rate credit card processors charge 2.9% + $0.30 per eCommerce sale. Shopify Payments charges this standard processing rate for users on the Lite and Basic subscriptions, but this processing rate decreases for users on the Shopify ($79/month) and Shopify Advanced ($299/month) plans.
For your reference, here’s a breakdown of the five Shopify plans rates and fees:
Shopify Lite Plan (No Online Store Included): $9/Month
- Shopify Payments Rates:
- 2.9% + $0.30 online
- 2.7% + $0.00 in-person
- Additional Shopify Transaction Fee (Without Shopify Payments): 2.0%
Basic Shopify Plan: $29/Month
- Shopify Payments Rates:
- 2.9% + $0.30 online
- 2.7% + $0.00 in-person
- Additional Shopify Transaction Fee (Without Shopify Payments): 2.0%
Shopify Plan: $79/Month
- Shopify Payments Rates:
- 2.6% + $0.30 online
- 2.5% + $0.00 in-person
- Additional Shopify Transaction Fee (Without Shopify Payments): 1.0%
Advanced Shopify Plan: $299/Month
- Shopify Payments Rates:
- 2.4% + $0.30 online
- 2.4% + $0.00 in-person
- Additional Shopify Transaction Fee (Without Shopify Payments): 0.5%
Shopify Plus (Enterprise)
If you bring in over a million eCommerce dollars per year, you’ll need to contact Shopify for special pricing. Check out our full review of Shopify Plus.
Additional Fees
Like all payment processors, Shopify Payments charges a flat-rate fee for each chargeback that customers issue. The amount of this fee varies by country. In the US, it’s $15, which is the industry average (see the full list of chargeback fees by country on the Shopify website). Shopify states that if the chargeback resolves in your favor, you get this chargeback fee refunded to you.
Except for the chargeback fee, Shopify does not charge any additional monthly fees, payment security fees, hidden fees, or setup fees on its payments service. We think Shopify offers excellent value and a pricing structure that provides flexibility and growth, which earns it an excellent rating in this category.
Sales & Advertising Transparency
Shopify Payments does a great job in terms of sales and advertising transparency. You’ll find all pricing information for rates and fees clearly on the website, and I haven’t seen any reports of bait-and-switch tactics or shady sales gimmicks listed online, and that’s excellent!
Contract Length & Early Termination Fee
Shopify Payments does not require users to sign any long-term contracts. You pay per transaction, and you can cancel the service at any time. Since there is no contract, there is no early termination fee.
Shopify Payments, like other merchant account providers, maintains the right to terminate your account at any time if you are not meeting its Terms of Service. However, if it does terminate your Shopify Payments account, that does not necessarily mean it will terminate your online store account. Here’s what Shopify says in its Terms of Service (for US merchants): “Termination of this Agreement will not necessarily terminate your Shopify Merchant Agreement unless Shopify informs you otherwise.” If your Shopify Payments account is terminated, but not your Shopify store, you will have to resume paying the 0.5%-2.0% transaction fee when you get yourself another processor.
Because Shopify has no binding contract or early termination fee, we have no problem giving it an excellent rating in this category. We do strongly suggest, however, that every merchant read and understand the Shopify contract so that you can be aware of all of your risks associated with funding holds or other circumstances that may cause your account to be terminated. Shopify’s terms and agreements are standard in the processing industry and will work just fine for the majority of merchants, but that doesn’t mean you shouldn’t be cautious and prepared.
Customer Service & Technical Support
Shopify keeps all of its customer service and technical support in-house. This includes the support it offers for Shopify Payments. You can reach a dedicated support team 24/7 via phone, live chat, or email. When I called in with a question, I reached a knowledgable representative within three minutes.
When you call or live chat Shopify with questions specific to Shopify Payments, you will first reach a representative who has a general knowledge of the platform. If your question surpasses their abilities, the representative will create a support ticket and forward it to the department in charge of Shopify Payments’ support (called Shopify Billing). The Shopify Billing department will then address your issue via email.
Here’s a quick breakdown of Shopify Payments’ support options:
- Phone Support & Live Chat: Shopify offers both live chat and phone support, which will help you contact a Shopify representative with general knowledge. They may escalate your issue to the Shopify Billing department, who will respond via email.
- Online Knowledgebase: Shopify has dedicated a full section of its knowledgebase to payments-specific information. You can find answers to many of your questions within these resources. I used this database to search for a question I had, and up popped several posts with suggested topics. I was able to find the answer to my question in only a few seconds.
- Email Support: Reach Shopify gurus or the Shopify Billing department via email.
- User Forum: Shopify has an active user forum. Use this forum to ask questions to fellow merchants. Occasionally, Shopify representatives also respond to questions on the forum.
I have seen mixed reviews on the quality of Shopify’s customer service. Some users have excellent experiences, while others do not. That said, we have found Shopify representatives to be informed and prompt in their responses and the knowledgebase robust. Additionally, we don’t see a pattern of customer service issues in user reviews and are fully confident with giving Shopify a good rating in the customer service and technical support category.
User Reviews
Here at Merchant Maverick, when we look into a payment service provider, we do our best to read as many user reviews as possible. The challenge with Shopify Payments is that while reviews of Shopify are plentiful, reviews of Shopify Payments in specific are much rarer. For this reason, and because you’ll be using Shopify Payments with Shopify, we’re providing reviews for the Shopify platform as a whole. Here are what some of the major consumer review sites have to say:
- G2 Consumer Reviews: 4.3/5 stars with 3,631 reviewers
- Better Business Bureau: A+ rating from the BBB with 1/5-star rating by those who visited (Keep in mind that users of the BBB are typically coming with complaints in mind!)
- Apple Store: 4.6/5 stars with 3,846 reviews
- Capterra: 4.5/5 stars with 3,300 reviews
Negative Reviews & Complaints
Here are some of the issues we spotted among negative reviews:
- Ineligibility: Some merchants complain that they are not eligible for Shopify Payments. For some, this is because Shopify Payments is not available in their country. In other cases, Shopify has revoked payment services because, for one reason or another, the business was deemed “high-risk.” Shopify’s Terms of Service (for merchants in the US) states: “We may terminate this Agreement and close your Service Account at any time for any reason effective upon providing you notice in accordance with Section A16 above.” Shopify does not need to provide any advanced notice of your account’s termination. It just has to send you an email.
- Shopify Holds Funds: Merchants frequently complain about their funds being withheld in a reserve, but this is standard practice if an account has elevated chargeback risk. Here’s what Shopify Payments’ Terms of Service says: “Stripe, on behalf of Shopify and/or Wells Fargo, reserves the right to change the Payout Schedule or suspend payouts to your Bank Account should we determine it is necessary due to pending disputes, excessive or anticipated excessive Chargebacks or refunds, or other suspicious activity associated with your use of the Service or if required by law or court order.” Funding holds are common with Stripe and other third-party processors, but they do happen with traditional merchant accounts, too. We recommend checking out our guide to avoiding holds and freezes.
Make sure you read the Terms of Service for every solution you sign up with, including Shopify and Shopify Payments. It could save you a world of pain.
Positive Reviews & Testimonials
Customers choose Shopify Payments for many reasons, and among the major review sites, the positive reviews are the majority. Praise for Shopify includes:
- No Shopify Transaction Fees: While there will always be processing fees when you use Shopify Payments, you no longer have to pay the extra 0.5%-2.0% Shopify transaction fee associated with your Shopify plan.
- Potentially Lower Processing Fees: As I’ve said before, higher-level Shopify merchants benefit from lower rates. You may find that Shopify’s rates are competitive with those of other major processors.
- Ease Of Use: Customers like how easy it is to take payments. No technical skills (e.g., coding) are needed to get an eCommerce site up and start selling. You won’t need any developers to connect with Shopify Payments, and payment management seamlessly integrates into your admin panel.
Shopify Payments is a great solution if you meet the requirements and are looking for a processor that’s easy to integrate. Because most users are happy with Shopify and offer consistent praise, we’re giving Shopify a good rating in the user review category.
Final Verdict
After sorting through each category and understanding more about what to expect, you might still be wondering if you should use Shopify Payments to process payments. And my answer is, it depends.
While it doesn’t happen to the majority of accounts, we’ve seen enough negative reports about Shopify Payments to advise merchants to do their research before signing up. As you make your decision, read every word of Shopify Payments’ Terms of Service to ensure your business qualifies. If you have even the tiniest inkling of doubt as to whether your business qualifies for Shopify Payments, I’d recommend speaking with the risk department directly before signing up. It’s better to be explicit about your business details from the get-go than to assume, guess, or hope it will all work out. Keep in mind that Shopify Payments is not unlike any other third-party processor when it comes to risk — and traditional merchant accounts certainly have their fair share of issues as well. The vast majority of users do business with no funding issues.
There are some great benefits to integrated payments, and if your store follows all the rules, Shopify Payments could be the best choice for your store. If not, check out our Top 8 Shopify Alternatives & Competitors post for more options! For most merchants, Shopify offers incredible value. The platform allows for a lot of flexibility and provides even more flexibility and cost-efficiency when it is time to scale upwards. Over the past year, Shopify has added even more value with its new shipping features and the addition of the curbside and delivery options in the checkout flow to support social distancing measures. You’ll have all the tools you need to start selling on your site or social media channels, with integrations to expand on Amazon, eBay, and more.
Do you have questions about Shopify? Want to share your experience with our readers? Leave us a comment below; we’d love to hear from you!
Liz Hull
Liz Hull is a writer for Merchant Maverick. In her three years with Merchant Maverick, she has tested and reviewed over 40 eCommerce platforms and published two ebooks on the topic of online selling. Liz has also been published in Startup Nation and Home Business Magazine Online. Liz has a BA in English and Spanish from George Fox University.
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We've done in-depth research on each and confidently recommend them.
We've done in-depth research on each and confidently recommend them.
Sources
- Shopify (Accessed 08/07/2020)
- G2 - Shopify (Accessed 08/07/2020)
- Better Business Bureau - Shopify (Accessed 08/07/2020)
- Apple Store - Shopify (Accessed 08/07/2020)
- Capterra - Shopify (Accessed 08/07/2020)
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Organization Name: MoWEAVE
We use the Shopify gateway and its AWFUL! They have stolen all of our initial cc transactions and held them for over 90 days. We switched immediately.