Shopify Payments Review: Benefits and Connection Methods

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Even such a popular and modern sphere as e-commerce periodically encounters difficulties that need to be dealt with in order to move forward. Now it is becoming increasingly difficult to use international payment services, as many of them no longer provide their services to users from Russia and other CIS countries – however, there are options.
In this article, we wanted to make a comprehensive review of the Shopify Payments payment system so that you could understand whether this system is right for your business. We will examine in detail all the advantages and disadvantages, terms of use, nuances and problems that may arise, as well as how to connect it.

What is Shopify Payments?​

As the name suggests, Shopify Payments is a payment system that comes with the Shopify online store builder. The Shopify platform is truly the leading eCommerce solution these days, thanks to its ease of use, flexibility, and customer support.
One of the most important steps to start selling on Shopify is setting up a payment method. Among the many payment options that can be connected to the platform, Shopify Payments is still considered one of the most popular systems.
Shopify Payments is Shopify’s in-house payment provider. It’s an integrated payment gateway that comes installed by default with your Shopify store. From the moment your customers enter their credit card details, it’s responsible for managing all the steps of accepting a payment until the money is deposited into your bank account. Some of the benefits of Shopify Payments include:

• Shopify Payments allows you to accept payments from bank cards.
• It is possible to transfer payments to your bank account.
• You have access to all payouts through your Shopify store dashboard.
• PCI compliant – banking information is safe.

Shopify Payments is powered by Stripe, so they are essentially the same payment processor. However, Payments is much more convenient for merchants, at least because it is fully integrated into your store’s dashboard. That’s why Shopify Payments is only available to businesses using the Shopify platform. With a simple setup process and competitive pricing, it’s the perfect payment solution for Shopify users.

Shopify Payments Fees​

Shopify uses a tiered methodology to calculate fees for each transaction across all plans. Processing fees decrease as you move up in price. To help prevent fraud, each plan includes regular fraud analysis as an added service.
It also helps the retailer avoid a form of bank fraud by unscrupulous customers when they issue a chargeback based on a false claim.
Let's now look at the differences between each tariff plan.

Shopify Lite plan

• Price - $9 per month;
• Shopify Payments fees are 2.9% + 30¢ per transaction when selling online and 2.7% per transaction when selling in-person.

Shopify Basic plan

• Price - $29 per month;
• Shopify Payments fees are 2.9% + 30¢ per online sale.

Shopify Tariff

• Price – $79 per month;
• Shopify Payments fees are 2.6% +30¢ per online sale.

Shopify Advanced plan

• Price – $299 per month;
• Shopify Payments fees are 2.4% + 30¢ per online transaction and 2.4% per in-person transaction.

Shopify Plus plan

• Price – from $2000 per month;
• Shopify Payments fees are calculated on an individual basis and you will need to contact our support team to get the calculation.

What are the benefits of Shopify Payments?​

As we have already said, this system has many advantages:

1. Quick setup​

Unlike many payment methods, Shopify Payments is a simple and easy-to-use solution. You don’t have to go through a third-party integration or get approval to open an account before you can start processing payments. The system is already integrated into Shopify, so you can set it up in minutes. Plus, once you’ve set up Shopify Payments for your store, your finances are synced with your sales and inventory.

2. Increasing conversion to payment​

With Shopify Payments, your customers will stay on your site the entire time because the checkout process happens on the store’s website. In comparison, if you choose PayPal or a third-party payment service, in most cases, customers will be redirected to another site to complete their purchase. Unnecessary complexity can frustrate your customers, making them wait for one page after another to load, which significantly reduces conversion rates.

3. Saving on transaction fees​

If you use a third-party payment gateway, you pay a fee for each transaction at the rate of the service you choose (in the case of Stripe, 2.9% + 30 cents). Shopify's fee is added to the payment gateway fee. The rate varies depending on the Shopify plan you choose, but in total, you'll have to deduct an additional 0.5%, 1%, and 2% of your revenue if you use Advanced Shopify, Standard Shopify, and Basic Shopify, respectively.
With Shopify Payments, you'll only pay the payment service's fees, bypassing Shopify's 0.5-2% processing fee for each transaction. This can save you hundreds of dollars per month.

4. Use with other payment methods​

Choosing Shopify Payments doesn’t mean you can’t use other payment services – you have the option to connect multiple payment systems. More payment systems means more payment options for customers. So, using Shopify Payments in conjunction with, for example, Paypal, you can increase conversion to payment by offering customers more options for placing an order.

5. Increased security measures​

Shopify Payments offers features that prevent any possible fraudulent activity from several sides at once. Firstly, there is an effective chargeback process that creates a favorable environment for doing business, allowing claims to be resolved amicably. Shopify is also able to flag high-risk orders. Apps like Fraudblock also help you in keeping your store safe.
To connect an international payment system to your online store, you can contact the specialists at Easy Payments, who help set up worthy analogues of Shopify Payments — Stripe and PayPal.

The main disadvantages of the system​

Along with the advantages, the system has several disadvantages. Whether they are significant or not is up to you to decide:

1. Shopify Payments is not available in certain countries​

While you can open a Shopify store almost anywhere in the world, the number of countries that Shopify Payments supports is still small.
In addition to the UK, US and Canada, Shopify Payments is widely used in the following countries:

• Australia
• Austria
• Belgium
• Denmark
• Germany
• MONTH Hong Kong
• Ireland
• Italy
• Japan
• The Netherlands
• New Zealand
• Singapore
• Spain
• Sweden

As you understand, there are no CIS countries on the list, so it is simply impossible to connect Shopify Payments there on your own. The two remaining options for citizens of Russia, Ukraine, Belarus, Kazakhstan and other countries are: registering an account for a friend or opening a company abroad.

2. Strict terms and conditions for the sale of goods​

You probably already know that Shopify has a list of prohibited products and services, and this list is not short. Similarly, Shopify Payments, like any other payment gateway, has strict rules that every user must follow. Therefore, we recommend that you understand everything that is stated in the terms of use agreement. If you do not comply with these rules, Shopify Payments has the right to terminate your account at any time.
Since Shopify Payments is powered by Stripe, the terms of use are largely the same, so you may want to check out the requirements and list of prohibited niches for using Stripe.

3. Sudden freezing of the account​

If there is a chargeback or suspicious account activity that requires intervention, Shopify Payments will freeze the payment until the issue is resolved. If the final verdict is reached quickly, you will receive your money in your next payment. However, it is highly likely that the case will take longer to resolve, in which case your payment may be frozen for months and your account access restricted.
Access to processing may be frozen immediately after connection if the payment system considers that your business does not meet its requirements. To avoid this, you must carefully study the terms of use of Shopify Payments and correctly fill in the information about your business.

4. High chargeback fees​

In case you forgot, a chargeback is a refund to the payer for an online credit card transaction. When you receive a chargeback, you not only lose the order, but also incur additional costs.
If a customer contacts their bank to dispute a charge on your store, you'll immediately have $15 deducted from the next available payout in your Shopify Payments account (the amount varies by country, but will be around $15). Shopify will refund you the $15 if you win the chargeback, but that's unlikely.

Differences between Shopify Payments and PayPal​

The biggest difference between the two is of course the transaction fees. You'll probably want to choose the one that's cheaper.

If you choose Shopify Payments, you won't have to pay Shopify 0.5% to 2% depending on your plan. You'll only be charged the Shopify Payments fee (2.4% to 2.9% + 30¢ per order).

When using Paypal, you'll pay both Shopify and Paypal fees. The rate also varies by region. For example, if you run your online business in the US, PayPal charges 2.9% for transactions within the US, plus a few cents on top of that (the rate is usually flat at less than 50 cents).
Transactions made outside the US are subject to a 4.4% fee and a flat rate on each sale. If you sell items using another currency, such as pounds sterling, PayPal charges a variable fee ranging from 1.9% + 20p to 3.4% + 20p on each transaction. The fee is based on your monthly sales volume.
It is also known that when opening disputes, Paypal usually sides with buyers rather than sellers.
The biggest advantage over PayPal is that with Shopify Payments, customers always stay on your site. Everything is done on one platform with a few clicks. Unfortunately, this is not the case with PayPal, as it redirects the customer to its own payment page. This slows down the checkout process, which reduces the expected conversion rate.
However, having a PayPal payment option increases customer trust in your business. It is wise to include it as a checkout option in your online store. Note that you can use PayPal as an additional payment gateway if most of your customers still prefer it over Shopify payments. Working with a couple of reliable checkout options is a huge plus and a promising way to increase sales.

Differences between Shopify Payments and Stripe​

According to its policy, Stripe restricts some businesses from processing transactions through its system. This includes dropshipping.
It’s not that Stripe is categorically against this business model, but it does typically take precautions against retailers who take longer than expected to deliver an ordered product. In most cases, Stripe’s system flags such transactions as high-risk transactions. Failure to include a detailed description of the shipping process, say in an FAQ section, can result in numerous chargebacks.
Another factor that influences Stripe's move to distance itself from dropshipping is the retailer's location and the type of products it sells on its online store.
It’s important to note that Shopify Payments and Stripe will record all refunds and chargebacks on your store. Both Shopify Payments and Stripe charge a fee of about $15 per chargeback. If your account has a high chargeback rate, Shopify may close your store entirely.
With Stripe, only your account can be banned, but your Shopify store will remain safe. This means that using Stripe can help protect your Shopify store and save you a lot of trouble. In theory, if you lose your Stripe account, all you need is a new account.

Stripe is available in more countries and accepts more currencies. Also, when using Stripe, you will have slightly more options for setting up fraud protection.

Again, the main difference in using payment processors is that when processing payments through Shopify Payments, you save between 0 and 2 percent on transaction fees.

How to get started with Shopify Payments?​

Before your customers can buy products in your online store using cards, you need to activate the system in the Payment Providers tab in Shopify settings:

• Go to your Shopify dashboard.
• Go to 'Settings' and select 'Payment Providers'.
• If Shopify Payments is not selected by default, select it and go through the setup process.

At this point, you'll need to fill out all the necessary information to set up your Shopify Payments account, including business information, personal information, product information, customer billing statements, and banking information. Be sure to read the Shopify Payments terms and conditions before clicking the "Finish Account Setup" button at the bottom of the page.
Now you need to wait for Shopify to review your application and approve it.

How to connect Shopify Payments from the CIS?​

Since Russia, Ukraine, Belarus, Kazakhstan and other CIS countries are not included in the list of available ones, you need to use workarounds to connect Shopify Payments:

• registering an account for a friend/relative;
• renting an account in a payment system;
• registering a company abroad and creating an account for a legal entity.

The first 2 methods cannot be considered convenient, stable and transparent, as there are high risks of losing money, so we will not dwell on them.
But official registration of activities in such jurisdictions as the UK, USA, Canada, Ireland, Hong Kong and others will help you ensure stable and secure acceptance of payments from your customers from anywhere in the world. In this case, you will be able to use Shopify Payments, Stripe, Paypal accounts registered to a legal entity in a country where the payment systems you need are available.
You can open a legal entity abroad remotely with the help of a registrar company for relatively little money. The company registration period depends on the country and takes on average from 8 to 15 days.
The service of registering a company abroad will also suit you if you, being in the CIS and accepting payments from abroad, are determined to scale the project in the future: increasing turnover, entering new markets, working with foreign counterparties. In order to receive payments stably, you will need a foreign legal entity in any case, so we sincerely recommend this option to you.
As a reliable company that specializes in opening foreign companies and connecting payment services, we can recommend Easy Payments to you. Leave a request on the website, and you will receive a free consultation on the issue of interest to you.

Should you connect Shopify Payments?​

Connecting to a payment gateway can sometimes be one of the most challenging parts of setting up an online store. If you are an online retailer and use Shopify as your primary sales channel, Shopify Payments may be the perfect solution for your daily operations.
As you have already understood, Shopify Payments has its advantages, so we recommend using this payment system. Before connecting, it is important to make sure that your business meets the processing requirements.
Remember that renting and buying a Shopify Payments account is a risky and unstable option that is best avoided. As the most optimal way to connect, we recommend registering a company abroad.