Ecommerce

How does Shopify pay you? (Shopify payments)

How does Shopify pay you

When we come to online shopping, people prefer to purchase from an e-commerce store that benefits from a safe, easy, and smooth payment process.

As you know, payment gateways (PayPal, Stripe, etc.) are platform-based, and they process credit card payments for e-commerce sites. But the point is, sometimes getting approval is too tricky, and you also have to integrate the gateway with your website, which is sometimes arduous. Here we will introduce a payment system that is free of two mentioned issues, and you can use it very easily; we will talk about the Shopify payment system.

What is precisely the Shopify payment?

Shopify Payments is a payment gateway used to receive and process online payments on Shopify stores. The platform was founded in partnership with Stripe in 2013 and supported many credit cards such as MasterCard, American Express, Visa, and JCB.

Shopify Payments is designed to help small and medium e-commerce store owners who are processing money without any complexity. You don’t need to register for multiple third-party payment solutions or manage multiple dashboards on Shopify payments.

Security & Safety

Shopify Payments is safe for both merchants and buyers. Because it is self-hosted, the support team continuously updates the software to dispel most of the possible hacking penetrations. Furthermore, you are not required to install any open-source plugins on your store that may put it at risk.

The excellent news is Shopify makes sure that all of the stores are compatible with PCI standards, HTTPS protocol, and free SSL encryption, so users’ credit card and ID information are in a safe place. The platform is also equipped with a fraud detection system that flags potential fraudulent transactions.

Advantages and disadvantages of Shopify payment

Any gateway has its profits and, of course, blind spots. So before trying to implement any system on your website, you must review all the possible details about it. Here we have some of them;

Pros

#1 Easy to run and manage

The first thing is: you are not going to wrestle with third-party providers. You have to apply for a merchant account on a third-party provider and go through a full rigorous approval process in traditional payment platforms. When you have done all that, you need to apply to multiple third-party providers before you can offer your customers various payment options. It seems like a disaster. No?

With Shopify Payments, you will shortcut all these processes and manage your orders as quickly as possible.

#2 Discounted card processing fee

Another advantage of Shopify payment is that the processing fee is too low compared to other platforms. Depending on your Shopify plan, your service charge can be around 2.4%-2.9% + 30 cents for every online card payment. This percentage is affordable when you are looking for gateways such as PayPal.

Here, we have listed three different types of Shopify payments accounts and how they work when you choose each of them;

Different types of Shopify payments

Basic Shopify plan

Price: $29 / month

Shopify payments rates: 2.9% + $0.30 (online), 2.7% + $0.00 (in-person)

Shopify plan

Price: $79 / month

Shopify payments rates: 2.6% + $0.30 (online), 2.5% + $0.00 (in-person)

Advanced Shopify plan

Price: $299 / month

Shopify payments rates: 2.4% + $0.30 (online), 2.4% + $0.00 (in-person)

#3 Accelerated checkouts

An interesting study shows that 28% of shoppers abandon their cart during checkout because of its complexity. To overcome this problem, Shopify has made a solution named Shop Pay. Shop Pay is an accelerated checkout system that stores customers’ details while checking out to complete checkout faster the next time.

#4 Multiple currency processing

With Shopify Payments, you will have enough power to trade with international customers and sell your products. This potency is now provided for users because Shopify is supporting more than 130 different currencies. For each country or region you are selling in, you can set the exchange rate manually or against the current market exchange rate.

Cons

#1 Limited availability

Not all users can enjoy Shopify payments from all countries. To be honest, the payment option is only available if your business operates in these 17 countries;

  1. Australia
  2. Austria
  3. Belgium
  4. Canada
  5. Denmark
  6. Germany
  7. Honk Kong
  8. Irland
  9. Italy
  10. Japan
  11. the Netherlands
  12. New Zealand
  13. Singapore
  14. Spain
  15. Sweden
  16. United Kingdom
  17. United States

Furthermore, not all businesses are eligible to use Shopify Payments. You can review the list of abandoned products as you see below;

Adult content and services

Pornography and other obscene materials (including literature, imagery, and other media); sites offering any sexually-related services such as prostitution, escorts, pay-per-view, adult live chat features

Counterfeit or unauthorized goods

Unauthorized sale or resale of a brand name or designer products or services; sale of goods or services that are illegally imported or exported

Gambling

Lotteries; bidding fee auctions; sports forecasting or odds making; fantasy sports leagues with cash prizes; internet gaming; contests; sweepstakes; games of chance

Regulated or illegal products or services

Cannabis dispensaries and related businesses; sale of tobacco, e-cigarettes, and e-liquid; online pharmacies; age-restricted goods or services; weapons and munitions; gunpowder and other explosives; fireworks and related goods; toxic, flammable, and radioactive materials; products and services with varying legal status on a regional basis; goods or services, the sale of which is illegal under applicable law in the jurisdictions to which your business is targeted or directed

Sanctions

Use of the Payments Services or use of Shopify Payments in or for the benefit of a country, organization, entity, or person embargoed or blocked by any government, including any person/entity on government sanctions lists

Get rich quick schemes

Investment opportunities or other services that promise high rewards

Mug shot publication or pay-to-remove sites

Platforms that facilitate the publication and removal of content (such as mug shots), where the primary purpose of posting such content is to cause or raise concerns of reputational harm

Aggregation

Engaging in any form of licensed or unlicensed aggregation of funds owed to third parties, factoring, or other activities intended to obfuscate the origin of funds; payment facilitation

Drug paraphernalia

Any equipment designed for making or using drugs, such as bongs, vaporizers, and hookahs

Multi-level marketing

Pyramid schemes network marketing and referral marketing programs

Pseudo pharmaceuticals

Nutraceuticals, pseudo-pharmaceuticals and other products that make health claims that have not been approved or verified by the applicable local and national regulatory body

Social media activity

Sale of Twitter followers, Facebook likes, YouTube views, Instagram followers, and other forms of social media activity

Substances designed to mimic illegal drugs

Sale of a legal substance that provides the same effect as an illegal drug (e.g., salvia, kratom)

Failure to comply with Shopify’s terms and conditions may lead to the termination of your account without prior notice.

#2 Chargeback fees

By definition, a chargeback is the forced reversal of funds initiated by a cardholder’s bank or issuer. If a chargeback is in favor of the buyer, you will not only be making refunds, but you also will be charged the processing fee for the chargeback investigation. If you are a US resident, Shopify will charge you $15 as the processing fee. If you are not, it can be vary based on your country.

How to build a Shopify payment gateway on our website

Finally, we are here to learn how to set up a beautiful Shopify payment gateway on our website. To do this task, you can follow these steps;

Make sure your bank account is compatible with Shopify’s requirements

Before beginning our course, make sure your bank account meets Shopify’s requirements. Furthermore, You should remember that Shopify Payments does not accept saving accounts, virtual accounts, and flex-currency accounts. Also, checking accounts that can only accept wire transfers is not supported.

Choose your currency

After the bank account confirmation process, you have to choose a specific currency for your business. This choice is the currency on which your products’ price will be displayed based on it.

Activate Shopify payments

Now, we are going to activate Shopify payments on our dashboard in the following steps;

Number one: Go to your Shopify admin dashboard

Number two: Click on “Settings,” and then click the “Payments” icon

Number three: Now, select “Activate Shopify Payments”

If you are setting up a credit card payment provider on your account for the first time, you’ll see the “Complete account setup” option and proceed from there.

Fill in your business and personal details

After activating your Shopify payments, you will fill in your business details in the “Business details” section. If your business is registered, you will need to provide your business number, business address, and Employer Identification Number (EIN) or Tax Identification Number (TIN). On the other hand, you need to provide your name and date of birth if you are set up as an LLC.

You also have to complete your information request page because this is a regulatory process required by companies that process payments to identify their users and prevent money laundering.

Make a test transaction

Finally, make a test transaction to see how customers will process orders. To do this, you should turn on the test mode;

Number one: Go to your Shopify admin dashboard

Number two: After that, go to “Settings Payments”

Number three: Next, go to the “Shopify Payments” section and click on “Manage”

Number four: Go to the “Test mode” section at the bottom of the page and select Enable test mode. Click “Save”

After testing, you can disable the test mode and use the real version.

Conclusion

I hope you enjoy the article and it helps you make better decisions. Although Shopify payments are not the best payment system for medium and professional businesses, it is optimal for those merchants who are at the beginning of their journey and want to improve themselves step by step.

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