Setting up a Shopify store is a breeze, but choosing a best payment provider for Shopify can feel overwhelming. Transaction fees, international reach, security concerns – it’s all enough to make your head spin!
This guide will cut through the confusion and help you find the perfect payment solution for your Shopify store. We’ll explore the top options, considering factors like fees, features, ease of use, and also risk. No more lost sales due to checkout friction – let’s get your customers paying happily!
Boost Conversion Rates With BOGO+ Free Gift And Upsell
How Shopify Payment Providers Work?
This is Online Payment Processing Flow
1. The Payment Gateway: A Secure Bridge
Imagine the payment gateway as a secure bridge. When customers enter their payment details on your store, this bridge ensures their information is encrypted and safely crosses over to the payment processor.
2. The Payment Processor: Verifying Customer Solvency
The payment processor acts like a detective. It takes encrypted data and checks in with the customer’s bank to ensure everything is in order—there are enough funds, a valid account, etc. If all checks out, it gives a green light.
3. The Issuing and Acquiring Banks: Completing the Transaction
When these three elements sync up perfectly, you have a seamless payment experience that keeps your customers satisfied and your business thriving. It’s the kind of harmony that makes everyone involved tap their feet to the rhythm of a successful sale.
Don't Lose Sales at Checkout: How Payment Providers Boost Conversion Rates
Now, why should an online shop have different ways to pay? It’s like having different flavours of ice cream – everyone has their favourite. Some people like to spend time with their credit cards, while others might want to use PayPal, Apple Pay, or even cryptocurrencies.
When a store offers these options, it’s like saying, “Hey, we’ve got your favourite flavour! More options mean more happy 😄 (and paying) customers!
The right payment provider does more than handle transactions. A clunky checkout process can be a dealbreaker. A Shopify payment provider offers a smooth, streamlined experience. Think about one-click purchases, autofill for saved information, and mobile-friendly interfaces.
These features make it a breeze for customers to pay, reducing the chances of them getting frustrated and abandoning their cart.
Real-World Checkout Success Story
Guess what? Within six months, Groovy Gadgets saw a 20% decrease in abandoned carts! Simply providing more payment flexibility unlocked a smoother checkout experience and happier customers.
Swipe Right (or Left): Choosing the Shopify Best Payment Provider
Balancing Cost & Choice: Transaction Fees vs. Supported Payment Options
Beyond Borders: Payout Speed, Supported Currencies, & Geographic Restrictions
Understanding the Trade-Offs: Advantages & Disadvantages
Who Needs This? Best Suited Businesses for Different Payment Gateways
Potential Risks: Mind the Money Flow
We’ve established that each third-party payment providers offer unique advantages for your Shopify store. But every rose has its thorn, and when it comes to payment processing, there are potential financial risks. Here’s a breakdown of concerns associated with the five popular payment processors we discussed:
Shopify Payments
- Hidden Fees: Opting out of Shopify Payments means additional transaction fees. These range from 0.5% to 2.0% depending on your Shopify plan, on top of charges from external gateways like PayPal.
- Delayed Access to Funds: Shopify can hold payouts for up to 180 business days in extreme cases to prevent fraud. This can be a major cash flow hurdle for small businesses.
- High-Risk Business Shutdown: Shopify Payments may not support high-risk industries like check cashing or gambling. Your store might be approved initially, but risk a sudden shutdown and delayed funds if your business falls into this category.
- Chargeback Challenges: Shopify Payments might not be ideal for businesses facing frequent chargebacks. Consider alternative processors if this applies to your store.
In short, Shopify Payments offers convenience, but hidden fees, delayed payouts, and potential shutdowns for high-risk businesses raise concerns. Explore alternatives if these downsides outweigh the benefits for your store.
Dealing with Shopify’s payment rules can be tricky and costly. Plus, they can shut down your store’s payment system suddenly. This is exactly what happened to some beauty shops, as we see in a case study from Beauty Independent.
Shopify Payments: Not Always Smooth Sailing
While Shopify Payments is convenient, it can be risky for some businesses. Take Bella Vérité, a beauty brand that launched with Shopify, was abruptly cut off from Shopify Payments Gateway just two months after its launch. The brand had to close for over a week, losing thousands of dollars in sales, as they scrambled to find a new payment processing provider.
The issue arose because Shopify and its partners categorized common beauty products as high-risk pseudo pharmaceuticals. This categorization led to Shopify cutting off payment services to beauty retail and brand e-commerce sites carrying such merchandise.
The exact number of affected sites is uncertain, but it’s clear that businesses in the United States, Canada, and Australia, such as Indie Apothecary, Take Care, Apoterra Skincare have been impacted, resulting in substantial financial losses.
This case study highlights the potential risks and challenges associated with using Shopify’s payment processing service, particularly for businesses in the beauty industry. It underscores the importance of understanding the terms of service and being prepared with alternative payment processing options.
Solution: Don’t put all your eggs in one basket! Offer alternative payment options to minimize dependence on a single provider and ensure a more stable flow of incoming funds.
Paypal
Many merchants use personal Paypal account for Dropshipping, and they have encountered many limitations: lower withdrawal and transaction limits, restricted access to certain features like invoicing and payment processing, and potentially higher fees for receiving payments.
PayPal may place a hold on funds from 3 to 5 days, and in some cases, up to 21 days because of security reasons to protect customers from potential fraud by online stores. This can be inconvenient for sellers, affecting your operations.
The hold is lifted once PayPal confirms the legitimacy of the transactions and that the products are shipped to customers. Funds are released when the buyer confirms receipt of the item in the expected condition. You can take steps to speed up this process.
Funds could be on hold for several reasons, including:
- New Sellers: Building buyer-seller trust and a history of successful transactions is essential for new sellers to change their hold status.
- Inactivity: If you haven’t sold anything for a while, you’ll need to re-establish your credibility.
- Refunds/Disputes/Chargebacks: Multiple flags from customers for various issues may lead PayPal to delay releasing your funds.
- Unusual Selling Patterns: Accounts with a sudden increase in sales or changes in the types of items sold may be flagged by PayPal.
- Selling Risky Items: Selling items like tickets, gift cards, electronics, computers, or travel packages can be considered risky, and PayPal will take time to review these transactions.
Solution:
Switch to a business account for some features such as invoicing, payment processing, and merchant services, as well as lower fees and higher transaction and withdrawal limits.
To prevent PayPal from freezing your funds and to access your money faster, consider using a reliable tool like Synctrack. This tool is recognized for its ability to help users sidestep typical PayPal issues.
With Synctrack, you can have peace of mind knowing it assists in avoiding complications when receiving payments through PayPal, particularly during periods of significant order volume increases.
Amazon Pay
- Risk: While trusted by many, Amazon Pay limits your customer base to those with Amazon accounts. This can exclude many potential buyers, impacting your overall sales volume.
- Solution: Offer a more comprehensive range of payment options beyond Amazon Pay to reach a broader audience and maximize your sales potential.
Apple Pay
- Risk: Apple Pay caters specifically to Apple device users, potentially excluding a large segment of the online shopping population. This can restrict your customer base and limit your revenue stream.
- Solution: Provide alternative payment methods alongside Apple Pay to capture a more diverse customer base and ensure you get all the potential sales.
Klarna
- Risk: Klarna’s “Buy Now, Pay Later” option can entice customers but also lead to overspending and potential payment defaults. If customers fail to meet their payment obligations, you will lose revenue.
- Solution: Communicate loan terms, late fees, and consequences of non-payment to customers. Consider offering Klarna only for specific product categories and implementing a responsible credit check process to minimize the risk of defaults.
Remember, Security is Key
Critical Considerations to Choose a Shopify Best Payment Provider
When selecting a payment provider for your Shopify store, key considerations include integration, global reach, security, flexibility, and clientele:
- Shopify Payments offers seamless integration for an easy checkout, potentially lowering fees. It benefits stores aiming for a streamlined customer experience.
- PayPal has a vast global outreach, ideal for stores serving customers internationally by accepting various currencies.
- Apple Pay focuses on security and convenience with a one-touch payment for Apple users, perfect for technology enthusiasts.
- Klarna introduces “Buy Now, Pay Later” schemes, attractive for stores selling high-value items that want to offer payment flexibility.
Your choice should align with your business’s unique needs:
- Shopify Payments for ease and savings,
- PayPal for international sales,
- Apple Pay for a tech-savvy demographic,
- Klarna for increased conversion via flexible payments.
Now, you can make your own decision on the Shopify Best Payment Provider that suits your store. If you want us to review any other Shopify Payment Providers, just let us know. We will update you soon!
The Final Thought
You can make an informed decision by understanding the unique advantages each provider offers and the considerations specific to your business. Remember, there’s no “one size fits all” solution. But you can keep in mind about some essential factors below:
- Prioritize a frictionless checkout experience: Minimize steps and offer various payment options to cater to customer preferences.
- Balance convenience with security: Choose a payment provider that adheres to PCI compliance and offers strong fraud protection measures.
- Consider your target audience: Global reach, brand recognition, and flexible payment options may be relevant to your customer base.
- Mitigate risks: Implement clear return policies, monitor suspicious activity, and diversify your payment options to minimize dependence on a single provider.
Remember, a secure and efficient payment system is the cornerstone of a thriving online business. Make the right choice and watch your sales flourish!
Want to read more helpful and intersting articles on Shopify marketing and conversion stategies! Don’t wait to check out WizzCommerce’s blog!
Grace is a creative writer at WizzCommerce, specializing in e-commerce and Shopify content. She creates compelling articles that help merchants optimize their Shopify stores and drive success in the competitive online marketplace.
