Set up Shopify Payments to optimize your payments

For every online store, payment management is a make-or-break business component. Customers expect payment methods that meet their needs and make the checkout process easier. You will be surprised how much this affects the conversion rate and the overall success of your business. Learn how to use Shopify Payments to simplify your store management and accommodate your customers.

Selecting payment methods on Shopify

The optimal payment methods of your online store should be closely related to your target audience. Factors such as age, socioeconomic status and geographic location are critical in choosing the appropriate payment method. The type of products you sell should also factor in here. Consider all these aspects when setting up your Shopify Payments gateway.

However, be aware that some countries have restrictions related to permissible forms of payment. Check the Shopify website for the relevant restrictions.

The most common payment methods and their main features are described below. Read on to determine which payment method is best for your online business.

SEPA direct debit

SEPA direct debit payments hold the most benefits for online store operators. First and foremost, the transaction costs are very low, enabling you to optimize the profitability of your business. Moreover, you do not have to worry about non-payments or delays in the availability of funds. However, this payment method is not very popular in Europe as customers are reluctant to disclose their account data online.

Credit card

Credit card payments allow the buyer to make purchases on credit through a financial service provider. The payment to the owner of the online store is, nevertheless, guaranteed.

This is the most commonly used payment method in the world. Users find the complexity of customer authentication protocols bothersome, but they appreciate the advanced security. This may also be the reason why they usually use this method only for purchases over 30 euros.

PayPal

PayPal is a virtual wallet. It is an application that allows you to make payments without cards. PayPal is also not dependent on any bank or financial institution. This is one of the oldest online payment methods, but it still holds a leading position in the market. In Germany, it is the second most-used option.

PayPal users enjoy the peace of mind facilitated by its robust buyer protection program. The payment service provider grants compensation if the customer does not receive the product. PayPal has fast payment terms for online store operators.

Other forms of payment

The growth of e-commerce has been a key driver in the development of payment applications. The volume and variety of online transactions require secure, fast and accessible alternatives.

As perhaps expected, the online retail giant Amazon has also created its own application with Amazon Pay. In 2016, the Apple company did the same with Apple Pay. The platform now known as Meta launched its own system under the name Facebook Pay in 2019. Add to this the massive proliferation of cryptocurrencies around the world as this survey from Statista illustrates:

All of these applications allow their users to use the data stored on their platforms to make payments via Shopify Payments. This streamlines the processes without compromising data confidentiality, as they work with encrypted information.

At first glance, it may seem almost impossible to manage so many payment types. But you can simplify these processes by centralizing management in Shopify Payments.

Which payment methods do your customers want? We answer this question in the article Comparison of Payment Methods.

What is Shopify Payments?

Shopify Payments is a native payment service for this commerce platform. What does that mean? It is an end-to-end gateway through which you can process payment transactions without leaving Shopify. Shopify Payments verifies customer data without requiring the customer to log in elsewhere.

Shopify Payments is a comprehensive payment gateway that integrates with your online store by default, giving you the ability to enable and centrally manage other payment methods.

The service is integrated into the store, so approvals from third parties are not needed to process the payment. As a store owner, you decide which payment methods you allow. Simply log into your store’s dashboard and select them in the “Payment Providers” section. You can configure Shopify Payments to support transactions with credit cards, Apple Pay, Amazon Pay, Shop Pay, PayPal, SEPA transfers or cryptocurrencies.

Why does centralization on Shopify optimize your payments?

Integrated payment management simplifies store management and has a significant impact on your profitability. You can assume that this is a logical consequence of process optimization. Let’s take a look at how it works:

The buyer stays on store webpage

Full Shopify Payments integration prevents your customers from having to leave your store to complete a purchase. If a payment option is not enabled on the payment gateway, customers are redirected to the relevant service’s website. This may cause distrust or fear in some users.

As an online merchants, it is advisable to make the process user-friendly for your customers. Do everything you can to improve the shopping experience. Remember that if customers do not feel comfortable, there is a high probability that they will cancel their orders.

Fast payments = higher sales

Time is definitely a very subjective term. Some seconds seem to last forever while some hours seem to fly by. This is not a philosophical consideration, but a reality that also comes into play in your online store.

Slow payment processing is one of the causes of low conversion rates. In this context, the Shopify team conducted a test comparing the performance of Shopify Payments with that of other payment services. They particularly observed and noted the page loading time and the duration of the transaction.

The results were overwhelming. Conversion rates for customers who logged in to Shopify from a computer were 1.56 times higher – that’s more than 50% – than other service providers! Those who used mobile devices had an even better score of 1.91.

Complicated processes and delays in payment processing undermine buyer confidence. With every tenth of a second, a customer’s resolve weakens and the certainty of their decision falters.

Shopify Payments also allows your customers to save their data so they don’t have to re-enter it for new purchases. This shortens the transaction time.

Lower transaction fees

When your customers make payments via third-party platforms, your store incurs transaction costs. Payment gateways charge a flat or percentage fee for each transaction. In addition, credit card providers, currency conversions or the processing of international transactions also require fees. All of this cuts into your profit margin, possibly affecting your company’s profitability in the long run.

Additionally, all payments accelerated through the Shopify Payments gateway will show up in your account and originate from the same platform. This includes transactions made with Apple Pay, Facebook Pay, Google Pay, Shop Pay and, of course, Shopify Payments.

On- and offline sales management

Shopify Payments also integrates with Shopify POS for offline sales. Both apps are synchronized, enabling order tracking and inventory control across all your distribution channels. This is a great advantage over other applications, as it facilitates the administration and management of your business.

A small producer selling both online and at a weekly artisan market can use Shopify Payments to centralize management. The platform integrates with Shopify POS for managing inventory, sales and orders. This means, for example, that you do not have to manually deduct in-person sales from inventory.

Flexibility

Shopify Payments is not an exclusive payment gateway. This means that it can perfectly coexist with other payment gateways such as PayPal, Authorize.net and Amazon Pay. Under no circumstances should you prevent your customers from using the platform of their choice.

Moreover, this payment system can be used to carry out transactions in different currencies. A customer from the United States should not have to worry about converting to euros when shopping in your store. Nevertheless, you will have to pay the conversion fee if you withdraw money in your local currency.

Repayment management

Occasionally, your online store may need to issue a refund to a customer. This can throw your cash flow out of whack. Shopify Payments takes care of issuing refunds and deducts the refund amount from your next available payment.

If your store does not have sufficient funds, Shopify Payments can debit your bank account or provide successive discounts. This depends on the country where your store is registered.

Shopify Payments restrictions and requirements

The Shopify Payments app is currently available in 17 countries. Your online store must be registered in one of these countries to be able to use this payment service. The countries list includes:

• Austria
• Belgium
• Canada
• Denmark
• Germany
• Ireland
• Italy
• Japan
• Netherlands
• New Zealand
• Singapore
• Spain
• Sweden
• United Kingdom
• China (Hong Kong Special Administrative Region only)
• United States (excluding Puerto Rico)

Regulation by type of business activity

In addition to geographic restrictions, certain types of business are not allowed. These may vary depending on the country where you operate your online store. In general, the restrictions relate to activities such as:

Financial services

This includes investment and lending activities such as securities brokerage, mortgage services and debt reduction counseling. Exchange offices or money collection centers are also not permitted.

Adult content and services

All activities that may involve pornography or sexuality are excluded from Shopify Payments. The marketing of such materials, including literature, films or photographs, is not permitted. Payments for escort services, adult chat rooms and prostitution are also prohibited.

Betting and gambling

Lotteries, sports betting, internet gaming and fantasy sports leagues do not qualify for Shopify Payments.

Counterfeiting and services that violate property rights

This refers to online businesses that sell or distribute materials that violate property rights. In this context, the marketing of items such as software, music, movies and books requires the permission of the rights holder. Using Shopify Payments to sell counterfeit copies of branded products is also prohibited.

Non-authorized substances and products

Tobacco and tobacco-related products, electronic cigarettes and ammunition and weapons, for example, are also generally prohibited. The geographic location of the seller and the buyer shall determine the scope of this limitation. Cannabis and related commodities are also subject to this regulation.

Review Shopify Payments usage restrictions based on your geographic location and business type.

Bank requirements

The bank account associated with your store must meet certain requirements in order to be linked to Shopify Payments. The general conditions are:

• You must link to an active checking account.
• The bank account must allow transfers with different types of financial instruments. These include electronic funds transfers or fast payment systems (FSP).
• The currency of the bank account must correspond to the legal tender of the country in which your business is operated.

Check the Shopify website for the specific criteria that apply in your region. For example, accounts often need to be opened via a bank located in your country of operation. Furthermore, bank accounts for online stores in Europe must be approved for SEPA transfers.

Improve your sales with Shopify Payments

Shopify Payments allows you to adapt to your customers’ payment preferences without compromising the management of your store. It enables hassle-free management of multiple payment methods and ensures secure and fast transactions – all without incurring high costs that cut into your profit margin.

By optimizing Shopify Payments, you can provide a better shopping experience for your customers. Over time, this will translate into higher conversion rates and stronger customer loyalty.