Top 5 Factors for Choosing the Best Payment Gateways for Shopify
Setting up an online business can be exciting, but as a Shopify merchant, you will need to choose a payment gateway provider to handle the financial transactions for your eCommerce site. In some cases, it makes sense to change processors on Shopify. In the last year, the eCommerce industry has exploded, driven in part by 2020’s stay-at-home orders. Accordingly, consumers worldwide have embraced the benefits of a touchless shopping experience. Shopify merchants have the flexibility of choosing between many highly rated third-party payment gateway providers or using Shopify payments, but which are the best third-party payment providers for Shopify?
Payment Gateways Explained
What is a payment gateway? In the simplest terms, a payment gateway is a technology that captures the customer’s payment data and transfers it to the merchant’s account. The gateway securely validates the customer’s card account details, verifies the availability of funds, and completes the purchase transaction by depositing those funds with the merchant. To guarantee data security, the gateway encrypts sensitive account details on both sides of the transaction.
Shopify merchants have the option to use Shopify Payments which is easy to set up and is already integrated into your online store, but is it the best payment gateway for your eCommerce site? The following are the top 5 factors to help you decide.
What products are you selling? Is your website local or international, and which customers are your target market? Each payment gateway processor may offer a variety of new and useful features, but promotions and cool tools won’t matter if they aren’t a good fit for the specific needs of your business. For instance, if your customer base is worldwide your payment gateway needs to manage a multitude of transaction types, which means accepting a variety of currencies and the ability to process payments in many different languages.
Shopify Payments is limited in the number of countries and languages in which it can operate, so they probably aren’t the best choice. In this case, it clearly makes more sense to consider a third-party payment provider for your Shopify business, one with a global presence. Payline, Paypal, and Stripe have a wider international reach. Additionally, you should carefully review each payment processing company’s terms and conditions. Does the company prohibit any items that you sell? Shopify Payments T&C’s prohibit such things as CBD’s and alcohol, not great if you want to open an eCommerce wine shop. Narrow your list down to which gateway payment providers have T&C’s that don’t conflict with your store’s products and are also equipped to handle every type of business transaction you envision, whether they be in-store, mobile, ACH, or online payments. If you find that your business’s products aren’t the best fit, you might consider changing payment processors from Shopify.
Rates and Fees
When comparing pricing plans for the best third-party payment providers for Shopify, transparent standardized pricing packages remove the guesswork for you as a merchant. The rates and fees for transactions should support the financial blueprint for your business model and provide you with an ideal ROI per transaction. You should also research whether each processor charges various additional fees such as annual fees, settlement fees, and chargeback fees. Shopify Payments offers three different levels of payment plans, ranging from 2.6% -3.5% per transaction, as well as a per-transaction cost. Payline also has three levels of payment plans but employs an interchange-plus pricing model, which is one of the most transparent and competitive in the industry.
Stripe charges a flat 2.9% + $0.30 for all transactions, regardless of the network or credit card the customer uses. This pricing structure has advantages and disadvantages depending on the type of credit cards that are popular with your customers.
Paypal charges minimum transaction fees between 1.9% and 3.4% for all transactions. While there is no charge to set up a Paypal business account there are fees associated with many of the business tools they offer. Payline and Stripe also have no setup fees, and Payline goes one step further by offering your first month of service free of charge.
It’s important to note that Shopify’s platform adds a .5% to 2.0% fee when you use a third-party payment provider on their site, but that fee may be offset by the competitive pricing that’s available with third-party payment processors and as mentioned, Shopify Payments may not fit your business model.
Ease of Setup
How complicated is the setup process for Shopify Payments versus a third-party payment processor? Shopify Payments is an integrated payment gateway that is already incorporated into your Shopify site so it’s ready to go as soon as you open for business.
Alternatively, a Paypal checkout account can be created while building your Shopify storefront. This means that if you already have a personal Paypal account you can simply input your associated email address and receive payments within a day of setting up your Shopify site. Keep in mind that you need to have a Paypal business account in order to utilize any of Paypal’s business tools.
For Shopify merchants, most other third-party payment gateway providers can easily be added to your site from your Shopify admin tab. Simply go to ‘Payments’, select the provider you would like to use from the dropdown list, enter your credentials then hit ‘Activate’ in order to change processors on Shopify. It doesn’t take much time to have your chosen payment processor up and running.
Exceptional Customer Experience
Shopify Payments integration means the customer stays in your eCommerce site to complete payment. Stripe and Authorize.net are also payment processors that integrate within your Shopify storefront, and Payline uses Authorize.net for integration which results in a seamless checkout experience for the customer. Some other third-party payment processors don’t offer the Shopify integration feature in processing payments.
Paypal is a good example of a payment gateway that opens a new window to complete the payment process, and frequently the customer has to re-enter login information. When a customer is redirected away from your business site to complete their payment even for just a few moments, the slight disruption in the transaction flow could result in abandoned carts and lower sales conversion rates.
Of course, you also want to thoroughly research customer reviews for any payment gateway processor that you are considering for your business. The payment processor you choose should provide exceptional service and be very responsive to customer issues and inquiries.
The final factor to consider is how easy a third-party payment processor makes it for you as the business owner to manage your day-to-day business. Features such as chargeback management, electronic invoicing, text/email reminders for customers, and easy plugins to Quickbooks are highly beneficial, just to name a few.
Merchant benefits can also include providing the business owner with software-like invoicing, managing recurring billing, and providing a payments page. Flexibility in transaction processing tools is also a valuable merchant benefit. With Payline you can use the card reader of your choice, while Shopify Payments has a single proprietary card reader, and Paypal only provides two card reader options.
As a Shopify merchant, you have a variety of different payment gateways to choose from for your online store. Shopify Payments provides easy setup and an integrated payments page, but it may not be the best choice for the needs of your Shopify business. It’s not available in some countries and has T&C’s with specific product restrictions. Payline, PayPal, and Stripe are some of the best third-party options for Shopify, but the payment gateway that best fits all your business needs, is affordable, user-friendly, and has great reviews is most likely the ideal choice for you and your customers. If any of these 5 bullet points speak to you, you can easily change payment processors on Shopify.
For more information regarding gateway payment processing with Payline, check out this page.