What Payment Processor Does Shopify Use? Find Out Here

If you’re running a Shopify store, one of the first things you’ll need to figure out is how you’re going to accept payments from customers. Luckily, Shopify makes this part of the process pretty simple. But you may be wondering, what payment processor does Shopify use, and is it the best option for your business? Let’s break it down and take a closer look at Shopify’s payment system and the different options available for you to choose from.

What Are Payment Processors and Why Do They Matter?

Before we dive into Shopify’s payment processor, let's break down what a payment processor actually is. A payment processor is the company or system that handles transactions between customers and merchants. When a customer makes a purchase, the payment processor ensures the money is transferred from the customer’s bank to the merchant’s account securely. For online stores, this typically involves credit card payments, digital wallets, or even cryptocurrency.

Choosing the right payment processor is essential for smooth transactions and customer trust. It affects not only your transaction fees but also your store’s security, speed of payments, and available payment methods.

Shopify Payments: The Default Payment Processor

If you're using Shopify to run your store, Shopify Payments is the default payment processor. But what exactly is Shopify Payments, and why should you consider using it?

What Is Shopify Payments?

Shopify Payments is Shopify’s built-in payment processing system that allows you to accept payments directly from on store. It’s a convenient, integrated solution that eliminates the need for third-party payment processors. Once activated, Shopify Payments enables you to accept payments via major credit cards like Visa, Mastercard, and American Express, as well as alternative payment methods such as Apple Pay, Google Pay, and Shop Pay.

Benefits of Using Shopify Payments

There are several reasons why Shopify Payments is the go-to choice for Shopify store owners:

No Third-Party Fees

When you use Shopify Payments, you avoid the additional fees charged by third-party payment processors. Typically, Shopify takes a percentage of transactions processed through third-party gateways, but with Shopify Payments, this fee is waived, although transaction fees may still apply depending on your Shopify plan.

Simplified Setup

Setting up Shopify Payments is easy and integrated directly into your Shopify store. You don’t need to mess with complicated integrations or separate merchant accounts.

Built-in Fraud Protection

Shopify Payments includes built-in fraud protection tools, which help keep your store and customers safe. It works with Stripe, which is known for its robust security features like PCI compliance, SSL encryption, and fraud detection.

Integrated Analytics and Reporting

Since Shopify Payments is built into Shopify, you can access transaction data directly from your Shopify dashboard. This makes it easier to track sales, manage inventory, and monitor customer purchases.

Faster Payouts

Shopify Payments offers faster payout schedules compared to third-party processors. You’ll typically receive funds within 2-3 business days, depending on your bank.

Limitations of Shopify Payments

While Shopify Payments offers many benefits, there are also a few things to keep in mind:

• Availability: Shopify Payments is only available in specific countries, including the U.S., U.K., Canada, Australia, and others. If your business operates in a country where Shopify Payments is unavailable, you'll need to rely on a third-party payment processor.
• Restricted product categories: Shopify Payments has specific rules about what kinds of products can be sold using the service. If you’re selling high-risk items like firearms, gambling services, or certain adult products, Shopify Payments may not be an option for you.
• Chargeback limits: Shopify Payments has strict policies regarding chargebacks. If your business experiences high chargeback rates, you may face limitations or even suspension of your account.

Third-Party Payment Processors on Shopify

If Shopify Payments isn’t available in your country, or if you prefer to use a different payment gateway, Shopify also supports numerous third-party payment processors. Here’s a closer look at some of the most popular alternatives.

PayPal: A Widely Trusted Payment Gateway

PayPal is one of the most well-known payment processors globally. It allows customers to pay directly from their PayPal account or linked bank account, and it’s trusted by millions of users worldwide.

Advantages: PayPal’s global reach, strong fraud protection, and buyer/seller protection programs are major benefits. It’s also very easy to integrate with Shopify.

Considerations: PayPal charges higher transaction fees, especially for international transactions. Additionally, some merchants have reported issues with PayPal freezing funds during disputes.

Stripe: Powering Shopify Payments and More

Stripe is the payment processor behind Shopify Payments. However, you can also choose to use Stripe directly if you prefer more control over your payment system.

Advantages: Stripe offers advanced features and API support for developers who want to customize their payment gateway. It also supports multiple currencies, making it ideal for international businesses.

Considerations: While Stripe offers robust tools, it may require more technical knowledge to fully customize and integrate into your Shopify store.

Amazon Pay: Simplifying the Checkout Process

Amazon Pay allows customers to pay using their Amazon account details. Since many people already have an Amazon account, this can reduce checkout friction and increase conversion rates.

Advantages: Amazon Pay’s familiar checkout process can enhance customer trust, and it’s available in several countries, including the U.S. and U.K.

Considerations: While Amazon Pay is an attractive option for customers, it has higher fees compared to some other payment processors. Additionally, it’s available in fewer countries.

Other Third-Party Payment Providers

Shopify supports several other payment gateways, including:

• Authorize.Net: A popular payment gateway in North America.
• 2Checkout (now Verifone): Known for its international support and multi-currency capabilities.
• Klarna: A “buy now, pay later” service that’s growing in popularity in Europe and the U.S.
• Alipay: A widely used payment option in China, ideal for merchants targeting Chinese consumers.

How to Choose the Right Payment Processor for Your Shopify Store

When deciding which payment processor to use on your Shopify store, there are a few key factors to consider:

Transaction Fees

Each payment processor charges different fees. Shopify Payments has no additional transaction fees, but third-party processors like PayPal or Stripe often charge a percentage of each sale. Make sure you compare fees and consider how they’ll affect your profit margins.

Customer Location

Make sure the payment processor you choose supports the countries your customers are based in. For example, Shopify Payments is available in some countries, but some third-party processors, like PayPal, may support a wider range of regions.

Payment Methods

Different payment gateways offer various payment methods. If you want to accept digital wallets like Apple Pay, Google Pay, or Shop Pay, Shopify Payments and some third-party gateways support these methods.

Security

Your payment processor must comply with PCI DSS standards to ensure that your customers’ data is secure. Shopify Payments and major third-party providers like Stripe and PayPal offer robust security features to protect both you and your customers.

Ease of Integration

Shopify Payments is integrated directly into the Shopify platform, making setup easy. Some third-party processors require more effort to integrate, so consider your technical expertise when choosing a provider.

Manual Payment Methods

In addition to the automatic payment gateways mentioned above, Shopify also allows you to offer manual payment methods. These methods are useful if you want to give customers more payment options but don’t necessarily want to integrate a third-party payment processor.

Some manual payment methods include:

• Bank Transfer: Customers can transfer money directly from their bank to yours.
• Cash on Delivery (COD): Customers can pay for their order in cash when it’s delivered.
• Checks: If you prefer, you can accept payments via checks.

How to Set Up Payment Processors in Shopify

Setting up your payment processors in Shopify is straightforward. Here’s a step-by-step guide:

1. Go to the payment settings: From your Shopify admin panel, go to Settings and select Payments.
2. Choose your payment provider: If you want to use Shopify Payments, it should be the default option. To add a third-party provider, select Choose Third-Party Provider and find the one you want to use.
3. Follow the setup instructions: Depending on the provider you choose, follow the on-screen instructions to complete the setup. For Shopify Payments, this involves entering your business and banking information.
4. Test your payment gateway: After setup, it’s a good idea to test your payment gateway by making a small purchase. This ensures everything is working smoothly.

Integrating Extuitive’s AI-Powered Ad Predictions 

At Extuitive, we’re passionate about helping businesses optimize their ad performance with confidence. Our AI-driven platform enables Shopify store owners to predict the real-world success of their ads before they even go live. We take the guesswork out of digital advertising by offering precise, data-backed predictions that empower you to make smarter marketing decisions.

By leveraging our advanced AI models, we provide insights into how different ad creatives will perform across various audiences. Our system analyzes live campaign data to give you accurate forecasts, helping you reach the right people at the right time. This means no more wasted ad spend or missed opportunities. We help you target the audiences most likely to convert and purchase, ensuring your ad dollars are spent wisely.

Final Thoughts

The payment processor you choose for your Shopify store is a critical decision that impacts both your business and your customers. Shopify Payments is the easiest and most integrated option for many merchants, especially those based in supported countries. However, third-party processors like PayPal, Stripe, and Amazon Pay offer unique benefits, especially for international businesses.

Ultimately, the best payment processor for your store will depend on your location, customer base, and the payment methods you want to offer. By carefully considering your options and choosing a processor that aligns with your business goals, you’ll ensure smooth, secure transactions that keep your customers happy and your business thriving.

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