Current Shopify users and new small business owners, we hear your shrieks. Payment processing is an essential part of any online business, but Shopify Payment’s plans often leave us wide-eyed with shock and disgust. How can it possibly cost that much? Does everyone pay this price? How will these fees affect my profits?
We hear you and we’re here to tell you there are ways to lower your payment processing fees on Shopify’s platform. Listen up!
You’re Paying Too Much for Shopify
When you’re running an online business, fees can quickly add up. Shopify may be the world’s leading e-commerce platform, and Shopify Payments may be a convenient option for making and processing payments, but it is the most expensive.
There are ways you can lower your Shopify Payments fees though if you take the time to do some research about other payment options and their various fee structures. Your best bet is to set up multiple payment accounts that have low transaction fees so that your business can maximize its profits.
Taking these steps will certainly help reduce the cost associated with Shopify Payments – and give your business a real return on its investment.
Shopify uses a flat-rate fee structure.
This means that all transactions are charged the same fee regardless of their size. The downside to this structure is that large orders made through Shopify Payments end up costing a lot more in credit card processing fees than smaller orders, reducing your business’s profits considerably.
A better option is to choose an alternate processor that uses tiered pricing or Interchange Plus Pricing (ICP). ICP’s structure creates price tiers based on the size of the transaction and rewards businesses for processing larger orders.
This means your business will pay less in fees when customers purchase more and ultimately, you’ll keep more of your profits.
You are not obliged to use Shopify Payments on Shopify.
Contrary to what Shopify wants you to believe, you are completely free to use whatever payment processor and gateway you want on your Shopify store.
The only issue is that Shopify has made it difficult to set up other payment gateways and easy for newcomers to accept the built-in Shopify Payments gateway (called Shop Pay) without question. Therefore, you’ll need to consult customer support articles or get help from an expert to get everything configured correctly on your Shopify account.
Once you’ve done this though, you can start accepting payments through whichever processor and gateway suits your business’s needs best – without the hefty Shopify Payment fees.
Ways to Reduce Shopify Payments Fees
There are a few ways to reduce your Shopify Payments fees. The most useful methods are listed below. Feel free to combine methods together for even more cost-saving power.
Tip: As long as your checkout process can accept the most popular payment methods, i.e. credit cards (Visa, Mastercard, American Express), with a PCI-compliant gateway then your store has potential to succeed.
Use a 3rd-party gateway and processor.
Reducing Shopify Payments fees is essential if you want to remain profitable and maximize your earnings. One of the most reliable ways to do this is to use an alternative payment processor aside from Shopify Payments.
Third-party payment solutions offer a range of services that make it easier for customers to buy from your store, plus they come with lower transaction fees than are otherwise available with Shopify.
On top of that, such payment providers also offer extra features like improved fraud protection, fraud analysis, chargeback prevention, and faster payouts for completing purchases on your store. By doing so, you can keep more money in your pocket while providing your customers with a more seamless shopping experience.
There are countless 3rd-party processing solutions available. The best one depends on your merchant category and monthly sales volume. As mentioned, Shopify Payments (and popular alternatives like Stripe and PayPal) use a flat-rate pricing structure. You should look for ones with tiered or interchange-plus structures so you have more control over what fees are accrued.
Use multiple gateways and processors.
If you’re looking for an even more cost-effective way of reducing Shopify Payments fees, try setting up multiple payment accounts. That way, you can spread the processing load across several different gateways and processors to further lower your fees.
You can alter each to process specific products and cards or even from customers in different locations. It may take some effort to optimize, but once it’s done you’ll save big in processing fees.
The gateway that works best for your store depends on the payment methods your customers prefer. Apple Pay, debit cards, Amazon Pay, ACH—whatever they prefer, you need to offer. That’s also true for in-person sales, where you need the right point-of-sale card reader to match your business needs.
Use a Shopify plan that gives you a discount on payment processing.
Reducing your Shopify Payments fees doesn’t have to be complicated. One straightforward way to decrease your cost is to upgrade your Shopify plan and take advantage of the payment processing discounts offered.
Having the extra features and resources of a Premium, Advanced, or Shopify Plus pricing plan (as opposed to the Basic Shopify plan) might make things easier for your business in the long run as well.
For instance, with an Advanced Shopify plan you can access professional reports, script editor and more. It’s up to you whether or not upgraded pricing is beneficial for you, but with the discounted processing costs it may just be worth considering.
The caveat is that you do end up paying more as a monthly fee for the lower processing fees (which are still flat-rate). But if you process a high volume each month, say at least $20k, then the monthly cost is minimal.
Use a credit card with cash-back rewards or by taking advantage of special promotions.
For e-commerce merchants, Shopify Payments offers an easy and secure way to accept payment from customers. But if you really want to maximize your profits when using Shopify Payments, consider taking advantage of cash-back rewards.
Using a credit card with generous cash-back rewards can help you earn points that can be used toward business costs. The more points you earn, the more money you can save.
Always Be Aware of the Fees You Pay, On or Off Shopify Payments
When handling your online store’s finances, it is important to always be aware of any fees associated with your credit card payments process.
When utilizing Shopify Payments or another form of payment processing, pay close attention to the rates you are being charged. There are numerous benefits to using Shopify Payments– such as convenience and accessibility– but being conscious of the cost of these services is a key factor in ensuring a successful and efficient business.
Don’t forget to do the research on other payment options that may better suit your needs and wallet size.
FAQ: What merchants should use Shopify Payments?
It’s not without reason to wonder who should use Shopify Payments wholeheartedly. Any new merchant—startups, new store owners, second e-commerce businesses—should use the base, flat-rate payment processor. If not Shopify Payments, then Stripe or PayPal.
We suggest this because new merchants don’t have the credit card transaction history or business credit, yet both are needed to apply for a high-quality payment processor.
If you operate in a high-risk industry, like selling supplements or coaching or dropshipping, then you need to get your 3 months of processing history and hurry out of Shopify Payments. This is because your industry has a higher risk of chargebacks and fraud. Meaning, you’re more likely to pay too much in chargeback fees and risk your store getting shut down if you stick around too long.
Conclusion: Optimizing Your Processing Fees Is Easier Than You Think
Shopify Payments is a great way to take care of your online payment needs, but you may be paying too much in fees. There are ways to reduce those fees, though, and it’s important to be aware of those methods so that you can keep your costs as low as possible.
The best way to reduce Shopify fees is to not use their payment system at all. But how do you find a better solution? DirectPayNet will help.