For many of you starting out with Shopify, one of the many concerns is ‘How does Shopify pay you?’. I’ll take you through the process that takes place from the time a customer makes a purchase until the money lands into your bank account. I’ll also be covering different payment providers you can use to accept store payments, the advantages and disadvantages for using each, how long it usually takes to get money to your account and whether the process is automatic or manual. Click on the video link or read on to know more.
Payment Options with Shopify
There are a ton of different payment providers you can use to receive payments. This confuses a lot of people because it seems like a complicated process. If I’m not mistaken, there are over 70 different payment providers. There’s a lot because Shopify’s goal is to cater to everyone’s needs. Wherever you are and whatever type of bank account you have, you are guaranteed to receive money that customers pay you through your Shopify store.
The Process of Receiving Money through Shopify
When you set up a Shopify store, you have to install a payment provider. A payment provider is a company that is responsible for processing payments and for sending money off to your personal account.
Shopify has its own payment provider called the Shopify Payments. This is the default integrated payment gateway that you bolt into your Shopify store.
Shopify also lets you integrate third-party payment providers like PayPal, Amazon Pay, and Stripe.
The Step by Step Process
A payment processing period can take a couple of days. The processing period starts from the point the customer provides their card details to the point you get to receive the money in your account.
Step #1 Customer Purchase
The customer pays for the product from the website by giving out his/her credit card information, address along with other personal information to the payment provider.
Step #2 Payment Starts to Process
The payment provider which you have integrated with your Shopify store has to process that payment. The payment provider is responsible for validating payment details like if the customer has money for payment in the bank account or if the credit card payment went through successfully. The process can take a couple of days.
Step #3 Payment lands in Merchant Account
That payment the customer paid lands into your merchant account. It’s not your bank account but a virtual merchant account. This could be your Shopify payment account, your PayPal account or any other virtual merchant account that sits on the internet provided by your payment provider.
Step #4 Money lands in your Personal Account
After the money has been cleared and landed into your merchant account, the next step is to transfer the funds to your personal bank account. Depending on the payment provider you opted to use, this can happen automatically or manually wherein you get to decide when to actually withdraw your funds.
Different Payment Providers to Help You Get Paid on Shopify
The processing period and the choice of whether to manually withdraw your funds or have it sent to a bank account depends on the payment provider. You do not necessarily have to use just one payment provider. This means you can use Shopify payments (which as mentioned earlier is the default) and have a Paypal option(third-party payment provider) on your store as well.
Shopify Payments Gateway
Using Shopify Payments gateway instead of any other third-party payment gateway comes with its own advantages.
No Extra Transactional Charges
Shopify payments don’t charge any additional transaction fee. Third-party payment providers take a transaction fee from every purchase made on your store as handling charges of the credit card payments.
No going Off the Store for Payments
Moreover, the Shopify payment gateway is integrated into your Shopify store. The product is not taken off your store when a customer decides to buy it. They are prompted to fill in the required credit card details and continue to the confirmation screen. Many third-party payment providers require your customers to go off your store to another page to fill in the credit card details for the payment. This can result in loss of sales.
Automatic Transfer of Money to your Bank Account
Another major advantage of using Shopify Payments is that the money is automatically sent to your personal bank account. A customer pays for a product, after a few days of processing, the money goes to your Shopify merchant account and from there directly to your personal bank account. No manual processing required.
Track Financial History
Using Shopify, you can keep a track of your money, how much has been cleared and how much is still pending, all within the Shopify admin panel. You can simply log in to the back end of your Shopify store and get a complete history of your financial payments.
All these advantages do come with a little setback. Shopify Payments is only available to stores based in certain countries. If you are outside any of those countries, you’re not going to be able to use Shopify Payments.
These are the countries wherein Shopify payment is available:
- United States
- Porto Rico
- United Kingdom
- New Zealand
The payment processing period varies depending on the country you’re in.
If you are in the US, it will only take two days to clear your payments and get them into your merchant account. In Canada, it takes up to three days to process the payments and it takes four days if you’re in the UK. The time ranges from 2 to 4 days. You can find out how long the payment processing period for your country is on the Shopify website.
Once it is in your merchant account, it can take 1 to 3 days to land to your personal account.
Third-Party Payment Gateway
So, how does Shopify pay you if you aren’t in any of these countries? People who have stores based in other countries can use many of these third-party payment gateways. The payment providers are going to change depending on what country you are based in.
As already mentioned, there are 70 different payment providers that Shopify supports. So, no matter where you are in the world you will have some payment gateway that will help you transfer money to your bank account from the purchases made on your Shopify store. You have two types of third-party payment providers:
- Direct Payment Providers
- External Payment Providers
Direct Payment Providers
These are third-party payment providers that are integrated into your Shopify store. Using these gateways, your customers don’t have to go off your store to fill in their payment details. Everything happens in your store area on Shopify.
External Third-Party Payment Providers
If you use external payment providers, your customers will be taken off your Shopify store to another page where they enter their card details. Hence, as mentioned earlier, this can reduce trust and result in loss of sales for you.
If you are going to use a third-party payment gateway, you should be using a direct payment provider.
Third-party providers charge a transaction fee for every purchase made on your store. The amount is equivalent to a percentage of the purchased product. These are treated as handling charges. If you are in a country where Shopify Payment is not available, this is a complete disadvantage. Unfortunately, there’s no way to go around it.
I hope this discussion has clarified any questions you might have on, ‘How Shopify pays you’.
In a nutshell, a customer makes the purchase from the website by filling out his credit card information along with some other personal information. It can take a few days to process and for the funds to land into your merchant account. From there, it can either go to your personal account automatically or manually. Choose a payment gateway that is available in your country. There are Shopify payment gateways or third-party payments you can choose from. If you opt to use a third-party payment, you can decide whether to get a direct payment provider or an external payment provider.
No matter where you are, as long as you put in hard work, time and effort in learning e-commerce, finding a good product that people are going to buy, there is a way for you to make money from an online store.
If you wish to start with Shopify today, use this link to get a free 14-day trial on Shopify.