Shopify Payments vs. Third-Party Gateways: Which Is Best for Your Store?

Selecting a payment processor is one of the most critical decisions for Shopify merchants. Shopify Payments represents the Shopify payment processing in-built with the platform. Additionally, there are several other renowned payment gateways. So which one is the ideal fit for your e-commerce business?

This article seeks to create a useful comparison between Shopify Payments and third-party Shopify payment gateways, their features, costs, and practical usage to help them decide.

Understanding In-built Shopify Payment Processing Gateway and Third-Party Gateways

Shopify Payments is the main Shopify payment processing system that merchants are able to operate without referring users to another service. But Shopify can receive payments via third-party Shopify payment gateways. These include:

• PayPal, 
• Stripe, 
• Authorize.Net

Both help make transactions securely and through different methods, but customers can expect a very different experience in terms of set-up, expenses, and the experience of the store customer.

What Are Shopify Payments? Key Features and Benefits

A major advantage affiliated with Shopify payment processors is the ability to remove the need for third-party processors. A few other characteristics include:

• Seamless Integration: Built into Ecommerce Shopify’s ecosystem for easy setup and management.
• Transparent Fees: With in-built Shopify payment gateways, customers can avoid additional fees that are usually deducted from the sales proceeds of third-party gateways.
• Multiple Payment Methods: Accept major credit cards, Shopify, Shop Pay, Apple Pay, and Google Pay.
• Remarkably Fast Payouts: With the Shopify payment processor, you can get your earnings after two business days.
• Comprehensive Reporting: Analyze all payment operations through your Shopify dashboard.

Overview of Third-Party Shopify Payment Gateways 

Third-party Shopify payment options such as PayPal or Stripe offer lots of functionalities. Important highlights include:

• Worldwide Reach: Available for several countries and currencies.
• Options packed with Features: These third-party Shopify payment gateways come with high-level anti-fraud, subscription billing, and flexible checkout processes.
• Trust from Customers: PayPal, Stripe, etc, are trusted and established names in the payment industry, so customers trust them. 

Third party gateways require some work to set up and here you can hire Shopify developers for proper setup and operation. 

Key Statistics: Shopify Payments vs. Third-Party Gateways

• Roughly  1.8 million merchants are using Shopify Payments, which brings about 90% of all shoppers on the website.
• Shopify Payments saw an increase from 32.76 billion in Q3, 2023 to  42.90 billion GMV Q3, 2024 – an increase of 31% growth over the previous year.
• Revenue earned using Shopify Payments increased from  $106.1 billion in 2022 to $137.04 billion in 2023, this represented a growth of 29 percent.

Pros and Cons of Shopify Payments

Pros:

• Usability: No extra configuration is needed with the Shopify payment processing gateway other than toggling a switch on the dashboard.
• Cost Savings: Shopify charges a 2% fee for those who opt to use third-party Shopify payment options.
• Improved Checkout Process: Increased personalization and an easier checkout process.
• Fraud Protection: Built-in solutions to secure your business.

Cons:

• Geographical Limitations: Only 20+ countries are available, so a few world markets are left out.
• Limited Features: Advanced features that come with outside Shopify payment methods are absent.

Pros and Cons of Third-Party Shopify Payment Methods

Pros:

• Greater Range of Options: Broader support with regard to currency and countries.
• Better Features: Advanced capabilities, including recurring billing and detailed analytics.
• Established Trust With Users: Third-party Shopify payment options like PayPal, Stripe, and PayTrace tend to instill trust and familiarity among customers.

Cons:

• Higher Fees: With Third-party Shopify payment options, you’ll need to pay 2% transaction fees. 
• Difficult Processes: Needs external accounts and plugin setup. Hire Shopify Developers to develop or set up a third-party payment gateway. 
• Checkout Flow Disruption: This might cause a level of disturbance since customers will be redirected to different pages. However, some plugins created by Shopify Development Companies  offer same-page checkout. 

Cost Comparison: Transaction Fees and Hidden Costs

For Shopify Payment Plans:

• Shopify Basic Payment Plan: 2.9% + 30 cents for each transaction.
• Shopify Plan: 2.6% + 30 cents for every transaction made.
• Advanced Shopify Plan: 2.4% + 30 cents for every transaction made.

For external gateways:

• Shopify charges a 2% additional fee for those who use external Shopify payment methods.
• Transaction costs are higher, owing to the extra gateway-specific fees, for instance, PayPal’s 2.9% plus a fixed fee.
• Other fees such as charges for changing currency and withdrawal fees should be included in the calculations as well while using the best payment gateway for Shopify. 

Integration and Setup: Ease of Use for Shopify Payments vs. Third-Party Shopify Payment Methods

Using Shopify payment plans is a matter of switching it on. For other options, however, one has to create accounts for external merchants, design API interfaces and sort out other issues that may be sources of bottlenecks. But when you hire Shopify Developers you can overcome these challenges.

For merchants who want to cut down the complexities involved, the only real choice is the Shopify Payments. For others, who are looking for more advanced features or have a wider geographical scope in mind, probably, the third-party gateways can be the best payment method for Shopify. 

Supported Countries and Currencies: Which Option Is More Flexible?

Shopify Payments is operative in more than 20 countries including the United States, France, Germany, and most parts of Europe. It has multi-currency support but its spread is narrower compared to third party best payment gateway for Shopify.

PayPal and many of the other third-party integrations exist in more than 200 countries and have hundreds of currencies on their platform. If you are targeting clients from all over the world, it looks like a third-party integration will suit your requirements quite well. You can even create custom integrations with the help of Shopify development services. 

Payment Security: Ensuring Safe Transactions for Your Customers

Both the Shopify Payments and the external merchants offer very good security features.

• Shopify Payments is PCI DSS compliant and has tools for fraud assessment.
• Third-party applications also abide by the set standards and have several measures for fraud protection.

Whichever the option, it is very important to ensure that your shop is properly SSL-certified and follows the best practices with regard to data security. Shopify development Company can help you deal with the store’s security setup. 

How Do Different Shopify Payment Plans Impact Checkout Experience and Conversion Rates?

When a merchant uses Shopify payment plans, the integration will mean that customers do not leave the Shopify store. This, in turn, decreases the abandonment rate and increases conversion levels.

Although third-party options often come with additional features, customers can be directed to other websites which may lead to drop-offs. But some of the best payment methods for Shopify offer the same page checkout. So check the features before installing a third-party plugin and build a custom solution. 

Simplified checkout processes such as Shop Pay on Shopify have resulted in an average increase of 50% in conversions when compared to guest checkout processes.

Which Option Is Best for Different Types of Businesses?

• Small to Medium Businesses: Shopify payment option is simple and inexpensive, making it the best payment method for Shopify merchants in the initial stages of the business. 
• International Sellers: However, global transactions may be best handled through third-party gateways.
• Businesses Needing Advanced Features: If you need complex reporting, anti-fraud, or recurring payment options, you may want to choose a third-party vendor.

Case Studies: Real-World Examples

Furnmall

Furnmall is a Shopify-based eCommerce store that simplifies the payment process for its users through Shopify Payments. By using an integrated payment solution, it reduced operational intricacies and allowed the store to concentrate on improving its online visibility. This makes it easy for buyers to make transactions while reducing the number of people abandoning their carts.

Zense

Zense, an International lifestyle brand headquartered in Singapore which is a Shopify specialized shop has also adopted third party gateways with the help of Shopify development company. Through Paypal and other gateways, Zense made it possible for its global customers to transact in different currencies. 

Conclusion: Which Payment Solution Is Best for Your Store?

Your selection between Shopify Payments and third-party gateways will depend largely on your store’s preferences. Shopify Payments is most suited for local firms, while third-party gateways are ideal for businesses with a global perspective looking to meet specific needs.

Analyze your target segment, transaction volume, and technical feature requirements to make the best choice. Whichever path you choose, offering safe and effective payments will build consumer confidence and increase revenue.

Curious Minds Want to Know More !

• How long does it take to get a payment from Shopify?

Funds are transferred into your bank within 2-5 business days, according to your bank and location.

• What does “capture payment” mean on Shopify?

This refers to authorizing the charge after a customer places an order. Capturing secure funds from the customer’s account.

• What are the main differences between Shopify Payments and third-party gateways?

Third party gateways have advanced features and connections while Shopify payments specializes in ease of use and reduction of costs.

• Are there extra fees for using third-party gateways on Shopify?

Yes, Shopify has extra charges of 2% for third-party gateways.

• Is Shopify Payments available in my country?

Visit Shopify’s website for the latest list of supported countries.

• How does using a third-party gateway affect my store’s checkout experience?

When you use a third-party merchant account, it may require your customer to go to other sites to make a transaction, which can be a disruption to the checkout process, possibly causing cart abandonment. Conversely, when using Shopify Payments, this barrier is removed as all activities are performed within your Shopify store.

• What types of businesses benefit most from utilizing Shopify Payments?

Due to its ease of use, low cost, and quick setup, it is local businesses in the supported countries that benefit the most. This is most useful to merchants who do not want to incur third-party costs and would prefer a smooth checkout process.

• What types of businesses should consider third-party gateways?

Third-party gateways are ideal for those successful businesses that have international customers or countries with particular payment needs like recurring billing facilities or comprehensive analytics. These gateways are also great for merchants in areas where Shopify Payments is not available.