How to Set Up Shopify Payments: Complete Payment Gateway Guide 2025

Payment processing is the backbone of your Shopify store—without it, you can't accept customer payments or complete sales. Shopify offers multiple payment options, with Shopify Payments being the recommended choice for most stores. This guide walks you through setup, explains fees, compares alternatives, and helps you choose the right payment methods for your business.

1. Understanding Shopify Payments

Shopify Payments is Shopify's built-in payment processor, powered by Stripe. It's designed specifically for Shopify stores and offers the simplest setup with the lowest fees. When you use Shopify Payments, there are no additional transaction fees—you only pay credit card processing fees.

Shopify Payments Benefits

No transaction fees when using Shopify Payments. If you use third-party gateways like PayPal or Stripe directly, Shopify charges additional transaction fees (0.5-2% depending on your plan) on top of the gateway's processing fees. Shopify Payments eliminates this extra cost, saving you money on every transaction.

Integrated directly into Shopify admin—no separate account needed. Setup takes minutes, not days. Your payment processing lives inside your Shopify dashboard. View transactions, issue refunds, and manage disputes without logging into separate payment processor accounts. This integration simplifies operations significantly.

Faster payouts—typically 2-3 business days to your bank account. Money from sales reaches your bank account quickly. Standard payout schedule is 2 business days in the US, 3 days in Canada, and varies by country. Faster access to funds improves cash flow, especially important for new businesses needing to restock inventory.

Accepts major credit cards plus Shop Pay, Apple Pay, and Google Pay. Customers can pay with Visa, Mastercard, American Express, and Discover. Shop Pay offers one-click checkout for returning customers. Apple Pay and Google Pay enable mobile wallet payments. More payment options increase conversion rates.

Built-in fraud analysis and chargeback protection. Shopify Payments includes fraud detection tools that flag suspicious orders. Risk indicators help you decide whether to fulfill potentially fraudulent orders. Chargeback protection is available in some countries, reducing financial risk from disputed transactions.

Unified reporting—see sales and payments in one dashboard. Your payment data syncs automatically with order data. No reconciliation between separate systems. Track revenue, fees, payouts, and refunds all in Shopify admin. This unified view simplifies accounting and financial reporting.

Shopify Payments Fees (2025)

Fees vary by Shopify plan and location. Here are US rates (other countries have different fee structures):

Basic Plan: 2.9% + $0.30 per online transaction, 2.7% + $0.00 per in-person transaction (using Shopify POS with card reader). Most new stores start on Basic plan.

Shopify Plan: 2.7% + $0.30 per online transaction, 2.5% + $0.00 per in-person transaction. Slightly lower fees justify the higher plan cost if you're processing significant volume.

Advanced Plan: 2.5% + $0.30 per online transaction, 2.4% + $0.00 per in-person transaction. Best rates for high-volume stores doing $50k+/month.

Shopify Plus: Custom rates negotiated based on volume, typically 2.15% + $0.30 or lower. For enterprise stores doing $500k+/month.

International and currency conversion fees: Additional 1.5% fee when selling to customers in different currencies. For example, if your store is in USD and a customer pays in EUR, you pay the standard processing fee plus 1.5% currency conversion fee.

Shopify Payments Eligibility

Shopify Payments is available in select countries: United States, Canada, United Kingdom, Australia, New Zealand, Ireland, Spain, France, Italy, Germany, Netherlands, Belgium, Denmark, Finland, Sweden, Austria, Czech Republic, Portugal, Singapore, Hong Kong, and Japan.

Requirements to use Shopify Payments: Your business must be located in a supported country, you need a valid business bank account in that country, your products must comply with Shopify's acceptable use policy (no weapons, illegal items, or restricted products), and you must provide accurate business information during setup.

If Shopify Payments isn't available in your country or your business doesn't qualify, you'll need to use third-party payment gateways like PayPal, Stripe, or regional providers. More on alternatives below.

2. How to Set Up Shopify Payments (Step-by-Step)

Step 1: Access Payment Settings

Log into your Shopify admin, click Settings in the bottom-left corner, then select Payments from the settings menu. You'll see the Payment providers section showing available payment methods for your store's location.

Step 2: Activate Shopify Payments

In the Shopify Payments section, click Complete account setup (if you haven't set it up) or Manage if it's already partially configured. Shopify will guide you through the setup wizard.

You'll need to provide: Legal business name (must match your bank account), business address, business type (individual/sole proprietor, partnership, corporation, LLC), tax ID or Social Security number (for US businesses), date of birth for account owners, phone number for verification.

Identity verification: Shopify requires identity verification to comply with financial regulations. You may need to upload government-issued ID (driver's license, passport) and potentially proof of address. This protects against fraud and ensures legal compliance. Verification usually completes within 1-2 business days.

Step 3: Add Banking Information

Enter your bank account details where you want payouts deposited. You'll need your bank's routing number and your account number. Ensure this information is accurate—incorrect bank details delay payouts and can freeze your account.

Important: The bank account must be in the same name as your business. If your business is "ABC Store LLC," the bank account must be in that exact legal name. Mismatches cause payout delays and require additional verification.

Step 4: Set Payout Schedule

Choose how frequently Shopify transfers funds to your bank account. Options include: Daily (recommended for most stores), Weekly (select a specific day), Monthly (select a specific date), or Manual (you trigger payouts when desired).

Most stores should use daily payouts. Money arrives 2-3 business days after the payout is initiated. Daily payouts mean you receive funds continuously, improving cash flow. There's no advantage to weekly or monthly unless you have specific accounting preferences.

Initial payout hold: Your first payout is typically held for 7-10 days for security and fraud prevention. This is standard across all payment processors. After the initial hold, payouts process normally on your chosen schedule.

Step 5: Configure Payment Methods

Choose which payment methods to accept. By default, Shopify Payments accepts all major credit cards (Visa, Mastercard, American Express, Discover). You should also enable accelerated checkouts for better conversion.

Enable Shop Pay: Shop Pay offers one-click checkout for returning customers and significantly increases conversion rates (often 20-40% higher than standard checkout). There's no extra cost—it's included with Shopify Payments. Enable it by checking the box in payment settings.

Enable Apple Pay and Google Pay: These digital wallets allow mobile users to pay with saved cards. Conversion rates for mobile wallet payments are 2-3x higher than manual card entry. Enable both in your Shopify Payments settings—no additional setup required.

Step 6: Set Up 3D Secure (Optional but Recommended)

3D Secure adds an extra authentication step for credit card payments, reducing fraud and chargebacks. When enabled, customers may be prompted to verify their identity through their bank (entering a code sent via SMS or using their banking app).

Should you enable 3D Secure? Yes, for most stores. It reduces fraud significantly with minimal impact on conversion (1-2% drop). The chargeback protection is worth the minor friction. However, if you sell very low-priced items (under $20) where fraud risk is minimal, you might skip it to maximize conversion.

Step 7: Test Your Payment Setup

Before launching, test your checkout to ensure payments work correctly. Shopify provides a test mode where you can place orders using test credit card numbers without processing real charges.

To test payments: Go to Settings → Payments → Test mode (toggle on). Use Shopify's test credit card numbers (e.g., 4242 4242 4242 4242) to place test orders. Verify the checkout flow works smoothly. Check that order confirmations send correctly. Then disable test mode before launching.

3. Alternative Payment Gateways

If Shopify Payments isn't available in your country or doesn't fit your needs, Shopify integrates with 100+ third-party payment gateways. The most popular alternatives are PayPal, Stripe, Square, and Authorize.net. Remember: using third-party gateways incurs additional transaction fees (0.5-2% depending on your plan) on top of the gateway's processing fees.

PayPal: Most Recognized Alternative

PayPal is the most widely recognized payment method globally. Many customers trust PayPal and prefer it over entering credit card details on unfamiliar websites. PayPal also allows customers to pay without leaving your site (PayPal Express Checkout).

PayPal fees: 2.9% + $0.30 per transaction in the US (similar to Shopify Payments), but Shopify adds transaction fees (0.5-2% depending on plan) on top of PayPal's fees. Total cost is higher than Shopify Payments.

PayPal advantages: Widely trusted by customers, especially internationally. Faster checkout for existing PayPal users. Buyer protection builds customer confidence. Available in 200+ countries where Shopify Payments isn't.

PayPal disadvantages: Higher total fees due to Shopify transaction fees. PayPal can hold funds or freeze accounts aggressively if they detect unusual activity. Customer disputes heavily favor buyers. Separate dashboard for managing transactions.

Setup: Go to Settings → Payments → Alternative payment methods → Add PayPal. Connect your PayPal Business account or create one. Choose PayPal Express Checkout for seamless integration. PayPal appears as a payment option at checkout alongside credit cards.

Stripe: Developer-Friendly Alternative

Stripe is a popular payment processor known for excellent developer tools and APIs. If you're using Shopify in a country without Shopify Payments, Stripe is often the best alternative since Shopify Payments is built on Stripe infrastructure.

Stripe fees: 2.9% + $0.30 per transaction, plus Shopify transaction fees (0.5-2%). Similar total cost to PayPal—more expensive than Shopify Payments but competitive among alternatives.

Stripe advantages: Available in 45+ countries. Excellent international payment support. Advanced fraud detection. Supports subscription billing and complex payment flows. Strong developer tools if you need custom integrations.

Stripe disadvantages: Higher fees than Shopify Payments due to Shopify transaction fees. Account holds can occur (though less aggressive than PayPal). Requires separate Stripe account management. Slightly more complex setup than Shopify Payments.

Setup: Create a Stripe account at stripe.com. In Shopify: Settings → Payments → Alternative payment methods → Choose Stripe. Connect your Stripe account using OAuth. Stripe appears alongside other payment methods at checkout.

Square: Best for Omnichannel Retailers

Square is ideal for businesses selling both online and in-person. If you have a physical retail location or sell at markets/events, Square's hardware ecosystem (card readers, terminals) integrates with Shopify POS seamlessly.

Square fees: 2.9% + $0.30 online, 2.6% + $0.10 in-person (with Square hardware), plus Shopify transaction fees online. In-person rates are competitive. Online rates are similar to competitors.

Square advantages: Unified system for online and offline sales. Excellent point-of-sale hardware. Inventory syncs between online store and retail locations. Same-day deposits available (for a fee). Simple interface.

Square disadvantages: Higher combined fees than Shopify Payments for online sales. Less international support than Stripe or PayPal. Limited advanced features. Account holds can occur (standard for all processors).

Setup: Create Square account. In Shopify: Settings → Payments → Alternative payment methods → Square. Connect accounts. Configure inventory sync settings if using both online and offline sales.

Regional Payment Gateways

Many countries have popular local payment methods that customers prefer. If you're targeting specific international markets, offering regional payment options can significantly improve conversion rates.

Examples: iDEAL (Netherlands) for direct bank transfers, Klarna (Europe) for buy-now-pay-later, Afterpay (Australia) for installment payments, Alipay and WeChat Pay (China) for Chinese customers, Bancontact (Belgium) for bank transfers, Sofort (Germany) for instant bank transfers.

When to add regional gateways: If 20%+ of your customers are from a specific country with preferred local payment methods, add that gateway. Check your Shopify analytics to see where customers are located. Research payment preferences in those countries. The conversion increase often outweighs additional transaction fees.

4. Buy Now, Pay Later (BNPL) Options

Buy now, pay later services let customers split purchases into installment payments over time. These options are increasingly popular and can increase average order value by 20-40% by making higher-priced items more accessible.

Shop Pay Installments

If you use Shopify Payments, Shop Pay Installments is built-in (available in the US). Customers can split purchases of $50-$17,500 into 4 interest-free payments or monthly installments. You receive full payment upfront; Shop Pay handles installment collection from customers.

Fees: Similar to standard Shop Pay transactions—no additional cost beyond normal credit card processing fees. This makes it the most cost-effective BNPL option for Shopify stores.

Setup: Automatically available if you use Shopify Payments in the US. Enable in Settings → Payments → Shop Pay Installments section. Customers see the option at checkout automatically.

Klarna: Global BNPL Leader

Klarna is the largest buy-now-pay-later service globally, especially popular in Europe and growing in the US. Offers 4 interest-free payments or longer financing options up to 36 months.

Fees: Klarna charges merchants 2.49-3.29% + $0.30 per transaction (varies by average order value and industry). Plus Shopify transaction fees if not using Shopify Payments. More expensive than standard payment processing but increases conversion and AOV significantly.

Setup: Apply for Klarna merchant account. Install Klarna app from Shopify App Store. Configure settings (minimum purchase amount, which products qualify). Klarna messaging appears on product pages and checkout.

Afterpay: Popular for Fashion and Beauty

Afterpay is dominant in Australia and growing in US, Canada, and UK. Particularly popular with millennial and Gen Z shoppers in fashion, beauty, and lifestyle categories.

Fees: 4-6% of transaction value (no per-transaction fee). Higher than Klarna but attracts younger demographic willing to spend more when installments are available. Stores report 20-30% higher AOV with Afterpay.

Setup: Create Afterpay merchant account. Install Afterpay app from Shopify App Store. Set minimum/maximum purchase amounts. Add Afterpay messaging to product pages to promote the option.

Affirm: Best for Higher-Ticket Items

Affirm specializes in larger purchases ($100-$17,500) with longer financing terms (3, 6, 12 months). Popular for furniture, electronics, and other expensive products where customers want extended payment plans.

Fees: 2.9-6% per transaction depending on terms selected by customer. Longer financing terms = higher fees. You receive full payment immediately; Affirm handles customer payments and financing.

Setup: Apply for Affirm merchant account. Install Affirm app from Shopify App Store. Configure which products qualify (typically items over $100). Display Affirm messaging on product pages showing monthly payment amounts.

5. Additional Payment Considerations

Should You Offer Multiple Payment Methods?

Yes, offer at least 3-4 payment options. At minimum: credit cards via Shopify Payments, PayPal, and at least one BNPL option (Shop Pay Installments if eligible, or Klarna/Afterpay). More options increase conversion rates—some customers exclusively use PayPal, others prefer credit cards, younger shoppers want BNPL.

Research shows checkout pages with 3+ payment methods convert 15-25% better than single-option checkouts. Customers abandon carts when their preferred payment method isn't available. The small additional cost of transaction fees is offset by higher conversion rates.

Manual Payment Methods

Manual payment methods like bank transfers, checks, or cash on delivery are available in Shopify but require manual order processing. You create the order, send payment instructions to the customer, and manually mark the order as paid when you receive payment.

When to use manual payments: B2B sales with established customers using purchase orders. International markets without good online payment infrastructure. Very high-value orders where wire transfers are preferred. Local pickup/delivery with cash payment.

Setup: Settings → Payments → Manual payment methods → Add manual method. Choose method type (bank deposit, money order, cash on delivery). Add payment instructions customers will see. Orders require manual fulfillment after confirming payment received.

Digital Wallets (Apple Pay, Google Pay)

Digital wallets store customer payment information securely and enable one-click payments. They're especially important for mobile shoppers where manual card entry is frustrating.

Apple Pay: Available automatically with Shopify Payments. No setup required. Works on iPhones, iPads, Macs, and Safari browsers. Customers authenticate with Face ID, Touch ID, or device passcode. Conversion rates are 2-3x higher than manual entry.

Google Pay: Also included automatically with Shopify Payments. Works on Android devices and Chrome browsers. Similar authentication and conversion benefits. Increasingly popular as Android market share grows.

Important: Digital wallets require HTTPS (secure connection). Shopify provides SSL certificates free with all plans, so this is automatic. Just ensure wallets are enabled in your payment settings to maximize mobile conversion.

Cryptocurrency Payments

Some Shopify stores accept cryptocurrency (Bitcoin, Ethereum, etc.) through apps like BitPay or Coinbase Commerce. Crypto payments appeal to specific customer segments and can differentiate your brand in certain niches.

Crypto payment advantages: Lower transaction fees (typically 1% vs 3%), no chargebacks (payments are irreversible), appeals to crypto enthusiasts, international payments without currency conversion.

Crypto payment disadvantages: Very small percentage of customers use crypto. Price volatility risk (unless you convert to fiat immediately). Technical complexity. Limited customer support for issues. Regulatory uncertainty.

Recommendation: Only add crypto if you have a specific customer base requesting it (tech products, luxury goods, international B2B). For most stores, crypto payments aren't worth the complexity. Focus on optimizing standard payment methods first.

6. Common Payment Setup Issues and Solutions

Shopify Payments Account Holds

Issue: Shopify Payments may hold your account or delay payouts if they detect unusual activity, policy violations, or fraud risk. Common triggers: sudden spike in sales volume, selling restricted products, high chargeback rates, mismatched business information.

Solution: Provide accurate business information during setup. Read Shopify's acceptable use policy carefully—don't sell prohibited items. If you expect a sales spike (launch, promotion), contact Shopify support in advance to notify them. Respond quickly if Shopify requests additional verification documents. Maintain low chargeback rates through good customer service and fraud prevention.

Bank Account Verification Failures

Issue: Payouts fail because bank account information is incorrect or doesn't match your business name. Common causes: typos in routing/account numbers, business name mismatch, using personal account for business, closed or frozen bank account.

Solution: Triple-check routing and account numbers before saving. Ensure bank account is in exact same legal name as your Shopify store business name. Use business bank account, not personal. Test with small payout before relying on account. Contact bank to verify account is active and can receive ACH deposits.

High Decline Rates at Checkout

Issue: Many customers report payment failures or declines at checkout. Causes include: overly aggressive fraud filters, 3D Secure authentication problems, expired cards, insufficient funds, incorrect card details, international cards being declined.

Solution: Review fraud settings in Shopify Payments—ensure filters aren't too strict. Test checkout yourself with different card types. Enable multiple payment methods (PayPal, BNPL) as alternatives. Display clear error messages helping customers fix issues. Monitor decline analytics in Shopify Payments dashboard and investigate patterns.

Chargebacks and Disputes

Issue: Customers dispute charges with their banks, resulting in chargebacks. You lose the sale amount plus a chargeback fee ($15-25). Common reasons: item not received, item not as described, fraudulent transaction, subscription customer forgot they signed up.

Prevention: Use clear product descriptions and photos to avoid "not as described" chargebacks. Ship with tracking and require signatures for expensive orders. Send shipping confirmations with tracking numbers. Respond to customer service inquiries quickly. Use fraud analysis tools to avoid fulfilling fraudulent orders. For subscriptions, send reminder emails before charging.

Response: When chargebacks occur, respond immediately with evidence: order confirmation, shipping tracking showing delivery, customer communication, product descriptions. Shopify provides templates for responding to disputes. Many chargebacks are won if you respond quickly with strong evidence.

7. Payment Best Practices

Display Payment Options Prominently

Show accepted payment methods in your site footer, on product pages, and at the top of checkout. Visual trust signals (credit card logos, PayPal logo, BNPL badges) reassure customers and reduce checkout abandonment. Many customers check accepted payment methods before shopping.

Add payment method icons to your footer using a simple HTML/image block. On product pages, display "Pay in 4 interest-free installments with Shop Pay" or similar messaging. These small touches increase conversion 5-10% by reducing payment uncertainty.

Optimize for Mobile Payments

60-70% of ecommerce traffic is mobile. Mobile checkout optimization is critical. Enable Apple Pay and Google Pay—they convert 2-3x better than manual card entry on mobile. Test your checkout on multiple mobile devices. Ensure payment buttons are large enough to tap easily. Minimize form fields—use autofill where possible.

Shopify's checkout is mobile-optimized by default, but test it yourself. Place a test order on your phone. Is it frustrating? Fix friction points. Every second of friction costs conversions.

Communicate Payment Security

Display trust badges and security seals near payment forms. Explain that payment information is encrypted and secure. Many customers are nervous about entering card details online, especially on smaller or new stores.

Simple messaging works: "Your payment information is encrypted and secure. We never store your card details." Add padlock icon or SSL badge. These small reassurances reduce payment anxiety and improve conversion, especially for first-time customers.

Set Clear Refund and Return Policies

Clear refund policies reduce payment hesitation and chargebacks. Customers are more likely to complete purchases when they know they can return items if needed. Unclear or missing refund policies increase abandonment and disputes.

Write a simple, customer-friendly refund policy. Link to it from your footer and checkout page. Standard ecommerce refund policies: 30-day returns, items in original condition, customer pays return shipping, refund processed within 5-7 days. Adjust based on your products and margins, but clarity is key.

Monitor Payment Analytics

Regularly review payment performance in Shopify admin. Key metrics: decline rate (should be under 5%), chargeback rate (should be under 0.5%), payment method breakdown (which methods customers prefer), average processing time for payouts.

If decline rates are high, investigate causes and adjust fraud settings. If one payment method is rarely used, consider removing it to simplify checkout. If chargebacks spike, identify the cause and fix it. Data-driven payment management improves revenue and reduces problems.

Conclusion: Launching with Confidence

Payment processing is non-negotiable for ecommerce—you can't sell without it. For most Shopify stores, Shopify Payments is the best choice: lowest fees, easiest setup, fastest payouts, and seamless integration. Set it up correctly from day one, enable multiple payment methods (credit cards, PayPal, BNPL), and test thoroughly before launching.

If Shopify Payments isn't available in your country, use Stripe or PayPal as primary alternatives. They're widely available, trusted by customers, and relatively straightforward to set up. Add regional payment methods if significant portions of your customers are from specific countries with preferred local options.

Remember to optimize for mobile (enable Apple Pay and Google Pay), display payment options clearly, communicate security, and monitor performance regularly. Payment setup is foundational—get it right, and you'll never think about it again. Get it wrong, and you'll fight payment issues constantly. Invest the time upfront to configure payments correctly, and your store will run smoothly from day one.