Shop Pay Review for 2024: A Complete Overview for Merchants

In today’s complex digital world, merchants are looking for a simple payment solution and Shopify’s payment service, Shop Pay, does precisely that. As evidence suggests that 82% of American consumers now use digital payments, businesses in today’s market continue to invest in virtual payment capabilities. ^[1]McKinsey & Company. “New trends in US consumer digital payments“. Accessed on December 1, 2023. Working as a shopping cart software, Shop Pay creates a seamless checkout experience. However, while Shop Pay improves payment speed for online shoppers, some merchants still prefer using traditional checkout methods.

This guide explores Shop Pay, how it works, its benefits, the platform’s features, and its pricing. We’ll also compare Shop Pay to other payment processing solutions and answer key questions from some online merchants. Continue reading to find out if Shop Pay is right for your eCommerce business!

What is Shop Pay?

Shop Pay is a shopping cart software created by Shopify and works in conjunction with Shopify Payments to facilitate seamless transactions. It brands itself as an “accelerated checkout” platform, as it allows customers to bypass the tedious task of inputting their personal details each time they make a purchase online.

In essence, customers input their credit card numbers and billing details, which then saves to the Shop Pay platform. When the same customer checks out at another Shopify-based store, Shop Pay automatically recognizes the shopper and prompts them to streamline their payment using Shop Pay.

Unfortunately, Shop Pay is primarily restricted to Shopify merchants. Facebook, Instagram, and Google sellers also have access to Shop Pay, but other eCommerce platforms are currently excluded from using the service. With that being said, Shop Pay doesn’t necessarily require Shopify merchants to use Shopify Payments—merchants have the option to connect third-party payment gateways to Shop Pay.

How Does Shop Pay Work?

As previously stated, Shop Pay is available to merchants using Shopify’s eCommerce platform. Merchants can enable or disable Shop Pay via their settings dashboard. Once a merchant does this, customers can use the platform to pay for goods and services.

When a customer first checks out on a website with Shop Pay enabled, they’ll receive the option to select a “Shop Pay” button and create a new account. Shoppers can use an email or a phone number to create an account (Shop Pay will send the customer a text message with a 6-digit code to verify the contact details are correct). During the initial sign-up process, Shop Pay requires customers to input card details, addresses, and other personal information that will be stored for future use.

After a customer registers with Shop Pay, they can check out on other Shopify stores without entering their personal information. Customers’ details are manageable within their Shop Pay accounts, making it simple to update card information or even opt out of the platform altogether.

Stores That Use Shop Pay

Shop Pay has become a favorite payment option for many global businesses. Let’s explore some of the most recognizable brands that are using Shop Pay to improve payment convenience for their customers:

Benefits of Using Shop Pay

Choosing the payment method for your online business isn’t an easy task so be sure to identify the pros and cons of different platforms before making a decision. Let’s explore some perks of using Shop Pay below:

1. Improved Payment Process: There’s no doubt Shop Pay offers a seamless shopping experience for customers, making it easier to purchase goods and services online without repeatedly entering their personal details.
2. Reduced Abandoned Carts: Not only does this make it easier for customers to check out, but it also reduces abandoned carts. Shopify claims Shop Pay increases conversions on mobile checkouts by 1.9x, making it an impressive tool if you want to encourage customers to complete their payments immediately.
3. Secure Payments: Shop Pay uses encryption to protect customer payment details and provide secure transactions for both shoppers and merchants. It also uses Shopify’s PCI-compliant servers, making it easier for your business to comply with requirements.
4. BNPL Features: Shop Pay offers more than just streamlined checkouts for customers; the platform has a built-in buy now, pay later (BNPL) option to help customers access financing. With this, customers may split payments into installments, making it easier to afford big-ticket items.
5. Available in Multiple Languages: While some Shop Pay features such as BNPL are only available in the United States, the platform is compatible with multiple languages. Currently, Shop Pay is accessible in Chinese, Czech, Danish, Dutch, English, Finnish, French, German, Italian, Japanese, Korean, Norwegian, Polish, Portuguese, Spanish, Swedish, Thai, Turkish, and Vietnamese.

Shop Pay advertises a commitment to helping global environmental issues. When customers pay with Shop Pay, the platform contributes money to various eco-focused projects like air capture projects, ocean-based carbon removal, and more. Additionally, Shop Pay supports projects that include planting more than four million mangrove trees in Senegal throughout 2021 and 2022.^[2]Shop Pay. “Invest in the planet with every online purchase“. Accessed on December 1, 2023.

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Key Features for Merchants

As with any payment platform, understanding Shop Pay’s features will help you decide if it is a worthwhile host for your business. Now, let’s explore its benefits!

Key Features for Customers

While it’s clear that Shop Pay offers a range of benefits to merchants, it’s also important to overview the features available to customers:

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Shop Pay Pricing

Unlike many modern payment tools, you don’t need to pay anything additional to access Shop Pay. However, as this platform is only available to online stores built on the Shopify framework, you need a Shopify subscription to unlock Shop Pay. Let’s explore the three subscription options for Shopify stores:

• Basic Plan: $29 per month
• Shopify Plan: $79 per month
• Advanced Plan: $299 per month

Remember, Shop Pay doesn’t charge additional fees for its checkout services, but you still need to pay standard processing rates to accept credit and debit cards online. In many cases, Shop Pay merchants use Shopify Payments to process transactions, meaning they are subject to Shopify’s processing rates. If you do choose to work with Shopify to process credit cards, the fees are as follows:

• Basic Plan: 2.9% + $0.30 USD for online payments
• Shopify Plan: 2.6% + $0.30 USD for online payments
• Advanced Plan: 2.4% + $0.30 USD for online payments

It’s important to note that Shopify Payments fees are slightly higher than average credit card processing fees. However, Shop Pay allows Shopify users with third-party payment processors to use the checkout tool, giving merchants a chance to save on their credit card processing fees. Also, while there’s no additional charge for using Shop Pay to process standard transactions, merchants are required to pay a fee for transactions using installment plans.

Is Shop Pay Secure to Use?

Yes, Shopify is secure to use. As with PayPal, Apple Pay, Google Pay, and other similar services, one of the primary benefits of Shop Pay is its security.

Not only does the platform help merchants securely process credit card payments, but it also provides additional assurances to shoppers. Submitting card details to individual websites can make shoppers feel like they’re prone to fraud. Despite this, Shop Pay stores and encrypts sensitive information, assuring shoppers that Shopify is handling their payments instead of an unknown merchant.

However, while Shop Pay offers excellent security and compliance benefits, it isn’t immune to fraud. Customer accounts can still be hacked, leaving merchants prone to friendly fraud. Therefore, it’s wise to continue to implement robust security protocols that protect your business from fraud and other financial losses.

What is a Shop Pay Code?

A Shop Pay verification code is a six-digit number used to verify a payment’s legitimacy. If you attempt to make a payment using Shop Pay, the platform will send an SMS to your phone to verify that you are the individual attempting to make the payment. This quick, easy verification tool allows Shop Pay to offer secure, and almost-instant payments to its users.

If you receive a Shop Pay code but are not currently attempting to process a payment, contact Shop Pay immediately—it may be a sign of fraudulent activity.

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Shop Pay & Affirm: What Is Shop Pay Installments?

Shop Pay partners with BNPL giant, Affirm to provide consumer installment payment options. Eligible purchases must be between $50 and $17,500 for payments to be split into installments. There are two different payment options available to consumers: bi-weekly payments and monthly payments. With bi-weekly payments, the customer does not pay interest, but with monthly payments, interest will be charged.

Shop Pay doesn’t charge additional fees to customers either. While there are no late fees, not paying a payment on time will result in a temporary suspension from the Shop Pay platform. Additionally, merchants pay 5.9% + $0.30 per transaction for Shop Pay Installment purchases, and since it’s controlled by BNPL partner, Affirm, it is subject to change.

Many Shop Pay merchants enable the installment payment option for their customers. Well-known brands like Gymshark, Steve Madden, SKIMS, Rhoback, and FLO Vitamins use this payment method. Additionally, many merchants accepting Shop Pay Installments also accept other BNPL services like Klarna.

Shop Pay vs. Shopify Payments

Shop Pay and Shopify Payments are separate platforms, but they work together to process payments for merchants using the Shopify web platform. Shopify Payments is Shopify’s primary payment processing platform, allowing merchants to conveniently process credit cards and debit cards via their eCommerce websites. Shop Pay is a tool that can be enabled on this platform to process payments more efficiently.

While processing payments online with Shopify Payments, the checkout process is similar to that of other websites. Customers must enter their card numbers and billing details to process their payment. There is no streamlined payment function built into Shopify that automatically enables Shop Pay, so merchants will need to manually add a Shop Pay account to unlock this feature.

Shop Pay is also used by third-party payment processors to speed up payments, as it doesn’t always need to be used in conjunction with Shopify Payments. This is especially important for businesses using Shopify as a high-risk merchant, since Shopify Payments does not work with businesses deemed “high-risk“. Another key difference is that since Shopify Payments is the processor, it charges traditional transaction processing fees, whereas Shop Pay does not.

Shop Pay vs. PayPal

One of Shop Pay’s biggest rivals is PayPal, the popular digital wallet service that revolutionized virtual payments and peer-to-peer money transfers. PayPal provides a similar, streamlined checkout process for its users, as there is no need to input card details after a shopper sets up a PayPal account. Customers can log into their accounts and process instant payments. PayPal also offers a range of additional payment tools, including peer-to-peer payments, digital wallet features, cryptocurrency purchases, commercial accounts, and more.

While Shop Pay doesn’t offer advanced payment features like PayPal, it has a bigger investment in internal marketing tools. With Shop Pay, your business is able to communicate with customers, send offers, appear on curated lists, and benefit from other upselling opportunities.

PayPal, on the other hand, has a significant advantage in brand recognition. As an incumbent in the digital wallet space, the virtual payments giant is one of the most recognized payment companies in the world. Currently, it has more than 425 million users worldwide, making it a preferred payment processing platform for many internet shoppers.^[3]GlobalData. “Number of Active PayPal Accounts: Global (Q3 2015 – Q1 2022)“. Accessed on December 1, 2023.

Additionally, since PayPal isn’t an eCommerce web builder, it integrates its payment features with various eCommerce platforms and other online shopping services, unlike Shop Pay which can only be used with stores on Shopify). Still, PayPal does integrate with Shopify, so it’s possible to use both PayPal and Shop Pay on a Shopify website.

In terms of cost, it’s nearly impossible to compare the two platforms. As Shop Pay’s price depends on your specific payment processor (Shop Pay doesn’t charge additional fees), PayPal Checkout fees are set at 3.49% + $0.49 per transaction, making it a more expensive option compared to other providers.

Are There Any Other Shop Pay Alternatives?

While Shop Pay offers convenient checkout options to millions of online shoppers, it’s not the only platform making it easy to store payment details and process instant payments. Other providers are hard at work to provide similar services, and many of them aren’t restricted to specific eCommerce platforms, as Shop Pay is with Shopify.

Let’s explore two of the most convenient payment processing tools in competition with Shop Pay:

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How to Enable Shop Pay for Your Online Store

Once Shop Pay is enabled for your online store, you’ll be ready to accept transactions from your customers. However, it’s important to set up this tool correctly if you want to avoid issues when you first begin accepting Shop Pay payments. Below, is a step-by-step guide to activating Shop Pay.

1. Head to your Shopify website.
2. Click the “Add Shop Channel” button on the homepage.
3. Click “Add app” at the top right-hand corner of the page. This will prompt you to log into your Shopify account to finish the installation process.
4. Once the app is installed in your online store, it’s possible to manage the settings by navigating to Sales Channels > Shop > Settings
5. After you begin accepting payments with Shop Pay, you can head to the “Overview” tab to track metrics. Here you’ll find data on shop performance, orders, sales, and more.

Shop Pay is now enabled on your Shopify store. Remember, you can also use the “Shop” website to add a button to your Instagram, Facebook, or Google store. However, you won’t be able to add the button to any other eCommerce platforms or web builders.

Shop Pay Customer Support

Shop Pay offers a range of customer support options, making it simple to get help if you run into any problems. There is an online depository of information for troubleshooting issues, and you’ll also find answers to various problems in the Shopify Help Center. You must have an active Shopify account to access customer service. All Shopify customer service is available 24/7, meaning that you’ll never be stuck without support, no matter what time of day it is.

Should I Use Shop Pay?

With so many payment options available to modern eCommerce users, it’s challenging to decide which options are the most suitable for both you and your customers. If your website is built on Shopify, it’s easy to see why your business would benefit from this expedited checkout tool. Not only does Shop Pay make it easier for your customers to process payments, but the service also doesn’t come at any additional cost to your business. And since it doesn’t require you to use Shopify Payments exclusively and add a third-party payment processor, you’ll be able to save on payment processing fees and create a custom payment system for your business. So, as long as you choose an eCommerce merchant account provider that is compatible with the Shopify website platform, you’ll streamline the checkout process and bring maximum ease to your customers.

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