In 2024, selecting the right payment gateway for your Shopify store is crucial to ensure smooth and secure transactions. With over 100 payment integrations available, it’s important to understand which options best suit your business needs. This guide covers the most popular Shopify payment gateways for 2024 and how they can benefit your business.
What Is a Payment Gateway?
A payment gateway allows retailers to securely collect customer financial information, such as credit card numbers and billing addresses, and pass it onto the processor that transfers the money from the customer’s account to the merchant’s account. Payment gateways are essential for facilitating every e-commerce store transaction, ensuring merchants can receive and process customer payments.
Key Functions of Payment Gateways:
- Authorization of the customer’s bank
- Encryption of sensitive information
- Transaction processing
- Transfer of funds to the merchant’s account
- Detailed transaction reporting
Factors to Consider When Choosing a Payment Gateway
- Availability in Your Location: The first factor to consider is your location. Certain payment gateways only work in specific regions, so it’s important to check which ones are accessible to you and your target audience. Shopify provides a good breakdown of available payment gateways by region.
- Payment Gateway Pricing Structures: Cost is a major factor. This will affect your profit margins and product pricing. Don’t just look at transaction rates; also consider monthly fees some processors charge. Evaluate if a higher transaction rate with no monthly costs is cheaper or more expensive than a lower rate with a monthly fee.
- Setup Time: The time taken to set up your payment gateway varies between providers. For example, PayPal can be set up in less than a day, whereas Sage Pay can take 4-5 weeks. Don’t leave selecting or setting up your payment gateway until the last minute when your site is complete.
- International Expansion: Choose a payment gateway that serves your current market and has the potential for international expansion. Even if you only trade locally now, future-proofing your site is beneficial.
- Quick Competitor Analysis: Regularly check what payment gateways your competitors use to see what works well for their business. This may encourage your brand to upgrade to a different gateway and improve customer experience.
Types of Payment Gateways:
- Hosted Gateway: Also known as redirect payment gateways, customers are taken off your site to the payment gateway page. Once the payment is completed, they are redirected back to your site.
- Self-Hosted: Payment data is collected on the Shopify site before being sent to the payment gateway in the backend. The payment is processed offsite.
- Non-Hosted: The merchant collects and processes the payment on the site. This is more common with larger, enterprise businesses as it requires ongoing maintenance and support.
Top 9 Payment Gateways for Shopify in 2024
Shopify Payments: Best for all Shopify merchants, Shopify Payments is worth considering if your store is on Shopify. It eliminates the need for third-party providers and is set up to accept major payment methods automatically. You can see transaction details in your Shopify admin, and there are no subscription transaction fees. Setup is quick, requiring just a form fill. Payments can take up to 3 business days to reach you. It also includes a free card reader for physical payments.
Pros:
- Easy to set up and integrate
- No additional transaction fees
- Cost-effective with competitive processing fees
- Built-in fraud detection tools
- Multi-currency support
- PCI DSS compliant
Cons:
- Not available in all countries
- Basic support services
- Limited customization options
- Platform is locked-in with Shopify
PayPal: Best for small to large e-commerce businesses with a global customer base. PayPal is one of Shopify’s default payment providers. Setup is quick, and it supports mobile-optimized checkout, international payments, and direct payments through PayPal accounts. Transaction fees are 2.9% + $0.30 per transaction.
Pros:
- Ease of use and quick setup
- Available in many countries and supports multiple currencies
- Strong security measures and PCI compliance
- Easy integration with Shopify
Cons:
- Separate setup and checkout process required
- Additional transaction fee charges
- Higher transaction fees
- Basic customer support and limited customization options
Worldpay: Best for larger enterprises, international businesses, and high-volume merchants. Worldpay, accessible in nearly 120 countries, has helpful support and sales teams. It offers pay-as-you-go or pay monthly fee structures.
Pros:
- Supports multiple currencies and countries
- Suitable for large volume transactions
- Ecommerce and POS integration
- PCI compliance and 24/7 customer support
Cons:
- Complex fee structure
- Higher transaction fees
- Long-term contracts and potential account holds for suspected fraud
Stripe: Best for businesses offering subscription-based services. Stripe integrates easily with Shopify, offering a clear pricing structure and the ability to set up recurring billing and direct debits. No setup or monthly fees; transaction fees are 2.9% + $0.30 per online payment.
Pros:
- Developer-friendly and flexible customization
- Supports over 135 currencies and multiple countries
- Advanced functionality for subscription management
- Suitable for startups to large enterprises
Cons:
- Additional charges for chargebacks and refunds
- Requires technical expertise for integration
- Complex setup and basic support
- Not available in all countries
Klarna: Best for high-volume merchants. Klarna offers a ‘buy now, pay later’ model, allowing customers to split costs into installments or delay payments. It uses a simple per transaction structure starting at 1.9% plus a 20p transaction fee.
Pros:
- Flexible payment options
- Seamless checkout experience
- Supports multiple currencies and a global customer base
- Built-in fraud detection tools
Cons:
- Costly transaction fees
- Depends on third-party providers
- Requires technical expertise for integration
Amazon Pay:Best for small to medium-sized businesses. Amazon Pay allows customers to use their Amazon account details to pay on your store. Setup requires an Amazon Professional Seller account. Transaction fees are 2.9% + $0.30 per transaction for domestic sales and higher for international sales.
Pros:
- Faster checkout
- Supports multiple currencies
- Easy integration with Shopify
Cons:
- Costly transaction fees and additional charges
- Amazon controls customer data
- Basic support and limited customization options
Opayo (formerly Sage Pay):Best for small to medium-sized businesses. Opayo charges a flat monthly fee per number of transactions, starting at £19.90 for 350 transactions a month.
Pros:
- PCI DSS compliance and built-in fraud detection tools
- Integrates with various e-commerce platforms
- Suitable for high-volume transactions and growing businesses
Cons:
- Costly transaction fees and complex fee structure
- Technical integration challenges
- Limited customization
Shop Pay Installments: Best for Shopify merchants. Shop Pay Installments offers customers the option to pay in full or split their purchase into four equal, interest-free payments. No additional charges, interest rates, or late fees are passed on to customers.
Pros:
- Easy integration and setup
- Increases conversion rates
- Flexible payment options
Cons:
- Costly transaction fees
- Platform limitation (exclusive to Shopify merchants)
Square: Best for startups and e-commerce businesses, especially in retail, food, and beverage. Square allows you to link your e-commerce store with a physical shop, keeping track of inventory in one place. No setup fee, transaction fees are 2.9% + $0.30 per transaction.
Pros:
- Ease of use and simple setup
- Affordable and scalable
- POS integration with its hardware and software
- Additional services like payroll and marketing tools
Cons:
- Costly transaction fees
- POS hardware costs
- Basic customer support
Conclusion
Selecting the right payment gateway for your Shopify store in 2024 involves considering several factors such as location availability, pricing structures, setup time, potential for international expansion, and competitor analysis. The top payment gateways, including Shopify Payments, PayPal, Worldpay, Stripe, Klarna, Amazon Pay, Opayo, Shop Pay Installments, and Square, each offer unique advantages and some limitations. By carefully evaluating these options and aligning them with your business needs, you can ensure smooth and secure transactions for your online store.