If you’ve recently decided to create a website for your business, then Shopify is a great platform to help springboard your business into the online sphere.
However, if you’re currently on the fence about using Shopify because you’re wondering how you’ll get paid after you make that first sale, we’re here to cut through any confusion and put your mind at ease.
So, without further ado, let’s unpack how Shopify’s payment system works:
Setting up with a payment provider
As soon as you create an account with Shopify (besides creating a theme and uploading your products, of course) you’re also going to need to set up a payment provider.
Before we go any further, it’s important to note that all of Shopify’s payment methods are dependent on third-party providers who will be able to process each transaction made within your store.
For that reason, there is a chance that these providers could charge additional fees, so it’s important to familiarize yourself with the rules and regulations of the provider you are planning on going with.
With that being said, when you set up a payment provider to be able to accept all payments made via your store, it will then mean that each payment will need to be processed.
This means that there will likely be a short delay between your customer paying for the goods from your store, and you actually receiving the payment that was made.
Nevertheless, as soon as the payment has been correctly processed, the amount that was paid to your store will be transferred directly into your merchant bank account.
Alongside this, you can also accept manual payments that can be made outside of your website’s checkout page, such as a bank transfer.
However, unless you make sure that you switch on “Shopify Payments” as your payment processor, you will, unfortunately, be charged for all transaction fees that aren’t being directly brokered by the Shopify payment provider.
There are plenty of benefits to choosing to opt for Shopify over other third-party payment providers, with the biggest one being a shorter processing time.
Transaction fees and how much you’ll get paid:
So, after you have set up with your chosen provider and you’re ready to start selling, you’ll also need to get your head around something known as transaction fees.
We touched upon them above, but in a nutshell, a transaction fee is a fee that will be taken by the provider as payment for their services.
This would then mean that the money deposited into your merchant account would be less than the purchase price.
It’s important to note that you may be charged more than one transaction fee for all purchases made via your store.
Due to the payment process required for all online transactions, it means that your payment provider, the issuer, the acquirer, as well as the company in charge of handling your customer’s credit card may all charge a small fee for their services.
However, for many countries around the world, Shopify will not charge you any transaction fees when you are using Shopify Payments as your payment provider.
Instead, you will only need to pay any of the processing fees of your customer’s credit card processor, which will in turn mean that you’ll end up making more money for each sale that you make.
Additionally, if you were to opt for Shopify Payments, then there will also be something that is known as a “pay period” in which you’ll be able to see a date for when a payment is going to be deposited into your account.
This is super helpful and will allow you to keep track of when money is going to be coming in.
It’s also worth keeping in mind that, alongside the general processing time, you also won’t receive any payments during bank holidays.
Additionally, if you happen to discover that there is a delay on your payout, then you could also reach out to your personal bank, as there could be an internal delay on their end.
Regardless of which provider you choose, we strongly recommend that you do your own research, so that you are able to make the most well-informed decision for you.
Why is payment pending on Shopify?
If you’ve recently made a sale and its status is showing as “Payment Pending” in our admin area, then the reason for this is due to the fact that you haven’t yet received the payment, as it is still being processed by your provider.
When your customer visits your store and finds a product that they would like to buy, they will then go ahead and pay for it using their credit card.
After the payment has been accepted, it will then need to be processed by your payment provider before the funds can then be made available to you via your merchant account.
The first stage of the payment process is something known as Authorization. This is when your customer pays for the order placed in your store.
During this stage, your payment provider will check to see if the card has enough funds, before then going ahead and authorizing the payment.
After this point, the next stage of the payment process begins, and it is referred to as the Capture.
All this means is that the payment has to be “captured”, so important information needs to be sent to the acquirer to record.
After the details of the sale have been given to the acquirer, the payment details will be reviewed, upon which the purchase fee will be requested from the company that is in charge of processing your customer’s card.
Last but not least, the final stage of the payment process is known as Funding and is the stage in which the acquirer will take the transaction fee out of the amount (so that it can go to the payment provider) and the remaining balance will then be transferred directly to your merchant account, ready for you to access.