Shopify Payments vs PayPal

Which Online Payment Portal Should You Use?

You’ve probably been aware of PayPal for some time now. Considered to be trustworthy, secure, fair, and efficient, it’s been most buyer’s and seller’s go-to online payment platform for decades now.

Shopify Payments vs PayPal

With no prominent competitors to butt heads with, PayPal seemed to have the sector on lock, but fairly recently, a contender emerged in the form of Shopify Payments.

So, now the market has a bit of variety, which should we choose? 

Let’s begin our comparison with a brief overview of each company.

PayPal - At a Glance

As I already touched upon in my intro, PayPal is a stalwart of the industry, an online wallet and payment platform with global recognition.

You’d be hard-pressed to find any sort of online store that doesn’t have a little PayPal widget on their payment preferences page.

PayPal also offers plenty of incentives and utilities to attract users.

paypal payments

Recently, for example, they’ve been rolling out more flexible financing options such as PayPal 3, enabling customers to split payment for an item into 3 monthly 0% interest fees.

One of the best things about PayPal is its focus as a business. It’s a well-defined organization that specializes in electrical transactions. PayPal primarily draws profit from service and payment fees.

Shopify Payments - At a Glance

Shopify’s business model isn’t quite as focused as PayPal’s, but that doesn’t mean that it’s not impeccably structured. 

Shopify cut its teeth as an e-commerce platform for selling goods, much like Etsy or eBay.

shopify payments

Once established in multiple countries, they endeavored to streamline user transactions by inventing their own electronic payment processor: Shopify Payments.

In doing so, Shopify eliminated the need for 3rd party processors, keeping the payment pipeline as localized and secure as possible.

Usability - Customer Kind or Esoterica?

Being the largest e-commerce online wallet in the world gives PayPal a few advantages right off the bat in terms of usability.

For example, PayPal’s services are available in 200 different nations, which means it has a robust support structure in place for international trade.

As it stands, Shopify Payments is only available in 17 different countries, so if you live outside or plan to sell outside the countries on this short list, Shopify Payments may not be a viable option.

In terms of general, day-to-day usability, PayPal is pretty user-friendly. You can integrate it into your online business as a payment option following these steps:

  1. Create a PayPal business account
  2. Log into your account
  3. Open the “tools” menu
  4. Select “all tools”
  5. Select “PayPal buttons”
  6. Click “create new button”.
  7. Choose button type e.g. “buy it now” or “donate”.
  8. Alter the size of the button or upload your own image.
  9. You can then preview what your webpage will look like to your customers.
  10. There are 2 more optional menus full of customizable parameters.

Despite being in direct competition with Shopify, you can integrate PayPal into your Shopify e-commerce store as they’re fully compatible.

Shopify Payment is arguably even easier to integrate into your e-commerce store, especially if your business is set up on the Shopify e-commerce format. All it takes is…

  1. Logging into your account
  2. Clicking “settings”
  3. Selecting “payment providers”
  4. “Shopify Payment setup”
  5. Then fill in all the necessary information

The edge Shopify has on PayPal for customers is that they’re never diverted from your business site to complete the transaction, making Shopify Payments slightly more efficient.


Here’s where we start to see the potential gains of using Shopify Payments.

If you run a U.S. E-commerce business, Shopify will get your money to you in no longer than 3 business days, which is incredibly efficient. 

That said, in some other nations such as Canada or the UK, it can take as long as 7 business days. Offering full transparency, the Shopify dashboard lets you keep an eye on the payout process.

No matter what country you’re operating in, PayPal insists that you wait 5 - 7 business days for a transaction to process.

They also offer transaction data analysis, so you can keep tabs on your cash while it’s making its way through the system.

Chargebacks - How Do These Payment Portals Deal with Claims?

Shopify's rules on disputes and chargebacks are incredibly strict. In the event of a dispute, Shopify will collate evidence from both seller and buyer and respond within 60 days.

Should the customer be awarded the chargeback, the seller will be forced to pay a $15 punitive fee for malpractice.

Should sellers be involved in multiple or consistent disputes, their account may be frozen indefinitely, and access to any money in the sales account will be denied.

PayPal gives you 10 days to provide evidence that you’re in the right, then takes upward of 75 days to deliberate, during which time, the money will be held up.

At $20, the chargeback fee is a little steeper than Shopify’s, but if your transactions are covered by their seller protection policy, PayPal covers the chargeback fee themselves.


Both payment portals understand the importance of a safe transaction for sellers and buyers alike, but PayPal offers a slightly more balanced approach with both buyer and seller protection protocols.

Shopify, on the other hand, offers fraud protection to sellers, but no buyer protection. In their eyes, the parameters of the sale are entirely set out by the shop owner.


Shopify Payments is undoubtedly the best of the two payment processors when it comes to fees. On their most basic plan, when fees are at a premium, the largest cut they’ll ever take as a credit card charge is 2.9% of a sale plus a standard 30 cent additional fee. The more you invest in your Shopify business, the lower the fees get, hitting bottom at a very reasonable 2.4%

They also offer a maximum transaction fee of 2% on their basic plan, and 0.5% on their advanced plan, which is incredible.

Found at bsscommerce

PayPal does things differently. They focus on your monthly revenue to decide which fee bracket a seller falls into.

Anything below $5000/month means PayPal collects 5.4% plus a 45 cent additional fee on every sale, and that can really add up.

PayPal also stacks on fees for international transactions, so you have to be careful when trading with other countries.

However, PayPal does have one feather in its cap in terms of transactions, and that’s its ability to convert almost any currency into U.S. dollars automatically using an exchange rate that’s updated twice daily.

Which Payment Processor is Right for You?

As you’ve seen, there are benefits and drawbacks to both of these global online payment platforms. Which is best for you depends on where you live and where your customer base is.

Shopify Payments simply isn’t as widespread as PayPal at this moment in time, but that’s likely to become less of a problem as Shopify grows. 

Furthermore, if you live anywhere other than the U.S., Shopify may drag behind PayPal on payout by a couple of days, which should factor into your final decision.

As a buyer, the reputability of the PayPal name and the fact they offer buyer protection means it’s probably your best bet, but it depends on the nature of the product and the business you’re buying it from.

As a seller, Shopify’s minimal transaction fees are an incredibly enticing prospect, so it would make sense to at least take Shopify Payments for a test drive and see how it affects your income.

The speed at which Shopify gets the money to you is a real bonus too, but again, you can only take advantage of the 3-day processing period if you’re a U.S.-based merchant.

I know there’s a lot of information to sift through here, so I’ve distilled it into the concise table below.


Shopify Payments


Full store integration (no 3rd parties)

Can be integrated into any store (even Shopify stores)


3 days (U.S.). 7 days most other locations

7-5 days globally


Strict policies with $15 fee and possible account restrictions

Slightly larger $20 fee, but buyer protection may cover it.


Solid security for merchants, but none for buyers.

Buyer and seller protection is available.


2.4 - 2.9% + 30c credit card

0.5 - 2% transaction fee

5% and upward + 45c transaction fee

Why Not Use Both?

Generally speaking, customers appreciate payment flexibility.

It stands to reason that the more ways there are of paying, the wider your possible customer base becomes. So, instead of settling on just one payment platform, use both.

People trust PayPal because it’s a household name. If they can see that little PayPal logo as one of the payment options, it provides a feeling of security, and they’re more likely to buy from your business.

Sure, if a customer chooses to pay through PayPal, you might be struck with slightly larger transaction fees, but it’s better than not making a sale at all.

Final Thoughts

I hope this Shopify Payments vs PayPal comparison has helped to bring a little clarity to your situation. As long as you factor in where you live, who you’re selling to, and your monthly income, you’ll make the right choice.

Leave a Comment

Your email address will not be published. Required fields are marked *