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Shop Pay vs Other Payment Methods: Comparison 2024

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Do you know why customers remove goods from their shopping carts after adding them? Unexpectedly, the lack of suitable payment methods may be one of the causes.

Payment options, it turns out, have a significant impact on online customers' conversion rates. For this reason, giving your customers the appropriate range of payment choices is always preferable.

So, you should pay special attention to the payment options you provide if you want to increase sales. Having said that, we will examine Shop Pay and other payment methods in this blog, outlining each one's advantages so you can choose the best one with the updated information in 2024.

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    What Is Shop Pay? 

    Shopify developed Shop Pay, a shopping cart software that enables smooth transactions when used in conjunction with Shopify Payments.

    It refers to itself as an "accelerated checkout" platform since it saves users the trouble of having to enter their personal information every time they make an online purchase.

    To protect the confidentiality of registered data and to prevent information exploitation, Shopify ensures security for their merchants by achieving Level 1 PCI-compliant, a world-renowned security standard used to safeguard payment methods, such as credit and debit cards.

    Plus, for transaction processing, Shop Pay requires code authentication, or Shop Passkey. This six-digit code is provided via SMS or email to the users' registered phone numbers.

    Shop Passkey works as a verification for each payment made by the users or any log in/sign up process. This layer of security can help prevent auto-charging, unintentional payment, and hackers.

    Shop pay

    Shop Pay - A fast and flexible checkout service

    There is no additional cost to use Shop Pay, in contrast to many other contemporary payment methods. However, in order to use Shop Pay, you must select a Shopify pricing plan as this platform is exclusive to Shopify online retailers.

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    How Does Shop Pay Work?

    Shopify users must first determine whether they are eligible to use Shop Pay, which requires them to be either a Shopify merchant or a customer.

    As a Shopify merchant: Merchants can enable or disable Shop Pay in the settings panel. When they enable Shop Pay, customers can use it as a payment option. To set up Shop Pay in Shopify store, follow these steps:

    • Step 1: Log in to Shopify. In the Shopify admin, navigate and select Settings.
    • Step 2: Click on Payments.
    • Step 3: In the Shopify Payments section, click on Manage.

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    Shopify Payments section
    • Step 4: Scroll down and check the box next to Shop Pay.
    Scroll down and check the box next to Shop Pay
    • Step 5: Click on Save.

    As a customer: When a customer checks out for the first time on a website that accepts Shop Pay, they will have the option to choose a "Shop Pay" button and create a new account.

    Save

    The following are the steps to register for a Shop Pay account:

    • Step 1: Sign up with a phone number or email address. User will get a 6-digit code by text or email to verify contact information.
    • Step 2: After verifying contact information, the user will be required to enter credit card number, shipping address, and other personal details.
    • Step 3: Once signed up, user can check out with Shop Pay on any other Shopify store that supports it by entering the 6-digit code to verify identity. (No need to provide personal information)

    Customers can also change their credit card information or opt out of Shop Pay by going to thier Shop Pay account settings.

    The Pros And Cons Of Using Shop Pay

    It is not simple to select a payment option for your online business, therefore weigh the advantages and disadvantages of various options carefully before finalizing your decision. Below, let's examine the benefits and drawbacks of using Shop Pay:

    Pros of Using Shop Pay

    • Improves conversion rates and encourages repeat purchase with quick and straightforward checkout process.
    • Shop Pay stored your details and fills them in automatically, so you can check out faster and easier. No more typing in long card numbers or addresses every time you shop.
    • Shop Pay is proven to increase mobile conversions by nearly 1.9x, reducing checkout time and cart abandonment.
    • Shop Pay encrypts your payment information and keeps it safe on Shopify’s PCI-compliant servers. You don’t have to worry about data breaches or fraud, whether you’re buying or selling online..
    • Shop Pay offers a buy now, pay later (BNPL) option, allowing customers to pay for larger purchases in installments, without any hidden fees or charges.

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    Shop Pay offers a buy now, pay later

    Shop Pay’s BNPL

    • The system supports numerous languages, even though some Shop Pay capabilities, such as BNPL, are limited to the US. Chinese, Czech, Danish, Dutch, English, Finnish, French, German, Italian, Japanese, Korean, Norwegian, Polish, Portuguese, Spanish, Swedish, Thai, Turkish, and Vietnamese are currently the languages in which Shop Pay can be accessed.
    • Shop Pay provides sophisticated fraud protection solutions for retailers by utilizing Stripe's payment gateway.
    • It is simple to add Shop Pay to an online business, and it works well with Shopify's other eCommerce features.

    Cons of Using Shop Pay

    • Since Shop Pay is a Shopify product, it is not available for usage by online sellers or merchants using other eCommerce platforms.
    • Shopify stores are compatible with Shop Pay ONLY. Hence, you won't be able to use it if you don't use Shopify Payments to accept credit card payments online.
    • You won't be able to utilize Shop Pay if your store isn't in one of the 22 accepted languages or 22 approved countries (see above).
    • Installments using Shop Pay come with hefty costs. Shop Pay offers monthly installments with interest rates ranging from 10 to 36% APR (annual percentage rate) for orders between $150 and $17,500. Depending on the purchase price, the payment plan's duration can range from 3 to 12 months.

    Factors To Consider When Choosing Between Shop Pay vs. Other Payment Methods

    Choosing the right payment method for your online business can be quite tricky. As a seller, you aim to offer your customers convenience, security, and affordability.

    But how do you know which option is best for you? What makes Shop Pay stands out from other payment methods, and vice versa?

    Here are some factors to consider:

    Shopper preferences and market standards

    First things first, this choice will be greatly influenced by what payment options your ideal customers like and what your competitors are currently offering.

    For instance, let’s assume that most of your customers like to use digital wallets instead of credit cards, then you should provide that option too.

    Audience demographics

    Put the demographics of your target audience in mind as well, along with the payment methods they tend to use.

    For example, older customers may prefer more traditional payment methods like credit cards or bank transfers, while younger customers may favor digital wallets.

    Transaction costs

    Every payment option has its own costs and fees. You need to weigh the costs of each option against the benefits of higher conversion rates or happier customers.

    For example, credit cards are very convenient for your customers, but they also charge you more fees than other options. If you accept Visa cards, you might have to pay between 1.5% to 2.4% of each transaction to the credit card company (source: forbes). That can add up quickly!

    On the bright side, however, credit cards can also boost your sales and make your customers happier (especially if they are popular and widely used).

    Security and fraud prevention

    You want to keep your online business and your customers safe from fraud, right? Of course not. That’s why you need a payment option that keeps your money and data safe.

    Nobody likes a payment system that is easy to hack or scam. You need a payment system that has the latest security features, such as encryption, two-factor authentication, and fraud detection. These features help protect your information and transactions from hackers and thieves. They also give you and your customers peace of mind when doing business online.

    Security and fraud prevention

    Shop Pay’s security and fraud prevention

    Compatibility with eCommerce platforms

    Your online business should make sure that its payment options work with the eCommerce platform it is operating on.

    Additional integration work for some payment methods can be necessary, yet this can be expensive and time-consuming. So, using a user-friendly payment gateway helps reduce internal stress related to the setup and upkeep of your payment infrastructure.

    Shop Pay vs Other Payment Methods Head-to-head Comparison

    In previous parts, we have discussed a lot on Shop Pay. However, if you are not interested in this payment method, here are some Shop Pay alternatives for you.

    Shop Pay vs Paypal

    PayPal, the well-known digital wallet service that transformed peer-to-peer money transfers and virtual payments, is one of Shop Pay's main competitors. It is a flexible third-party payment program that works with multiple platforms and allows safe online transactions and money transfers.

    The following are some important differences to remember:

        

    Shop Pay

    PayPal

    Availability

    • Installing Shopify Payments is essential for merchants.
    • Accessible in 23 nations.
    • Using Shopify Payments is not a requirement.
    • Accessible in over 200 nations.

    Transaction Fees

    Although there are no extra costs associated with enabling Shop Pay, credit card transactions are subject to the same transaction fees as Shopify Payments. Also, there is a 5-6% cost for each transaction if you allow Shop Pay Installments.

    Depending on the location. 

    2.9% of the transaction plus a fixed fee of $0.30 USD is the amount in the US. For transactions made outside of the US, 4.4% of the total plus a set fee based on the currency.

    Installment Payments Service

    Yes, customers are able to make payments in installments 

    Yes, PayPal has launched a new service called "Buy now, pay later."

    Procedure for Resolving Disputes

    The buyer and the merchant have 15 calendar days from the time a dispute is initiated to exchange supporting documentation.

    The buyer and the merchant have 20 days from the time the issue is raised to reach an agreement.

    Payout for Vendors

    3 business days

    5 to 7 business days 

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    Shop Pay vs Afterpay

    Both Shop Pay and Afterpay offer you installment payment options. What sets them apart is that Shop Pay—which was created by Shopify and Affirm—is intended only for Shopify retailers. The third-party service Afterpay, on the other hand, is accessible to a number of retailers.
    Here are a few important differences to remember:
     Shop PayAfterpay
    Supported Payment MethodsCredit, Debit Cards, Apple Pay, and Google PayCredit, Debit Cards, Apple Pay, and Google Pay
    AvailabilityExclusive to Shopify retailersAccessible on specific eCommerce platforms and at participating stores.
    Transaction FeesAlthough there are no extra costs associated with enabling Shop Pay, credit card transactions are subject to the same transaction fees as Shopify Payments. Also, there is a 5-6% cost for each transaction if you allow Shop Pay Installments.4% to 6% per transaction + $0.30 per transaction
    Threshold on Spending
    • Shop Pay: None
    • Shop Pay Installments: $50 - $17,500 for each order 
    $600 for new customers and up to $2000 for repeat business
    Payment Timing1 to 3 business daysWithin 2 business days
    Approval ProcessNoneCredit check required
    Data PrivacyEncrypted and PCI-compliantTwo-factor authentication and fraud analysis
    Eligibility RequirementsNoneCredit check and minimum age requirement (at least 18)

    Shop Pay vs Apple Pay

      Apple Inc. offers Apple Pay, a digital payment method that works with both iOS and macOS devices. Merchants can proceed straight to the order evaluation by avoiding the lengthy checkout forms.

      Apple Pay

      With Apple Pay, users may bypass the drawn-out checkout process and go directly to the order review, just like with Shop Pay.

      However, a crucial distinction between Apple Pay and Shop Pay is that Apple Pay allows you to easily validate your transaction using TouchID while Shop Pay needs a code to validate your payment.

      Customers must scan their fingerprints after tapping the Apple Pay button in order for Apple Pay to give the details needed for the transaction. Business owners should add credit card payment providers to Shopify stores in order to enable Apple Pay payments:

      • Shopify Payments
      • Authorize.net
      • CyberSource
      • Stripe
      • Braintree
      • First Data Payeezy

      While Shop Pay is limited to online transactions, Apple Pay facilitates payments both online and in-person. Moreover, there are no costs associated with using Apple Pay in-store, online, or within applications according to Apple.

      However, there are several restrictions when utilizing Apple Pay in place of Shop Pay. Only a select few iOS and macOS devices support this payment option.

      Shop Pay vs Google Pay

        Your customers can make quick and safe payments using Google Pay. Customers are able to place their orders and go through the checkout procedure with Google Pay.

        Google Pay

        Unlike Shop Pay, Google Pay is not exclusive to only Shopify merchants. It works with many other online platforms as well, and many customers prefer Google Pay for its accessibility.

        To pay with Google Pay, your customers simply tap the “Google Pay” button and confirm their payment with a pin, pattern, or biometric (just like Apple Pay). For Shopify store, there is a catch: You need to set up Shopify Payments first before you can enable Google Pay as a method.

        As a bonus, Google Pay supports a variety of web browsers—not only Chrome. Customers can use this payment method no matter what browser they prefer, like Safari, Edge, Opera, etc.

        It’s not perfect, though, despite its inclusive network. Unlike Shop Pay, Google Pay doesn’t require any transaction fees or interest rates, but it charges other fees that you would normally pay with your physical card.

        For instance, if you use a credit card with Google Pay, you may still have to pay interest and penalty fees if you do not pay your balance in full and on time.

        Final words

        For many online buyers, Shop Pay has swiftly gained popularity. It functions well as an automated one-click checkout option for Shopify online stores, improving consumer happiness and creating a favorable impression of your business.

        Yet, if you're not a fan of Shop Pay, there are plenty of additional Shopify payment methods including PayPal, Afterpay, Apple Pay, and Google Pay!

        Whichever option you use, keep in mind that the checkout process—whether it takes place online or in-person at your physical locations—is the most crucial part of the customer's shopping journey.

        Thus, be sure you have a method of payment that will enable you to get in front of more buyers with high intent and raise order values.

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