We all know that customers today expect to make online purchases quickly and easily and the fortunately, the rise of mobile wallets such as Apple Pay, autopay subscriptions and other convenient payment methods, has made it possible.
Shopify, one of the world's leading e-commerce platforms, offers a wide range of payment options to meet up to the diverse needs of both merchants and customers. Understanding these payment methods is crucial for any business owner looking to maximize their sales potential and provide a seamless shopping experience. In this comprehensive guide, we'll explore the various payment methods accepted by Shopify, their benefits, and important considerations for merchants.
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What Are Payment Methods?
Payment methods are the different ways you can pay for goods and services. They range from traditional cash and checks to digital options and even newer forms of payment like cryptocurrencies.
Here's a breakdown of common payment methods:
1. Traditional Methods:
- Cash: The most basic form, involving physical currency. It's widely accepted, but can be inconvenient to carry large amounts.
- Check: A written order instructing a bank to pay a specific amount to a payee. Checks are becoming less common due to electronic alternatives.
- Money Order: A payment order, similar to a check, but purchased from a financial institution or post office. Offers more security than a personal check.
2. Electronic Payment Methods:
- Debit Card: Linked directly to your bank account, deducting funds immediately from your balance.
- Credit Card: Allows you to make purchases and pay later, with interest charged on unpaid balances.
- Digital Wallets: Online services like PayPal, Venmo, Apple Pay, and Google Pay store your payment information for easy online and in-store purchases.
- Bank Transfers: Electronically transferring funds between bank accounts.
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Popular Payment Methods Accepted On Shopify
Offering a variety of payment options is essential for a successful online store. Shopify recognizes this and provides a wide range of payment methods to cater to diverse customer preferences. This guide explores the payment options available on Shopify.
1. Credit and Debit Card
When it comes to online stores, Credit cards and Debit cards are probably one of the most common used payment method.
Credit cards function as a form of borrowing. Companies like Visa, Mastercard, American Express, and Discover lend money to consumers when a purchase is made. Customers then repay this loan to the credit card company over time.
Debit cards, on the other hand, operate differently. They are linked directly to a customer's bank account and deduct the purchase amount immediately. Essentially, using a debit card is like paying with cash, but electronically.
2. Mobile Wallet
As the name implies, Mobile Wallet services function though apps that run on smartphones, tablets and smart watches and linked to customer's credit card, debit card or bank account.
Payment processors can also integrate some of these options into web-based checkouts, with respect to the service. Examples of mobile wallets include; Apple Pay, Google Pay and Samsung Pay. As soon as an individual sets up their mobile wallet account, they can begin making use of these apps to easily and conveniently pay for things at Vendors that accept mobile payments.
3. Buy Now Pay Later Plan (BNPL)
Buy Now, Pay Later (BNPL) is a type of short-term loan that lets customers purchase items without using a credit card. Instead, they pay in installments over time. Popular BNPL services include Shop Pay Installments, Affirm, Afterpay, Sezzle, PayPal's Pay Later, and Klarna. While initially popular for online shopping, BNPL is now also offered by some physical stores.
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4. Cash Payments
Cash is the oldest form of payment. Customers physically hand over bills or coins to the seller. Surprisingly, some online stores still accept cash payments.
Cash on Delivery (COD) is a cash payment option available on Shopify. Customers pay in cash when they receive their order from a courier. While uncommon in e-commerce, Shopify supports COD and doesn't charge fees for it.
5. Checks
Some customers still pay with paper checks, such as from a personal checking account or with a cashier’s check from a bank. While checks aren’t as fast as online payment methods, they can at least be more practical to send via the mail than cash.
6. Autopay
An auto pay system will automatically debit a person's bank account, credit card, or debit card on a set date, usually once a month. Autopay is very popular for credit card payments, utility payments, monthly subscriptions, and scheduled charitable donations.
Autopay actually promotes customer retention since customers can schedule automatic purchases instead of reauthorizing payments every month.
7. Bank Transfer
Bank transfers are a method of moving money from one bank account to another. This can be done through systems like ACH (common in the US) or directly between banks, which is known as a wire transfer. Wire transfers are often used for large purchases, especially in real estate.
Bank transfers are highly secure and typically involve a flat fee rather than a percentage-based charge like credit cards or BNPL options.
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8. Cryptocurrency
Cryptocurrency is gaining traction as a payment method. Services like BitPay and Wirex offer debit cards linked to popular cryptocurrencies like Bitcoin, allowing customers to spend their crypto holdings directly. Additionally, some online retailers accept direct crypto payments through platforms like Crypto.com.
These digital currencies, including Bitcoin, rely on blockchain technology. Blockchains are decentralized networks of computers that securely record financial transactions.
The decentralized nature of blockchain appeals to some for several reasons:
- Reduced government control: Some users prefer a currency independent of traditional financial systems.
- Enhanced security: Blockchain technology offers a high level of security for transactions.
Businesses that accept cryptocurrency can attract customers who value these aspects.
Choosing The Right Payment Method For Your Business On Shopify
Choosing the right payment methods can be overwhelming, but offering multiple options is generally beneficial. While managing various payment methods can add complexity, it's often worth it to cater to customer preferences.
Here's how to decide which payment methods to offer:
Consider Your Customers' Location:
Different regions favor different payment methods. Choose options popular in your target markets and select payment processors with a strong presence there.
Analyze Payment Method History:
Review your Shopify order data to identify popular and unpopular payment methods. This can help you streamline options and focus on what customers prefer.
Survey Your Customers:
Directly ask customers about their preferred payment methods through surveys or loyalty programs. Understanding their preferences can prevent cart abandonment.
Compare Payment Processing Fees: While customer satisfaction is important, consider the fees associated with each payment method. Balance customer preferences with your profit margins.
Final Thoughts: What Payment Methods Does Shopify Accept?
Shopify's diverse range of accepted payment methods ensures that merchants can cater to a global audience with varying preferences. By offering multiple payment options, Shopify helps businesses increase their conversion rates, enhance customer satisfaction, and expand their reach. Whether through Shopify Payments, third-party gateways, alternative payment methods, or manual options, Shopify provides the flexibility needed to run a successful online store.