If you’re looking for best value when choosing an eCommerce provider, Shopify delivers an accessible entry price point with its range of plans.
It’s easy to assume that Shopify must be pricier than its competitors, but the actual difference per month is much smaller than you might think.
But if there’s one big drawback about the platform, it’s Shopify’s transaction fees. Nobody likes to see their profits impacted by unnecessary charges, but fortunately, there are other options.
We’ve taken a closer look at Shopify fees and the best ways to avoid when possible. But first, it’s important to understand the difference between membership fees, transaction fees and credit card processing fees which we’ll look at in more detail below:
Shopify Membership Plans
Let’s start with Shopify’s pricing table, which are the cost for each Shopify plan – and based on your requirements such as staff accounts, reports needed and shipping rates:
The monthly fee gives you access to the Shopify platform and the tools you need to get your online store up and running. The transaction fee keeps your store powered up and ready to sell but doesn’t include the all-important fees when you make a sale (which we presume is your aim!).
Basic Shopify
$ 29
monthlyBest for new ecommerce businesses with occasional in-person sales
Shopify
$ 79
monthlyBest for growing businesses selling online or in-store
Advanced Shopify
$ 299
Per MonthBest for scaling businesses that require advanced reporting
Shopify Credit Card Rates
On top of the membership fees, you will also need to pay a rate per credit card transaction if you opt to use a 3rd party payment processor.
Credit card processing fees are a fact of life. If you buy something at the supermarket with a credit card, the supermarket pays a processing fee to a payment processor to make sure the payment goes from your bank into their bank.
So, whenever you buy anything with a credit card, online or offline, there’s a payment processing fee. That said, you can choose the payment processor you want to use based on their processing rates.
These are the credit card processing rates per transaction for taking 3rd party payments on Shopify as of January 2022:
- Basic Shopify Plan – 2.2% + 20p
- Shopify Plan – 1.9% + 20p
- Advanced Plan – 1.6% + 20p
If you use Shopify’s Point-of-Sale system for in-person selling, the credit card rates are lower.
It’s worth noting that these fees are charged on a per transaction basis. So, if you sell 10 items in one transaction, you’ll only pay the 20p fee once not on each individual item.
How Much Does Shopify Take Per Sale?
We’ve seen the basic Shopify credit card rates – a necessary evil considering that every credit card transaction involves a fee for getting the money from the seller’s bank account into yours.
However, the major bugbear for many Shopify sellers are the transaction fees on top of this. Shopify charges a basic transaction rate every time a customer decides to buy from your store, which can be avoided if you no how.
How do Shopify transaction fees work?
It’s simple. Every time a customer purchases an item from you, Shopify charges a transaction fee.
These fees as of January 2022 are:
- 2% for Basic Shopify
- 1% for the Shopify plan
- 0.5% for Advanced Shopify
What are transaction fees for?
To understand what transaction fees are for, you need to understand the services Shopify provides. With more than 1.7 million merchants using Shopify, it takes significant resources to power the site and make sure it doesn’t crash while your customers browse and make the decision to buy.
The idea of Shopify transaction fees is that they help keep your eCommerce store up and running at optimum levels, whether you have one customer or one million.
Do other eCommerce providers charge transaction fees?
Yes they do, but not quite in the same way. Let’s take a look at two of Shopify’s closest competitors:
- Woocommerce has a payment fee of 2.9% + $0.30 for each transaction made with U.S.-issued credit or debit cards. For cards issued outside the U.S., there’s an additional 1% fee.
- Magento 2 also has a transaction fee of 2.9% (per transaction) + $0.30 (per transaction)
- BigCommerce doesn’t charge a fee for every transaction. However, depending on the sales you generate in a 12-month period, they automatically bump you up to a higher-priced plan increasing your monthly running costs. With Shopify you can choose the plan that’s right for you, rather than being forced to upgrade.
- Wix is a great eCommerce site for new sellers and you won’t pay any transaction charges. The catch is that to actually sell through the platform, you’ll need to be on the eCommerce or VIP plan. And you’ll also need to pay a percentage per transaction to your chosen payment provider. It is also not as strong on SEO as Shopify and not as good for scaling your business.
How Do You Avoid Shopify transaction fees?
Luckily, for Shopify sellers the Shopify transaction fee can be avoid by opting to use Shopify Payments and you won’t pay any transaction fees.
When you use Shopify Payments to process credit card payments, you’ll pay the processing fees direct to Shopify and in return, they waive the transaction fee.
So, instead of paying transaction fees plus a credit card processing fee to another provider like PayPal, you only pay the credit card processing fee direct to Shopify. Easy!
Does using Shopify Payments cost me more?
No, and it could cost you less. Shopify credit card processing rates are lower than other payment processors like PayPal, and you won’t be paying transaction fees, both of which save you money.
In addition, you pay a fixed fee for every transaction. You won’t pay any more per month and there are no international fees so you can sell to shoppers from outside your country.
Is Shopify Cost-Effective Compared to Other Platforms?
Shopify in general is a cost-effective solution for ecommerce businesses. However, the transaction fee may get a little much if you start doing lots of orders so we would recommend switching to Shopify Payments.
There are a couple of other ways in which using Shopify Payments saves you money over the competition.
Shopify is very easy to use, meaning less 3rd party development fee. Despite this it is still highly scalable and integrates well with ERP and other business systems required for running a succesful ecommerce business.
The Bottom Line
If you want to avoid fees per transaction, you’re better off using Shopify Payments if it’s available in your country (Australia, Canada, Hong Kong, Ireland, New Zealand, Puerto Rico, Singapore, the United Kingdom and the United States).
According to Shopify’s own statistics, 85% of users selected Shopify Payments where it’s available, as of 2017. It’s not surprising when you get to avoid transaction fees, save on credit card processing rates and start receiving payments in as little as two days.
Shopify Payments has some major benefits for your eCommerce store:
- You won’t pay transaction fees
- Credit card processing rates are lower than the PayPal and other payment processors
- You can experience the benefits of Shopify without paying more than the other ecommerce platforms available.
The bottom line is that you’ll need to use a credit card payment processor when you start selling through Shopify. Using Shopify Payments won’t cost you anything and it’s straightforward to use making it a great choice for your store.
If you would like any help setting up a Shopify store, upgrading to Shopify 2.0, please get in touch with the UK-based Shopify website development or Shopify SEO consultant team at Search Hog today.
