Shop Pay: A comprehensive guide for Shopify Store owners

Last updated: January 12, 2023

What is Shop Pay?

Shop Pay is an accelerated checkout feature that allows customers to save their email addresses, credit card information, shipping, and billing information.

Powered by Shopify, Shop Pay is part of Shop App, a digital shopping assistant app that lets customers speed through checkout, track their orders and shipments, and rediscover their favorite brands.

Shop Pay offers two main functions:

Shop Pay as a virtual wallet

In this way, you can save your customers time during checkout, especially if they have already opted into Shopify Pay on any of your Shopify stores.

Shop Pay as a payment method

Customers can choose Shop Pay installments as a payment method, lowering the barrier for high-value purchases.

You can also accept payments using Shop Pay on various channels, such as Google, Facebook, and Instagram.

What are Shop Pay Benefits and Features?

Cart filler - Convert more sales and reduce abandoned carts with faster checkouts

With Shop Pay, shoppers can opt-in to save their shipping and payment details. When they checkout on any Shopify store powered by Shopify, they simply type in their email address and receive a verification Shop Pay code by SMS.

Your customers will only need to enter their payment information once; the tool will automatically recognize your profile when they visit a participating online store.

Shop Pay stores the following payment information:

  • Phone number
  • Details regarding the credit card, such as the number, expiration date, and CVV code (encrypted and PCI-compliant for safety purposes)
  • Details regarding the customer’s billing, such as their address
  • Details regarding shipping, such as the address of the customer

All previously entered billing information is encrypted and saved. Hence, customers only need to click the Buy Now button to complete a checkout form, eliminating the need for a credit card or even typing in their name.

Shop Pay has a 1.72x times higher conversion rate compared to regular checkouts. (according to Shopify research in 2020, conducted on 10,000 largest merchants)

Although Shop Pay’s conversion advantage is evident on both mobile and desktop, it is significantly enhanced on mobile, where Shop Pay checkouts convert at a rate of 1.91x times higher than regular checkouts.

This is a significant advantage for direct-to-consumer brands since mobile conversion can make or break your business.

Shop Pay installments

The Buy Now, Pay Later allows customers to spread the cost of their purchases over several months, maximizing their budgets and increasing their purchasing power.

37% of Americans leaned on BNPL and installments for major shopping events in 2022 (a huge boom from just 2% in 2021)

During checkout, Shop Pay allows customers to choose between paying for their order in full or in multiple payments between 50 USD and 17,500 USD.

You can offer your customers the following installment payment options at checkout:

  • Orders from 50 USD to 999.99 USD can be paid in four biweekly interest-free installments.
  • Orders from 150 USD to 17,500 USD can be paid in monthly installments with an APR ranging from 10 to 36% for a period of three, six, or twelve months.

A customer sees the following information about Shop Pay Installments when viewing your products:

  • Installment payment amounts are calculated.
  • Shop Pay Installments information for customers.
  • Regulatory information and compliance updates.

After installing Shop Channel to your Shopify Store, you will be able to present your stores and products to Shop App users.

Merchants can customize their Shop App stores and the checkout experience. Shop allows you to customize elements such as your customer support resources, contact methods, store description, and the images on your shops, such as your logo and cover photo.

More importantly, you can decide whether to offer free shipping, fast shipping, or in-store pickup. You can also choose to reveal certain products, recommend items, and display customer orders.

On the other hand, customers are able to track their orders at the Shop Pay checkout. According to Shopify reports, customers who track through Shop are 9% more likely to repurchase their products.

A Shop Pay checkout link allows you to select product variants, quantities, and discounts.

You can create a curated customer checkout experience by using a Shop Pay link. After clicking the link, the customer is taken to a checkout page where they can complete their purchase.

As an alternative payment method, Shopify merchants can add Shop Pay buttons to their ecommerce sites and use Shop Pay through any social shopping tools they have (such as Facebook, Instagram, or Google).

Shop Pay vs Shopify Payments: Are They The Same?

For transaction processing, Shop Pay relies on Shopify Payments and other third-party providers. Moreover, Shop Pay can be used outside the Shopify ecommerce platform, with Apple pay, Google pay, Amazon pay, etc.

Meanwhile, Shopify Payments plays the role of the Shopify default payment gateway and only serves Shopify store owners.

How to set up Shop Pay for your store?

Enable Shop Pay for your Shopify Payments

Step 1: Go to Settings in your Shopify Admin.

Step 2: Click on the Payments setting -> Click on Manage inside the Shopify Payments section.

Step 3: Enable Shop Pay as your payment method.

Enable Shop Pay for third-party payment providers

  1. From your Shopify admin, click on Settings, then Payments.
  2. Instead of Shopify Payments, find the Third-party payment providers section, then click on Manage.
  3. In the Shop Pay section, check Enable Shop Pay.
  4. Click Save.
  5. In the Shop Pay section, click Complete set up.
  6. Ensure you enter all the necessary information regarding your online store and banking information, and then click Save.

Enable Shop Pay installments

Shop Pay Installments require:

  • Your Shopify Store is based in the United States.
  • You are selling in USD
  • You have both Shopify Payments and Shop Pay activated.

If you are eligible to use Shop Pay Installments, you can activate it in your Shopify Admin.

  1. Go to Settings > Payments in the Shopify admin.
  2. Click Manage in the Shopify Payments section.
  3. Check Shop Pay Installments in the Shop Pay section.
  4. Click Save once you have accepted the terms and conditions.

Shop Pay FAQs

Is Shop Pay safe?

Answer: Yes.

Shop Pay is secured with SMS text verification, PCI compliance, and encrypted financial data.

  • A unique Shop Pay code will be sent to the user’s mobile phone before any transaction, which makes it almost impossible for hackers to intercept.
  • In addition to PCI compliance, Shop Pay servers use end-to-end encryption to protect payments and personal information.
  • When you opt-out of Shop Pay, your details will be deleted from the server.

Does Shop Pay affect customers’ credit scores?

Answer: No for four biweekly installments, yes for monthly payments.

Your customer’s credit score is not affected if they choose to pay in four biweekly installments.

If your customer does not make their monthly payments on time, their credit score might be affected. Only monthly payment options might affect a customer’s credit score.

What happens if a customer disputes an order paid with Shop Pay Installments?

As Shop Pay Installments is a service offered by Affirm, the company will be responsible for resolving disputes and issuing refunds to merchants or customers.

If a customer files a dispute with Affirm, they will email your Shopify store owner. You will not receive a notification in your Shopify account.

After receiving a dispute email from Affirm, you have fifteen days to respond directly with any evidence you wish to provide. After that period, Affirm will resolve the dispute within another fifteen days.

During these 30 days, Affirm will hold the disputed funds until the dispute has been resolved.

  • You will receive the funds back in your bank account if the dispute resolution is in your favor.
  • The disputed funds are returned to your customer if Affirm resolves the dispute in their favor.

Does Shop Pay have any late fees?

Answer: No, for installment orders that are split into four biweekly payments. Yes, for monthly payments, with interest rates from 10 to 36% APR.

For four biweekly payments, there are no late fees, penalties, or additional charges for four biweekly payments. However, customers may be restricted from Shop Pay installments if they make a partial or late payment.

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