AutomationShopify vs Shop Pay: Our Detailed Comparison
Last updated: December 05 2024
With over 5 million merchants using Shopify, many of them are struggling to find the best payment options for their businesses. If you’re weighing options to optimize your store’s checkout experience, then Shopify and Shop Pay are the two reliable options to consider.
Choosing between Shopify and Shop Pay can be confusing, especially if you’re unsure which one suits your store’s needs better. In this article, we’ll be doing a detailed comparison of Shopify vs Shop Pay to help you understand how they differ and which features stand out.
By the end, you’ll have a clearer idea of which platform or payment solution will best serve your business and help you make an informed decision.
Key Takeaways
- Shop Pay is part of Shopify’s ecosystem, serving as a checkout feature that facilitates secure and swift checkouts for your Shopify stores.
- By incorporating Shop Pay in their Shopify stores, Shopify merchants can expect an improved checkout experience, potentially leading to higher customer satisfaction and increased sales.
Early Verdict
When comparing Shopify vs Shop Pay, it’s clear that both have their strengths, but they serve different purposes. If you’re looking for a complete e-commerce platform, Shopify is the way to go, while Shop Pay is great for a streamlined checkout experience to boost conversions.
Shopify vs Shop Pay: What are they?
What is Shopify
Shopify is a leading e-commerce platform that empowers businesses of all sizes to create, customize, and manage online stores. Known for its scalability and versatility, Shopify now supports over 5 million merchants globally, providing tools for inventory management, marketing, analytics, and seamless integration with various payment providers.
How does Shopify work?
- Store Setup: Shopify makes setting up an online store really simple, with over 200 themes that can be easily customized without much coding knowledge. I’ve found it super helpful when I needed to get a store dashing and make it look professional.
- Product Management: Managing products on Shopify is pretty straightforward, with tools to organize inventory, create collections, and adjust prices. From my experience, these features make it easy to keep everything organized, even if you have a lot of products.
- Sales and Payment Processing: Shopify offers various payment options, like Shopify Payments and third-party gateways, which make transactions seamless. I like how integrating payment methods and setting up automated tax options saved me so much time and stress.
- Marketing and Analytics: Shopify has built-in marketing tools that let you run email campaigns or create discount codes to attract customers. Plus, the analytics are great for seeing what’s working; I’ve found it helpful in tracking performance and understanding what drives conversions.
What is Shop Pay
Shop Pay is a secure, fast checkout solution developed by Shopify, designed to enhance the buying experience by reducing checkout time and offering seamless order tracking. Currently used by millions of shoppers, Shop Pay stores payment details securely, allowing returning customers to complete purchases in just one click.
How does Shop Pay work?
- Customer Information Storage: Shop Pay securely saves customers' details like email, shipping, and payment info after they choose to store it during checkout. I think it's super convenient because I love not having to enter my information every time I shop.
- Accelerated Checkout: On future purchases, Shop Pay allows customers to check out with just one click, skipping the usual form-filling. This feature has saved me so much time, and I’ve noticed it makes me more likely to complete a purchase.
- Order Tracking: Shop Pay also offers real-time order tracking, which helps me stay updated on where my package is. I find this really helpful since it keeps me in the loop without having to dig through my emails for updates.
- Installment Payments: With Shop Pay Installments, customers can split their payments, making it easier for them to afford more significant purchases. Personally, I think this feature is excellent because it makes buying something pricey feel a little less intimidating, which is a win for both customers and merchants.
Shopify vs Shop Pay: What’s Different?
While both are essential tools for Shopify merchants, Shopify Payments and Shop Pay serve distinct roles in the transaction process:
- Shopify Payments as a Gateway: Shopify Payments is Shopify’s built-in payment gateway, which makes transactions smooth by removing the need for third-party processors. From my experience, having this option means fewer fees and quicker deposits directly to your bank.
- Shop Pay with Multi-Gateway Compatibility: Shop Pay works alongside different third-party gateways and is available on other platforms like social media. I think this flexibility is great because it means customers have more payment options, which helps boost conversions.
- End-to-End Process with Shopify Payments: Shopify Payments handles everything from checkout to settling payments, giving Shopify store owners complete control over transactions. In my opinion, this end-to-end management is a huge convenience because it reduces complications.
- Installment Payments on Shop Pay: Shop Pay offers a "Buy Now, Pay Later" feature, letting customers split their purchases into installments. I’ve seen firsthand how this feature encourages more significant purchases since it makes buying high-ticket items more affordable for customers.
- Platform Exclusivity for Shopify Payments: Shopify Payments is only available on Shopify, while other payment gateways can be used across multiple e-commerce platforms. This exclusivity can be limiting, but it also means that Shopify Payments is highly optimized for the Shopify experience.
- Customer-Centric Approach of Shop Pay: Shop Pay is designed to make checkout quicker with a one-click process for returning customers who store their payment details. In my opinion, this approach is brilliant because it removes friction during checkout, which can significantly improve conversion rates.
Shopify Payment vs Shop Pay: Pros & Cons
So, let’s explore the good and the bad of Shopify Payments and Shop Pay to help store owners understand their roles and benefits for their Shopify stores.
Shopify Payment
Pros
- Seamless Shopify integration to setup and management
- No transaction fees for order processing
- Accepting major payment methods, including credit cards, debit cards, and more
- Fraud prevention to protect your business data
- Multi-currency support for expanding your reach to international customers
- Unified data with Shopify POS for centralized management
Cons
- Not available in all countries
- Strict product compliance
- High chargeback fees
- Sudden account freezes
Shop Pay
Pros
- Speed up the checkout process
- Higher conversion rates
- Mobile optimization for customer experience
- Enhanced security for customer data
- Free installment options
Cons
- Potential for abandoned carts
- Less control over the checkout experience than Shopify Payments
Benefits of Utilizing Shop Pay in Shopify
Here are the most outstanding benefits of Shop Pay that can boost your sales and improve your checkout experience.
Speed up the Checkout
With Shop Pay, customers can flexibly opt-in to save their shipping and payment information. Whenever they check out at any Shopify store, they just need their email address and receive a verification code via SMS from Shop Pay.
Once they’ve entered their payment information once, Shop Pay will automatically recognize their profile, making their checkout process quicker and easier.
Shop Pay stores all payment information:
- Phone number
- Credit cards details such as number, expiration date, and CVV code
- Shipping address details
- Billing address details
Shop Pay allows business owners to store up to five different shipping addresses and five credit card details in the Shop app and the checkout process. All previously provided billing information is securely stored and encrypted.
As a result, customers can simply click the “Buy Now” button to complete their purchase, reducing the number of abandoned shopping carts.
Increase Sales Conversion Rate
According to a 2020 Shopify survey conducted among its 10,000 most prominent merchants, Shop Pay demonstrated a conversion rate that’s 1.72 times higher compared to traditional checkouts.
Shop Pay’s advantage is noticeable on mobile and desktop platforms but significantly enhanced on mobile devices. Shop Pay yields a conversion rate that’s 1.91 x times higher than regular checkouts.
Enhance Security
Shop Pay uses SMS text verification, PCI compliance, and encrypted financial data. The customer’s mobile phone will receive a unique Shop Pay code before any transactions, which prevents hackers from intercepting.
Moreover, Shopify’s PCI-compliant servers use end-to-end encryption to keep personal information private and secure payments. When customers opt out of Shop Pay, their detailed information will be removed from the system.
Manage from multiple devices.
Setting up Shop Pay is a breeze. Much like PayPal or Google Pay, you can easily enable it from your Shopify dashboard. And, it doesn’t stop there. You can manage it from different devices such as your computer or smartphone.
So, no matter where you are, you have the flexibility to use Shop Pay, making it a convenient tool for all users.
Make Marketing Your Shopify Store Easier.
Shop Pay makes marketing simpler. As a business owner, you can use it to automatically send out messages about great deals, special offers after purchase, and gifts to encourage customers to buy again. But that’s not all.
With Shop Pay, you can also set up marketing campaigns that run automatically, reaching your customers before, during, and after they buy something. So, it’s not just a payment tool, but also a powerful way to keep your customers coming back.
Build brand loyalty
Shop Pay helps to grow customer loyalty. How? Well, it has a top-notch order tracking tool. Business owners can see all purchases made in the Shop app, from when customers check out to when their package is delivered.
So, by using Shop Pay and the Shop app, businesses can make shopping easy and smooth. This encourages customers to stick around, which can greatly help a business grow and keep going strong.
Support multiple payments
Shop Pay accepts many cards, making it easy for customers. They can use a Visa, Mastercard, American Express, or any other card the store accepts. But, to use these cards with Shop Pay, customers need to follow four steps.
First, they need to turn on their cards before using them with Shop Pay. Second, the billing info must match the bank account info. Third, the cards need to be set up for buying stuff online. Last but not least, customers should use a debit or credit card.
How to Set Up Shop Pay on Your Shopify Store
Setting up Shop Pay can make a big difference in providing your customers with a smooth checkout experience. I’m going to show you how to get Shop Pay up and running on your Shopify store so you can boost conversions and make buying more accessible for everyone.
Step 1: Access Payment Settings
- Log in to your Shopify admin dashboard.
- Go to Settings in the lower-left corner of the dashboard.
- Select Payments from the Settings menu.
Step 2: Enable Shop Pay
- If you are using Shopify Payments, click Manage in the Shopify Payments section, check the box for Shop Pay, and then click Save. Remember to Activate Shopify Payments first if you have not done this already.
- If you are using a third-party payment provider, click Manage in the Third-party payment providers section, check Enable Shop Pay, and then click Save. After that, click Complete setup to enter your business details and banking information, then click Save.
Step 3: Complete Setup
- Ensure that all required details are completed to receive payouts through Shop Pay. If not completed within 21 days of your first payment, payments will be refunded to customers.
Note: In order to offer Shop Pay Installments to your customers, ensure your store meets the following eligibility criteria:
- Location: Your business must be based in the United States.
- Currency: Your store must sell in USD.
- Activation: Both Shopify Payments and Shop Pay need to be activated in your store.
- Billing Address: Your billing address must be located within the United States.
- Order Amount: Eligible order amounts must be between $50 and $20,000.
Shop Pay & Shopify: Common Challenges & How to Deal With Them
Setting up Shop Pay on Shopify is generally straightforward. However, it still has some potential challenges:
- Customer Verification: Customers need to verify their identity via SMS to use Shop Pay. If a customer can’t receive an SMS (for example, if they’re using a landline), they won’t be able to use Shop Pay.
- Limited Customization: The checkout process with Shop Pay has limited customization options compared to the standard Shopify checkout. This could be a challenge if you have specific branding or requirements for your checkout process.
- Refund Policy Compliance: Shop Pay requires merchants to have a clear and easily accessible refund policy. You’ll need to create it if your store doesn’t have one.
Alternative Methods to Shop Pay on Your Shopify Store?
Here are some Shop Pay alternatives for business owners to improve their checkout experience and increase their sales conversions.
Apple Pay
Apple Pay is a digital payment process by Apple Inc and is available on iOS or macOS devices. Merchants can bypass the long checkout forms and go directly to the order review.
However, a critical difference between Shop Pay and Apple Pay is that while Shop Pay requires a code to confirm your payment, you can simply verify your transaction using TouchID in Apple Pay.
Once the customers tap the Apple Pay button, they need to scan their fingerprints, and then Apple Pay provides the necessary information for the payment. To enable the Apple Pay payment on Shopify stores, business owners should include credit card payment providers:
- Shopify Payments
- Stripe
- First Data Payeezy
- Authorize.net
- CyberSource
- Braintree
Google Pay
Google Pay provides a fast and secure payment for your customers. Like Shop Pay and Apple Pay, customers don’t need to enter their credit card and shipping details when they use Google Pay.
Instead, they only click the “Google Pay button,” and then Google Pay will process. To activate Google Pay in your Shopify Store, you need to use Shopify Payments.
Shopify vs Shop Pay: FAQs
Is Shop Pay Owned by Shopify?
Yes, Shop Pay is owned by Shopify. It was developed by Shopify and officially launched in 2017 as an internal feature within Shopify’s ecosystem.
Is Shop Pay the Same Thing as Shopify?
No, Shop Pay and Shopify are not the same thing. Shopify is an e-commerce platform, while Shop Pay is a specific checkout feature offered to merchants using Shopify.
What Are the Disadvantages of Shop Pay?
Shop Pay is unavailable in every language and is limited in countries outside the US. In addition, merchants typically pay higher fees for customers using Shop Pay Installments.
What Are the Key Differences Between Shopify and Shop Pay?
Shopify is a comprehensive e-commerce platform that enables businesses to create, customize, and manage online stores. Shop Pay, on the other hand, is Shopify's accelerated checkout solution designed to streamline the purchasing process for customers.
Does Shop Pay Charge a Fee?
Shop Pay itself is free for merchants using Shopify. However, if you choose to offer Shop Pay Installments (its BNPL option), there’s a 5.9% + $0.30 per transaction fee for those payments.
How Does Shopify Make Money from Shop Pay?
Shopify earns revenue through subscription plans and credit card transaction fees. Shop Pay, boasting over 150 million users, simplifies the checkout process and offers a one-tap payment experience.
Final Thoughts
Ultimately, Shopify gives you the full power to run and grow your store, while Shop Pay steps in to supercharge the checkout process. For any business serious about conversions and customer loyalty, enabling Shop Pay isn’t just an option—it’s a must. Together, they’re a powerhouse combo that keeps customers coming back and helps your store thrive!
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