Shopify is a leading shopping and ecommerce platform, and Shop Pay makes it even easier for small business owners to sell their products and services. 

Here’s how Shop Pay works and how to decide if it’s right for your small business. 

What is Shop Pay?

Shop Pay makes it easy and fast for customers to buy items on your Shopify store or on Shop. They are able to save their email address, credit cards, shipping and billing information and use that when they shop at any store that participates. 

This can increase customer conversion rates and satisfaction. 

If you’re trying to understand how Shop Pay Works, compare it to the world’s largest retailer. If you’ve ever shopped on Amazon, you know how easy the check out process is. Your customer details, including billing and shipping addresses, and payment accounts, are all saved and it just takes a few clicks to make a purchase. 

Shop Pay brings a similar experience to customers who shop with merchants who offer it. 

In addition to speeding up the check out process, and increasing customer satisfaction, it also offers optional support for local delivery, if that’s something your business offers. 

It also brings a high level of security to the checkout experience, as customer’s shipping and billing information is securely stored on Shopify’s PCI compliant servers. That’s one less thing for you to worry about as a small business owner. 

Shopify Payments vs Shop Pay

Shopify Payments is a service powered by Stripe that allows businesses to accept payments from customers by credit card without having to get a separate merchant services account. 

If you use Shopify Payments, you’ll get Shop Pay for free.

If you choose not to use Shopify Payments and you want to accept credit cards, you’ll need to sign up with a third-party payment processing company, and then link that account to your Shopify account. 

Perhaps the easiest way to understand the difference between the two is that Shopify Payments is what allows you as a merchant to accept credit cards and other types of payments from customers directly through Shopify, while Shop Pay is the interface that allows your customers to quickly and easily make purchases in your store and others. 

Shop Pay can “lift conversion by as much as 50% compared to guest checkout, outpacing other accelerated checkouts by at least 10%,”  according to a research study by a Big Three global management consulting company, sponsored by Shopify. It found that “the mere presence of Shop Pay…”can increase lower funnel conversion by 5%.”

Cart abandonment is a big problem for many ecommerce retailers, and Shopify Pay can help reduce that with a more seamless checkout process. 

How Shop Pay Is Used 

If you’re a seller using Shopify Payments or another merchant processing service, and you meet Shopify’s eligibility requirements, you can enable Shop Pay. 

As a merchant, Shop Pay integrates seamlessly with your Shopify store to streamline the payment process. Once activated, it appears as a payment option at checkout alongside other payment methods. When customers use Shop Pay, you receive payments directly through your configured Shopify Payments account or third-party payment processor. The funds typically arrive in your account within 2-5 business days, minus any applicable transaction fees.

One of the key advantages is that Shop Pay handles all the payment security complexities for you. Customer payment and shipping information is stored securely on Shopify’s PCI-compliant servers, reducing your liability and eliminating the need to maintain sensitive customer data on your own systems. You also get access to detailed analytics about Shop Pay usage and conversion rates through your Shopify dashboard.

Shopify merchants in the US (and 22 other countries) can use Shopify Payments to accept Visa, Mastercard, American Express, Discover, and Diners Club credit cards and debit cards. It also supports other payment methods such as Apple Pay, Google Pay, and, of course, Shop Pay.

It works on both mobile and desktop. 

Shop Pay comes with:

• Shopify Protect to help protect merchants against fraudulent chargebacks. 
• Shop Pay Installments, an integrated Buy Now Pay Later solution.
• Shop App so customers can save their information and check out quickly.
• Sign In With Shop which offers your customers one-tap check out. 

If you already use Shopify payments, it’s easy to activate Shop Pay. 

If you prefer to use a different payment processor, you can also activate Shop Pay for third-party payment gateways, so your customers can use Shop Pay on your online store, Facebook, and Instagram.

Setting up a Shop Pay account is simple. If you already use Shopify Payments, from your Shopify admin page, go to Settings and then to Payments. 

Then follow these instructions from Shopify:

1. In the Shopify Payments section, click Manage.
2. In the Shop Pay section, check Shop Pay.
3. Click Save.

If you use a third-party gateway, follow these instructions. From your Shopify admin page, go to Settings and then to Payments. 

Then follow these instructions from Shopify:

1. In the Third-party payment providers section, click Manage.
2. In the Shop Pay section, check Enable Shop Pay.
3. Click Save.
4. In the Shop Pay section, click Complete set up.
5. Enter the required details about your online store and banking information, and then click Save.

Instructions for signing up on an iPhone or Android can be found here.

Once you’ve set up Shop Pay, you can use the checkout editor to customize the appearance and functionality of your checkout page separate from your theme editor. This feature is only available to certain merchants on the Shopify Plus plan.

Once you start making sales, you’ll get paid for those sales—minus fees. In the US, you’ll usually get paid in 2-5 business days. You’ll want to make sure you have set up your payment information (bank account) to get paid and completed verification activities. If you don’t do that within 21 days, any payments customers have made will be refunded. 

How Shop Pay Works for Customers

From the customer perspective, Shop Pay can offer a smooth checkout solution. During their first purchase using Shop Pay, customers enter their email address, phone number, shipping information, and debit or credit card details. Customer information is then securely saved for future purchases. On subsequent visits to any store that offers Shop Pay, they can complete their purchase with just a few clicks or by entering a 6-digit verification code sent to their phone or email.

In addition, the customer experience offers access to Shop Pay’s built-in features like order tracking and delivery updates through the Shop app. For larger purchases, customers can take advantage of Shop Pay Installments to split their payment into smaller, more manageable amounts – either through four interest-free biweekly payments for orders under $1,000, or monthly installments for larger purchases up to $17,500. This flexibility in payment options can help increase average order values and reduce cart abandonment rates for your store.

Shop Pay Installments

Buy Now Pay Later plans have become popular with shoppers. You can activate Shop Pay Installments, which provides your customers with a Buy Now Pay Later solution from  And if you sell in store, you can activate Shop Pay Installments for Shopify POS. 

Shop Pay Installments allows customers to pay for purchase between $50 and $17,500 over time. Customers can choose between the following installment payment options at checkout:

• Four, biweekly, interest-free payments, for orders from $50 to $999.99. (Choosing this option does not affect the customer’s credit score unless they make late payments.)
• Monthly payments for orders from $150  to $17,500 USD. Interest is charged with an APR of 10 to 36%, and customers must pay balances three, six, or twelve months depending on the purchase amount. 

Eligible merchants can use Shop Pay Installments premium package, which offers customers interest-free payments for up to 12 months, or monthly installments with interest for up to 24 months on orders between $50 and $17,500.

How to Incorporate Shop Pay Installments into Your Marketing

Shop Pay Installments can be a powerful marketing tool when properly integrated into your business’s promotional strategy. However, it’s crucial to follow specific guidelines and regulations when promoting this payment option to your customers.

When using paid advertising platforms like Facebook Ads and Google Ads, you can include Shop Pay Installments messaging, but you must adhere to fair lending guidelines. This ensures your advertising remains compliant while effectively communicating the benefits to potential customers.

Social media marketing for Shop Pay Installments requires careful attention to compliance. Shopify provides pre-approved messaging that meets state and federal regulations, including the Truth in Lending Act (TILA). They offer a comprehensive social media kit with ready-to-use assets, including newsfeed posts (1080 x 1080 px) and stories posts (1920 x 1080 px) for platforms like Instagram and Facebook. These assets can be customized with your products while maintaining the Shop Pay Installments branding.

Email marketing provides another effective channel for promoting Shop Pay Installments, but certain requirements must be met. All emails should include an unsubscribe option, approved messaging with required disclosures, and your store’s physical postal address. You can leverage this payment option in various email campaigns:

• Abandoned cart emails can highlight the installment payment option to encourage purchase completion.
• Announcement emails can introduce Shop Pay Installments to your customer base using Shopify’s pre-loaded email templates.
• Promotional emails, especially during peak shopping seasons like Black Friday or holiday periods, can remind customers about the flexibility of installment payments.

By incorporating Shop Pay Installments into your marketing strategy while following these guidelines, you can effectively communicate this payment option’s benefits to your customers and potentially increase sales conversions.

Pros and Cons of Using Shop Pay

If you have an online business and use Shopify, the pros of using Shopify Payments with Shop Pay are likely to outweigh the cons. 

Pros

Easy to implement and activate, especially if you already use Shopify Payments. But even if you don’t, it’s easy to implement. 

Make it easier for customers to buy. Increase conversions and reduce abandoned carts for customers who use Shop Pay to store their card information. 

Provide multiple checkout options. Support multiple payment options including personal and business credit cards, debit cards and more. 

Cons

Fees can add up. If you use a third-party processor, rather than Shopify Payments, you’ll pay merchant fees plus Shopify’s fees can get pricey. 

Shop Pay’s Local Pick and Delivery Support for Local Businesses

Through Shopify Plus plan you can set up local delivery if you have less than 20 locations and custom checkout deactivated. If you meet this criteria, you can set up a delivery option for the locations you want, a minimum price to qualify, the radius you will deliver to (must be 100 miles or less), and additional fees for delivery. 

There are also some rules for what customers qualify for delivery, certain payment methods, and actually getting local delivery setup so make sure you read through the full set of rules before you start using it so you can make sure it will serve your business.

How To Activate Shop Pay

Activating shop pay with Shopify is easy. All you need to do is login into your Shopify account then go to Payments under Settings. Under Shopify Payments select Manage and then under the Shop Pay section click Shop PayMake. Then save your changes. 

If you are doing this on your phone rather than your computer, you need to start by opening the Shopify app, go to Settings, then to Store Settings, and then to Payments. Once you have done this, you can go to Shopify Payments and from there the directions become the same as the directions for doing this on a computer.

Make sure that when you set up/activate Shop Pay that you complete it within 21 days. If you don’t have your payout information completed within 21 days of your first order, the money will be returned to the customer.

How to Deactivate Shop Pay

If you want to deactivate Shop Pay, follow the same steps as you do when you are activating Shop Pay, but when you get to the Shop Pay section uncheck Shop Pay. Then on the Deactivate Shop Pay box, click Deactivate and make sure to save.

As previously mentioned if you do this on your phone rather than your computer you will have the extra steps to get to the Shopify Payments section but once you get there it is the same again.

Is Shop Pay the Best Converting Checkout Like Shopify Says?

Shopify partnered with a Big Three accounting firm to study checkout data for all the major commerce platforms. According to Shopify, “this leading global management consulting company found that Shopify’s overall conversion rate outpaces the competition by up to 36% and by an average of 15%.”

How To Choose a Checkout Provider

If you are starting with Shopify and don’t want to use Shopify Payments, you can choose from a number of credit card payment providers. Credit card payment providers are split into direct and external providers. Choosing which to use should be based on business needs and the associated transaction fees with each checkout provider.

Alternative Shopify-Integrated Payment Providers

If you use Shopify, you can choose from a variety of payment providers. Shopify supports both direct providers (which means customers can check out on your site) or external providers (which means they check out on an external check out page). 

They include well-known providers like JP Morgan Chase, Affirm, Amazon Pay and Klarna. You can see the full list of providers Shopify supports here. 

Other popular alternatives to Shop Pay include Amazon Pay, for customers who have Amazon accounts, or PayPal Checkout.

Nav’s Verdict

Shopify is a popular option for business owners looking for an ecommerce or integrated ecommerce and retail solution. Shop Pay makes it easy for customers to check out, which can increase conversions and sales. 

Business owners who use Shopify should consider activating Shop Pay. Ecommerce store owners who do not use Shopify may also want to consider Shop Pay to increase sales. 

Frequently Asked Questions About Shop Pay

How do merchants get paid with Shop Pay?

When customers make purchases through Shop Pay, the funds are processed through your connected Shopify Payments account or third-party payment processor. For U.S. merchants, payments typically arrive in your bank account within 2-5 business days after the transaction. However, it’s crucial to complete your payment verification and provide valid banking information within 21 days of your first sale, or customer payments will be automatically refunded.

How much does Shop Pay charge merchants?

Shop Pay itself doesn’t charge additional fees beyond your regular payment processing costs. If you use Shopify Payments, you’ll pay the standard credit card processing fees which vary by your Shopify plan – typically ranging from 2.4% + 30¢ to 2.9% + 30¢ per transaction. (Check the website for current fees.) However, if you opt to use a third-party payment processor, you’ll need to pay both their processing fees and Shopify’s additional transaction fees, which can range from 0.5% to 2% depending on your plan.

What are the disadvantages of Shop Pay?

The main disadvantage of Shop Pay is its dependency on the Shopify ecosystem, which means you’ll need to either use Shopify Payments or pay additional fees for using third-party processors. Some merchants also report that the 21-day verification deadline for new accounts can be challenging to meet, especially if there are any issues with bank account verification. Additionally, while Shop Pay Installments can boost sales, the monthly payment option includes interest charges that some customers may find unappealing.

Does Shop Pay take a percentage?

Shop Pay doesn’t take an additional percentage beyond standard payment processing fees. The percentage you pay depends on your Shopify plan and payment processor choice. With Shopify Payments, you’ll pay only the standard credit card processing fees. However, if you use a third-party payment processor, you’ll need to account for both their fees and Shopify’s additional transaction fees, which can make the total percentage higher.

What are the requirements to use Shop Pay?

To use Shop Pay, you must have an active Shopify store and be located in one of the supported countries (currently available in 23 countries including the US). You’ll need to either use Shopify Payments or connect a supported third-party payment processor. Your business must also comply with Shopify’s terms of service and payment provider requirements. For Shop Pay Installments, additional eligibility criteria apply, including being based in the US and meeting minimum transaction requirements of $50 for orders.