Shopify transaction fees are the charge imposed by Shopify on merchants for each sale made through payment gateways other than Shopify Payments. These fees are different from the subscription cost and vary depending on the Shopify plan.
Shopify charges this transaction fee to cover the cost of using their platform, providing security, and offering various features that support your online business. However, there are methods to avoid the transaction fee, Shopify payments, upgrading your subscription plan to access lower fee tiers, or optimizing your store’s pricing and payment processes to reduce reliance on third-party gateways.
What is Shopify Transaction Fee?
Shopify transaction fee is percentage based charged by Shopify on each sale made through its platform, covering payment processing and related services. This fee is in addition to any fees charged by the payment gateway itself.
Shopify offers different subscription plans (Basic, Shopify, Advanced). The transaction fees decrease with higher-tier plans.
- Basic Shopify Plan: 2.0%.
- Shopify Plan: 1.0%.
- Advanced Shopify Plan: 0.5%.
By using Shopify Payments, you can maximize your profits without charging additional costs associated with using third-party payment gateways. However, there are still credit card processing fees that apply for both online and in-person transactions.
Why Shopify Charge Transaction Fee?
Shopify charges transaction fees to cover the costs associated with processing payments and integrating with payment providers. These fees help Shopify cover the costs of maintaining the platform, security, and integrating with external payment systems.
When using Shopify Payments, you won’t charge third-party transaction fees for orders processed via Shopify Payments, Shop Pay, or PayPal Express. Additionally, no transaction fees apply to manual payment methods like cash, cash on delivery (COD), or bank transfers.
What Are the Methods to Avoid Transaction Fees?
Avoid the transaction fee to minimize expenses and maximize returns. Many of the Shopify merchants finding ways to reduce or avoid these fees, becomes a priority. Although Shopify provides a seamless platform for managing your e-commerce business. There are methods to minimize or even eliminate these fees, allowing you to optimize your margins and reinvest savings into other aspects of your business.
Use Shopify Payments: Shopify charges a transaction fee ranging from 0.5% to 2%, when using third-party payment gateways. To avoid this fee, use Shopify Payments, which is Shopify's built-in payment processing system. It eliminates the additional transaction fee, although standard credit card processing fees still apply.
Choosing the Right Plan: Shopify offers different plans (Basic, Shopify, Advanced), and the credit card processing fees decrease as you move up in plan tiers. By selecting a higher plan, you lower the overall percentage of fees associated with transactions.
Avoid Third-Party Payment Gateways: When using third-party gateways, Shopify charges a transaction fee in addition to the gateway’s own fees. To eliminate this fee, use Shop Pay, PayPal and Stripe.
Sell Offline: You can sell offline to avoid transaction fees associated with online payments. When you sell in person using Shopify POS, you can accept cash payments, which do not incur transaction fees. Additionally, you can set up offline payments in your Shopify admin to accept card payments.
Negotiate Custom Rates: If business possesses high volume sales, reaching out to Shopify to negotiate custom rates can result in lower fees.
Are Transaction Fees Charged by Other E-Commerce Platforms?
Yes, other e-commerce platforms charge transaction fees, similar to Shopify. However, each platform has different pricing structures and fee models.
WooCommerce for U.S. based payments Shopify charges 2.90% + $0.30 transaction fee and for the other outside cards there is an additional 1% extra fee.
BigCommerce does not charge transaction fees for each sale. However, if your annual sales exceed a specific amount, your account will automatically be upgraded to a more expensive plan, increasing your monthly fees.
Magento charges 2.9% + $0.30/transaction.
Squarespace charges a 3% transaction fee for each sale in its Business plan.
Wix does not charge any transaction fee, but you will charge a processing fee of 2.9% + $0.30.
