Shopify transaction fees are extra charges applied to each sale when you use a third-party payment gateway instead of using Shopify Payments, Shopify's own payment processor. This fee is different from the subscription plan, which you paid to use the Shopify platform, and the amount changes based on the plan you choose.
Shopify charges this transaction fee to cover the cost of supporting external payment providers. Understanding the fee structure and alternative options helps you manage and reduce these costs to keep your store profitable.
What Is Shopify Transaction Fees?
Shopify transaction fee refers to the percentage of each sale that Shopify charges when a store does not use Shopify Payments as its payment gateway. This fee depends on your Shopify plan.
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%.
- Shopify Plus Plan: 0.15%.
Shopify charges lower transaction fees to stores on the Shopify Plus plan than other plans when using third-party payment methods. You can avoid this fee by using Shopify Payments. Also, Shopify does not charge transaction fees for manual payment methods such as cash, cash on delivery (COD), and bank transfers. However, if you switch to another payment processor, you will begin paying these transaction fees in addition to the fees paid to your new third-party payment processor.
Why Does Shopify Charge Transaction Fees?
Shopify charges transaction fees to cover the costs of integrating external payment gateways. These fees ensure secure payment processing and compatibility with external gateways. Shopify does not charge transaction fees when transactions are processed through Shopify Payments.
What Are the Methods to Avoid Transaction Fees?
Avoiding transaction fees helps you save more from each payment. You can do this by using payment methods that do not charge fees, choosing platforms that offer low fees, bank transfers, and negotiating lower fees with payment processors based on your transaction volume.
Shopify Payments
One of the easiest ways to eliminate transaction fees is by using Shopify Payments, Shopify's built-in payment processing system. This helps you to save a lot by providing a smooth checkout process to your customers.
Choosing the Right Plan
Shopify offers different plans (Basic, Shopify, Advanced), and transaction or credit card fees decrease in higher-tier plans. If your store starts making sales, upgrade your plans to save more due to the lower percentage of fees.
Negotiate with Payment Provider
If Shopify Payments is unavailable in your country, contact third-party payment providers. Show your monthly sales volume, transaction history, and business model to request a lower transaction rate. Some providers lower the fee based on your sales volume. Always compare rates from multiple providers before making a final decision.
Contact Shopify Support (for High Volume Stores)
If you're on the Advanced Shopify or Shopify Plus plan and have a large volume of sales. Contact Shopify Support to negotiate discounts on transaction fees.
How to Manage Transaction Fees to Keep More Profit?
Managing Shopify transaction fees effectively helps businesses reduce costs, optimize payment methods, and track expenses more accurately.
- Fee Calculator: A fee calculator helps you understand exactly how much each payment method is costing you. Fee Calculator tools by ecommerce-gold allow you to input your product price, transaction volume, and selected plan to see how fees affect your margins. Based on these inputs, the tool calculates your total fee per transaction.
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Review Third-Party Provider Fees:If you use third-party payment gateways, review their fee structures to understand the total cost per transaction. Use this formula to calculate the transaction fee of a third-party gateway.
[(cost of products - discounts) + tax + shipping charges] x rate
Do Other E-Commerce Platforms Charge Transaction Fees?
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 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 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 be charged a processing fee of 2.9% + $0.30.
