Progressive Payment Solutions

Why Shopify’s Payment Processing System Can Be Bad for Your Business

Shopify Payment Processing Bad for Your Business

Shopify may have exploded in popularity in recent years, but there are costs that can make it a poor choice. Find out what those costs are and what they mean for your business.

E-Commerce platforms are nothing new. Believe it or not, they have been around for over 40 years.

Not surprisingly, there continue to be new platforms that seem to offer advantages that the competition doesn’t have.

This is the case with the Shopify platform: many choose them because they are easy to set up, customizable, and offer plenty of online support.

However, there’s an ugly part of using Shopify that can wreak havoc on a business’ profitability: their payment processing.

Find out what that is to understand why it’s such a problem.

How does payment processing work on Shopify?

Shopify uses a flat-rate structure that varies depending on which package of theirs you choose.

As you may have read in our previous article on understanding pricing structures, there are different ways to price payment processing services. 

One way of processing to avoid is a flat rate if you are accepting a lot of money via credit cards. Why?

Flat rates are often offered for people just starting out. So if it’s just a side gig where you’re only doing a few thousand dollars a month, flat rates aren’t bad. Their simple structure, no contracts, and manageable fees are competitive with having a dedicated merchant account… to a point. 

Beyond that point, though, and things get ugly.

Once a business begins growing into the thousands, flat processing rates end up being very high in comparison with the rate that comes from having your own merchant account with an Interchange Plus pricing structure. 

So if it’s just your side-hustle on Shopify, keep it up. But if you’re ready to take things seriously, you had best think again about using Shopify to power your growth.

How does that affect your business in the real world? Let’s cover that next. 

How much does Shopify charge for processing credit cards?

As mentioned earlier, the amount Shopify will charge for processing credit cards will vary from one plan to the next.

Again: because it’s a flat-rate payment structure, it’s still going to be expensive if you’re doing high volume. 

In order to understand what that actually means, let’s look at what those rates are. Per Shopify’s website, there are three options: Basic, Shopify, and Advanced (it’s not clear why the middle option from Shopify is called “Shopify”, so we’ll call it “Standard”).

Shopify Basic offers an online credit card rate of 2.9% + 30¢ USD per transaction, with 2.7% + 0¢ USD for in person credit/debit rates.

Shopify (Standard) offers an online credit card rate of 2.6% + 30¢ USD per transaction, with 2.5% + 0¢ USD for in person credit/debit rates.

Shopify Advanced offers an online credit card rate of 2.4% + 30¢ USD per transaction, with 2.4% + 0¢ USD for in person credit/debit rates.

While this may not seem like much, all three become far too expensive if you’re doing any significant volume. Here’s why:

Even if you were to use their best offered rate with Shopify premium, you’re still paying 2.4% + 30¢ for EVERY credit card, whether debit or AMEX, on top of their monthly fee.

Once your business stops being a side-hustle and starts making a significant amount (say, three thousand or more), this flat fee system will quickly be paying far more than if they were to get a merchant account with Interchange plus. 

This is because the only costs from using Interchange Plus is the actual cost of the credit card plus the margin the processor will add on for their services. While this margin varies from processor to processor, it is nearly always significantly less than the flat fee pricing systems mentioned above. 

It gets worse. 

Roughly 50% of online transactions are made with debit cards, which should cost half that of processing credit cards–only 1-1.2% in fees with Interchange Plus. But all cards are the same to Shopify, so you’ll also pay 2.4%-2/9% + 2.4% + 30¢ per transaction with debit cards. Ouch.

After learning this, you may now be thinking, ‘I’ll just use a merchant account with Shopify and get Interchange Plus pricing!’. If this is what you’re hoping for, it’s best you read on.

What is Shopify’s policy with using other processors?

No question about it: Interchange Plus rates are less expensive than flat fees once you reach a certain transaction volume threshold. 

At this point, you will likely be hoping to have the best of both worlds: keep growing on Shopify, but with an outside payment processor in order to secure a better rate. There’s no easy way to say this, so it just needs to be said:

Using an outside payment provider will result in a penalty from Shopify. 

This penalty Shopify charges is 2% for the Basic Package, 1% for the Standard package, and .5% for the Advanced. 

While that may not seem like much, even with .5% you are still paying more than you need to, meaning you’ll be possibly losing hundreds or even thousands of dollars each month from your bottom line from Shopify.


Shopify certainly has a lot to offer small businesses doing less volume. However, there’s no way to get around the high processing cost from their flat fee pricing system once your business begins to do higher volumes of transactions. And because they penalize those who use an outside merchant account by imposing transaction fees, there’s no way to get a more affordable pricing system with them.

We hate to be the bearer of bad news. But by knowing this, you can save your business both money and wasted time from trying to grow the wrong way. 

Progressive Payment Solutions is all about empowering your business to make the best decisions that move you forward. If you’re ready to start saving money on payment processing, contact us today. We offer you the industry’s best processing with one-on-one customer service that’s second to none. 

Looking to Save Money on Payment Processing?


Download free guide with advice from experts!