What Is Shop Pay? One-click Checkout for Shopify Businesses
Meaghan has provided content and guidance for indie retailers as the editor for a number of retail publications and a speaker at trade shows. She is Fit Small Business’s authority on retail and ecommerce.
Andrea is a staff writer at Fit Small Business, focusing on payments under the Retail section.
This article is part of a larger series on Payments.
Shop Pay is an accelerated online checkout service by Shopify that lets customers enjoy one-click payments. It securely saves and encrypts customer details such as email, credit card, shipping, and billing information. By allowing faster checkouts, Shop Pay can help reduce shopping cart abandonment.
Enabling Shop Pay on your online store is free and takes fewer than five minutes. Although it is easiest to activate Shop Pay if you already have a Shopify store and use Shopify Payments as your payment processor, you may also use it with third-party payment providers and on Facebook and Instagram shops.
Shop Pay vs Shopify Payments
Shopify Payments is the payment processing service Shopify provides retailers, while Shop Pay is the front-facing checkout customers use. Shopify Payments is a backend merchant service, and can be used even without Shop Pay.
Shop Pay | Shopify Payments |
|---|---|
Customer-facing checkout | Backend payment processing |
Saves buyer details | Lets sellers offer multiple payment options |
Can work with Shopify Payments, third-party payment providers, and Facebook and Instagram shops | Works without Shop Pay |
Who Should Use Shop Pay
All Shopify sellers and US-based Facebook and Instagram shops could benefit from enabling Shop Pay as a customer payment option. Shopify says that Shop Pay increases checkout speed by 4x, leading to a 1.72 times higher conversion rate, and is 70% more efficient than a standard checkout process.
The ease of checkout gives more time for shopping and reduces the frustration of filling out the same information again and again. This makes for a better customer experience, which promotes customer loyalty. It’s also more secure and lets customers select their local pickup or delivery preference.
When Not to Use Shop Pay
If you do international sales or your business is not in one of the 21 supported languages, you may not be able to use it. If you have a Facebook or Instagram shop, you can only use Shop Pay if you are in the US.
How Shop Pay Works
Shop Pay works much like other express checkouts—by taking customer information once. Shopify encrypts and saves the information on its PCI-compliant servers. Then, when a customer wants to make a later purchase, the information is already loaded, along with pickup and delivery options.
The process is equally easy for you. If you’ve enabled the Shop Pay app, then the option appears on the Express Checkout with any other express options you offer.
If a customer is paying for the first time, they will be invited to join. They can then have their information saved, including contact information, credit card info, and delivery address. The next time they purchase from a Shopify store, they can choose the express option.
If they use the Shop app, customers will be asked to verify their purchase on the app; otherwise, they receive a six-digit verification code via text. Once the purchase is verified, they can use the saved information to pay. They are also given the option to pay in installments (if you have enabled Shop Pay Installments) and to have the item delivered or picked up in-store.
Customers can change their information at any time through Shop Pay or opt out as desired.
How to Add Shop Pay to Your Online Checkout
Previously, Shop Pay was only available to Shopify stores that use Shopify Payments. Currently, you may also use Shop Pay with a third-party payment provider or on your Facebook or Instagram shop.
Activating Shop Pay for Shopify Payments
Once you have set up your Shopify store, adding Shop Pay to your store is very easy. If you are already using Shopify Payments, it may already be enabled. If not, or if you’re unsure, follow these steps.
Activating Shop Pay for Third-party Payment Providers
Stores based in the US can use a third-party payment provider to activate Shop Pay. Check to see if you meet Shopify Payments requirements.
After activating Shop Pay, you will be asked for your business details and banking information to complete set up and receive payouts.
If you do not complete the setup when you enable Shop Pay, you need to submit the information within 21 days of receiving a payment via Shop Pay. Failure to do this within 21 days will result in the payment being refunded to your customer.
Activating Shop Pay for Facebook or Instagram Shops
Shop Pay is also available on a limited basis to Facebook and Instagram shops in the US. If you are setting up your shop for the first time, Shop Pay will be automatically turned on. Here’s how to turn it on if it’s not yet enabled on your shop:
Shop Pay Benefits & Key Features
| PROS | CONS |
|---|---|
| Quicker checkout | Does not work in every language supported by Shopify |
| Saves customer information across all Shopify stores | Higher fees for Shop Pay Installments |
| Secures and encrypts customer information | |
| Takes <5 minutes to set up | |
| Protects against fraudulent orders | |
The selling point of Shop Pay is the ease of use for your customers. However, Shopify has included other valuable features to make shopping at your store with Shop Pay even better:
It takes only a few steps to set up Shop Pay, and it’s nearly as simple for your customers to set up an account. After that, Shopify handles all the grunt work of creating the buttons and handling the transaction information.
All the information is encrypted end-to-end and stored on Shopify’s PCI-compliant servers. You don’t need to handle the responsibility—or liability—of securing your customer’s payment information yourself.
According to Baymard Research, 17% of customers abandon their cart because the checkout process was too long or complicated. Another 18% left because they didn’t trust the site with their credit card information. With Shop Pay’s simple, secure checkout, you can nip these issues in the bud.
To use Shop Pay, customers need to verify purchases on the Shop app or with a texted code, helping ensure someone isn’t using their information for fraudulent purchases. This helps protect you against chargebacks.
Since our last update:
Shop Pay now has built-in free fraud protection through Shopify Protect.
Shopify Protect covers the cost of the order and the chargeback fee on any eligible orders processed through Shop Pay that receives a fraudulent chargeback. The chargeback process is handled by Shopify and the chargeback amount and fee will be reimbursed. Learn more about Shopify Protect.
If your store has local pickup or delivery, you can let customers choose their option during checkout with Shop Pay.
Each year, Shopify gives a certain percentage of its Shop Pay transactions to support companies that work toward reversing climate change through carbon removal projects. Among Shopify’s Sustainability Fund Partners are Climeworks, Carbon Engineering, Noya, and Sustaera. With 50% of consumers saying they are willing to pay a premium for sustainable brands, it’s a nice way to stand out.
If you choose, you can give Shop Pay customers the option of paying in multiple payments through Shop Pay Installments. For orders between $50 and $999.99, your customer can pay in four interest-free biweekly installments, and for orders between $150 and $17,500, they can pay in up to 12 monthly installments with 10% to 30% annual percentage rate (APR).
With Shop Pay Installments, there are no hidden or late fees for your customers and you get paid in full upfront. However, Shop Pay Installments does have higher transaction rates than standard purchases—and these fees are not returned if you issue a refund. According to a Shopify representative, these are typically 5.9% + 30 cents.
Like PayPal’s Pay-in-Four program, Shop Pay Installments lets customers break payments into four installments. (Source: Shopify)
Shop Pay Frequently Asked Questions (FAQs)
Can I use Shop Pay without a Shopify Store?
Yes, Shop Pay is also available for merchants with a Facebook or Instagram shop. If you don’t have these, then you will need a Shopify Store that accepts card transactions.
What is the Shop app?
Shop is Shopify’s mobile shopping application. It lets customers shop in any Shopify store through one central application. Consumers can search for products, locations, and stores; select how they pay; track orders and receipts; and get recommendations. You can use the app to conduct analytics, manage what inventory is on your Shop app store, and run marketing campaigns.
Is Shop Pay safe and secure?
Yes, it is. Shopify protects customer information with end-to-end encryption and stores it in its certified Level I PCI DSS compliant servers. Shopify is also SOC 2 Type II and SOC 3 compliant, and GDPR and CCPA compliant. In short, it meets and exceeds industry standards.
Shopify protects merchants against fraud through Shopify Protect. This feature covers the cost of the order and the chargeback fee on any eligible orders processed through Shop Pay that receives a fraudulent chargeback
Is Shop Pay the same as Afterpay?
No. Shop Pay is an express checkout system, whereas Afterpay is a third-party BNPL service similar to Shop Pay Installments. (Square acquired Afterpay in October 2021.) If you are interested in BNPL for small businesses, check out our list of the best Buy Now Pay Later apps.
Is Shop Pay the same as Paypal?
No, although Shop Pay does work like PayPal checkout in terms of speed. However, Shop Pay is unique to Shopify and can store any credit card information. The two can be offered alongside each other to give your customers a choice.
Bottom Line
If you have a Shopify store that accepts card payments online, then Shop Pay is a simple and free tool that gives your customers an easy, secure, and fast checkout experience. You could also start using it if you have a Facebook or Instagram shop. To learn more about Shop Pay, log in to your Shopify account and activate it today—or learn how to set up a Shopify store.
