Enable PayPal for Shopify as a payment method

Integrating PayPal into your Shopify shop can simplify the checkout process for your customers and significantly boost your conversion rate. That’s why, in this article, I’ll explain everything you need to know about adding and integrating PayPal as a payment method in Shopify in 2025

Integrating PayPal into your Shopify shop can simplify the checkout process for your customers and significantly boost your conversion rate. That’s why, in this article, I’ll explain everything you need to know about PayPal in Shopify. Here, you’ll find out how to integrate PayPal into Shopify, what potential drawbacks there might be for you, how PayPal compares to Shopify Payments, and, finally, my recommendation regarding payment gateways.

What is PayPal?

PayPal is a world-leading online payment service that enables users to make secure and fast payments over the internet. With over 400 million active users, PayPal provides a trusted platform for transactions between buyers and sellers.

How to integrate PayPal into Shopify

Integrating PayPal into your Shopify shop is straightforward:

1. Open the Shopify admin: Log in to your Shopify admin.
2. Access settings: Click on ‘Settings’ and then on ‘Payments’.
3. Select PayPal: In the ‘PayPal’ section, select ‘PayPal Express Checkout’.
4. Activate: Click on ‘Activate’ and log in with your PayPal Business account.
5. Grant permissions: Follow the instructions to grant Shopify the necessary permissions.

Once you have completed these steps, PayPal will be enabled in your Shopify shop and customers will be able to use it as a payment method.

PayPal is one of the most widely used payment methods

PayPal is hugely popular for online shopping. Buyer protection is a key factor in its success. Given its widespread use, Shopify merchants are encouraged to offer PayPal as a payment method. This is because customers often abandon their purchase if they cannot find their preferred payment method at the checkout. Unfortunately, however, this payment service provider does present some drawbacks for merchants.

Disadvantages of PayPal for Shopify merchants

Using PayPal as a payment method in your Shopify shop offers numerous advantages, but there are also some potential disadvantages to bear in mind:

Transaction fees: In Germany, PayPal charges a fee of 2.49 per cent of the transaction amount, plus a fixed fee of €0.35 per transaction, for receiving payments for goods and services. For example, on a payment of €100, the total fees would amount to €2.84. These fees can sometimes drastically reduce a merchant’s profit margin, particularly when prices are low.

Payout time: Transferring funds from your PayPal balance to your bank account can take several days. This delay may affect your business’s cash flow, particularly when you need funds to come in quickly.

Customer experience: When using PayPal, customers are often redirected to its website to complete the payment process. This extra step can prolong the checkout process and may lead to abandoned purchases.

Payout issues: PayPal uses its own system for transferring customer payments to merchants. If you experience any issues with payouts, you must contact PayPal customer service directly, as Shopify is unable to provide support in such cases.

Account activation and country settings: To enable PayPal as a payment method in your Shopify shop, your shop’s country settings must match those of your PayPal account. Different country settings may prevent activation. Ensure that the country settings are configured correctly in your general Shopify settings.

Account restrictions due to high transaction volumes: A sudden or unusually high volume of transactions may be flagged as suspicious, which could result in temporary restrictions or even the suspension of your account. In such cases, you will need to contact PayPal customer service, as Shopify is unable to assist with this matter.

Shopify Payments as an alternative to PayPal for Shopify?

Shopify Payments is Shopify’s in-house payment gateway and offers a number of benefits for shop owners. But can it be a genuine alternative to Shopify? Here is a comparison of the two options.

1. Integration and user-friendliness

• Shopify Payments: As Shopify’s in-house solution, Shopify Payments is seamlessly integrated into the platform. It can be activated directly via the Shopify dashboard, without the need for third-party accounts. Customers can remain on your website throughout the entire checkout process, resulting in a more consistent user experience.
• PayPal: Although it is a widely used and familiar payment gateway, customers are redirected to the PayPal website during the payment process to complete the transaction. This can prolong the checkout process and may lead to abandoned purchases.

2. Fee structure

• Shopify Payments: Transaction fees vary depending on your Shopify plan. For example, the cost of online credit card payments ranges from 2.4% to 2.9% plus US$0.30 per transaction. There are no additional fees for using the service.
• PayPal: For domestic transactions in the US, a fee of 2.9 per cent of the transaction amount plus US$0.30 per transaction is charged. Additional charges may apply for international transactions.

3. Payout period

• Shopify Payments: Payments are usually transferred directly into your bank account within 3 working days, depending on your location.
• PayPal: It can take between 5 and 7 working days for PayPal funds to be transferred to your bank account.

4. Security and fraud protection

• Shopify Payments: Offers integrated fraud detection tools and complies with PCI-DSS standards, ensuring a high level of security.
• PayPal: Has robust security measures in place and offers both buyer protection and seller protection programmes. However, in the event of a dispute, the decision-making process can take longer, which may lead to uncertainty.

5. Availability and acceptance

• Shopify Payments: Is available in many countries, but not worldwide. It supports common payment methods such as credit and debit cards, as well as local payment options in certain regions.
• PayPal: Recognised worldwide and available in over 200 countries. Many customers trust the company, which can help to increase the conversion rate.

My recommendation: Integrate all standard payment methods

The evidence regarding payment methods in e-commerce is clear. Every customer has their own preference and will expect to find it in your Shopify shop. My recommendation is therefore to offer as many methods as possible. Shopify Payments already covers a large proportion of these. PayPal must be integrated into Shopify separately.

Conclusion – PayPal is compulsory for Shopify

As PayPal is one of the most widely used payment gateways worldwide, I recommend that every e-commerce retailer offers this option in their shop. Although problems may occasionally arise that require additional administrative effort, the potential gain from an increased conversion rate outweighs this. Studies show that integrating PayPal can increase the conversion rate by up to 28 per cent. This positive outcome can justify the challenges associated with using PayPal.

Frequently Asked Questions about Shopify PayPal

Can I use PayPal on Shopify?

Yes, you can use PayPal on Shopify. Shopify offers a direct integration with PayPal, so your customers can easily pay using their PayPal account at checkout.

Why doesn’t PayPal work with Shopify?

If PayPal isn’t working with Shopify, it’s usually because of missing or incorrect settings. You’ll often need to link your PayPal Business account to Shopify or enter your API credentials. Without this link, PayPal cannot be used in the Shopify checkout.

What payment methods are available on Shopify?

Shopify offers a range of payment methods: Shopify Payments (credit card, Klarna, Sofortüberweisung), Shop Pay, PayPal, Apple Pay, Google Pay and external providers such as Stripe. This allows you to offer your customers a wide range of options.

How much does PayPal charge on a payment of €100?

For a payment of €100 via PayPal, the fee in Germany is usually 2.49% + €0.35. This means that, after PayPal’s fees have been deducted, you’ll be left with around €97.16 out of the €100.

What are the fees for PayPal Business?

With PayPal Business, the standard fees in Germany are currently 2.49% + €0.35 per transaction. Fees may vary depending on turnover and the terms of your individual contract.

How much is the fee for PayPal payments?

In Germany, the fee for a PayPal payment is 2.49 per cent of the payment amount plus €0.35 per transaction. Higher fees may apply for international payments.

Does Shopify charge a fee for using PayPal?

Yes, Shopify charges an additional transaction fee if you use PayPal instead of Shopify Payments. Depending on your Shopify plan, this ranges from 0.5% to 2% per transaction. If you have Shopify Payments enabled, these additional fees do not apply.

How do I add PayPal to my Shopify shop?

To add PayPal to your Shopify shop, go to your shop’s settings and select the ‘Payment providers’ section. There, you can select PayPal as a payment option and enter the necessary details to link your PayPal account.

How can I ensure that my customers can accept PayPal?

To ensure that your customers can accept PayPal as a payment method, you need to set up the PayPal integration correctly in your Shopify shop. Check that the PayPal option is enabled and test the checkout process to make sure everything is working properly.

Can I process refunds manually via PayPal?

Yes, you can process refunds manually via your PayPal Business Account. To do this, go to the transaction you wish to refund in your PayPal account and follow the refund instructions. Don’t forget to note the refund in your Shopify shop as well.

How do PayPal’s currency conversion fees work?

PayPal may charge conversion fees when you receive payments in a foreign currency. These fees depend on the currency in which the transaction is made and may represent an additional cost that you should take into account when making international sales.