PayPal for Shopify - What you need to consider

Integrating PayPal into your Shopify store can make the checkout process easier for your customers and significantly increase your conversion rate. That's why I'll explain everything you need to know about PayPal in Shopify in this article. Here you'll learn how to integrate PayPal into Shopify, what possible disadvantages PayPal can have for you, how PayPal compares to Shopify Payments and finally my recommendation on payment gateways.

What is PayPal?

PayPal is a leading global online payment service that enables users to make payments securely and quickly over the Internet. With over 400 million active users, PayPal provides a trusted platform for transactions between buyers and sellers.

How you can integrate PayPal into Shopify

Integrating PayPal into your Shopify store is straightforward:

1. Open Shopify admin: Log in to your Shopify admin area.
2. Call up the 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 authorizations: Follow the instructions to grant Shopify the required permissions.

After completing these steps, PayPal is activated in your Shopify store and can be used by customers as a payment method.

PayPal is one of the most commonly used payment methods

PayPal enjoys great popularity in online shopping. Buyer protection is an important argument for this success. Due to its widespread use, Shopify merchants are encouraged to offer PayPal as a payment method. This is because customers often abandon a purchase if they cannot find their preferred payment method in the checkout. However, PayPal unfortunately has some disadvantages for merchants.

Disadvantages of PayPal for Shopify merchants

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

Transaction fees: In Germany, PayPal charges a fee of 2.49% of the transaction amount plus a fixed fee of €0.35 per transaction for receiving payments for goods and services. For example, a payment of €100 would incur a total of €2.84 in fees. These fees can drastically reduce a merchant's profit margin, especially at low prices.

Payout time: The transfer of PayPal funds to your bank account can take several days. This delay can affect the liquidity of your business, especially when fast cash inflows are required.

Customer experience: When using PayPal, customers are often redirected to the PayPal website to complete the payment process. This additional step can lengthen the checkout process and potentially lead to abandoned purchases.

Payout problems: PayPal uses its own procedure for transmitting customer payments to merchants. If you have problems with payouts, you must contact PayPal customer service directly, as Shopify cannot provide support in such cases.

Account activation and country settings: To activate PayPal as a payment method in your Shopify store, the country settings of your store must match those of your PayPal account. Different country settings can prevent activation. Make sure that the country settings are configured correctly in the general Shopify settings.

Account restrictions for high transaction volume: A sudden or unusually high transaction volume can be classified as suspicious by PayPal, which can lead to temporary restrictions or even the blocking of your account. In such cases, it is necessary to contact PayPal customer service, as Shopify cannot assist with this.

Shopify Payments as a PayPal replacement for Shopify?

Shopify Payments is Shopify's in-house payment gateway and offers a number of advantages for store operators. But can it be a real 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. Activation is done directly from the Shopify dashboard, with no third-party accounts required. Customers can stay on your website throughout the checkout process, resulting in a more consistent user experience.
• PayPal: Although PayPal is a widely used and trusted payment method, customers are redirected to the PayPal website during the checkout process to complete the payment. This can lengthen the checkout process and potentially lead to abandoned purchases.

2. fee structure

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

3. payout period

• Shopify Payments: Payouts are usually made directly to your bank account within 3 working days, depending on your location.
• PayPal: The transfer of PayPal funds to your bank account can take between 5 and 7 working days.

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 and offers both buyer protection and seller protection programs. However, in the event of disputes, the decision-making processes can take longer, which can 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: Recognized worldwide and available in over 200 countries. Many customers rely on PayPal, which can increase the conversion rate.

My recommendation: Include all common payment methods

The data on payment methods in e-commerce is clear. Every customer has their own preference and will expect this in your Shopify store. Therefore, my recommendation is to offer as many payment methods as possible. Shopify Payments already covers a large part of this. Paypal needs to be integrated into Shopify independently of this.

Conclusion - Paypal is mandatory for Shopify

Since PayPal is one of the most widely used payment methods worldwide, I recommend that every e-commerce merchant offer this option in their store. Although there may be occasional issues that require additional administration, the potential gain from an increased conversion rate outweighs this. Studies show that integrating PayPal can increase conversion rates by up to 28%. This positive result can justify the challenges associated with using PayPal.