What Is Shop Pay And How Does It Work?

When a customer is checking out, and they’ve entered their shipping, billing, and credit card information, they can save their information with Shop Pay.

Shop Pay is a good option for online retailers who want to make it simple for returning customers to check out swiftly.

Because most of Shop Pay’s distinctive features — such as rapid checkout and remembering customer payment data — are primarily applicable to online sales, it’s best suited for business owners that perform most or all of their business online.

Shop Pay is a payment service provider that allows clients to save their email address, credit card information, and shipping and invoicing information so that they may check out faster on a company’s website.

To know how to use shop pay and how it works, keep reading this article.

What is Shop Pay?

Shop Pay is a payment service provider that lets customers save their email address, credit card and shipping, and billing information so that checkout on a business’s website is faster.

Owned by Shopify, Shop Pay is an online checkout system that small businesses can use to help customers pay faster by automatically remembering and applying their contact and payment information.

When customers pay your business online for products or services, they typically have to provide email addresses, shipping and billing information and credit card information in order to check out.

Shop Pay speeds up that process by helping small-business websites recall customer information. Customers can use their saved information to check out quickly rather than needing to reenter it or verify themselves again.

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Shopify

Shopify Inc. is a Canadian multinational e-commerce company headquartered in Ottawa, Ontario. It is also the name of its proprietary e-commerce platform for online stores and retail point-of-sale systems.

The Shopify platform offers online retailers a suite of services including payments, marketing, shipping and customer engagement tools.

The company reported that it had more than 1,700,000 businesses in approximately 175 countries using its platform as of May 2021.

According to Builtwith, 1.58 million websites run on the Shopify platform as of 2021. The total gross merchandise volume exceeded US$61 billion for calendar 2019.

As of 2021, Shopify is the largest publicly traded Canadian company by market capitalization. Total revenue for the full year of 2020 was US$2.929 billion.

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Does Shop Pay have a Fee?

Shop Pay offers you the option to pay in full at checkout, or to split your purchase into 4 equal installment payments.

You can’t adjust the number of installment payments or the price range available for Shop Pay Installments.

You have the option to pay for orders between $50 and $3,000 USD, including discounts, shipping and taxes, in 4 installments. To use Shop Pay Installments, your shipping address needs to be in the United States.

There are no additional charges, interest rates, or late fees. You can pay your balance off early without penalty.

However, if you make a partial payment or late payment, then future applications to use Shop Pay Installments might be affected.

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Credit Scores and Eligibility

Your credit scores aren’t affected if you use Shop Pay Installments. However, if you don’t pay an installment, or you make a late payment, then your eligibility for making purchases using Shop Pay Installments in the future might be affected.

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Restricted Items

There are some items that you can’t use Shop Pay Installments to purchase, including, but not limited to:

  • Cash advances
  • Illegal items and activities
  • Weapons, including parts and accessories
  • Narcotics
  • Regulated products such as alcohol, tobacco, or drug paraphernalia
  • Currency, including cryptocurrency
  • PayPal, Venmo, and other money transfer services
  • Loan and credit card payments

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Is Shop Pay the Same as Paypal?

Using Shopify Pay is more advantageous if you have a Shopify store and is automatically set up for those in the eligible countries.

Paypal will be more costly as it has hidden costs.

Is Shop Pay Safe?

It’s not always easy to know which payment options and checkout solutions merchants should offer on a website. You want to make sure that you’re creating a simple experience for your customers.

However, it’s also important to ensure that you’re keeping your bills low and reducing the amount of effort required on your side too. The same can be said for customers; is my payment information safe if I purchase through Shop Pay?

Based on research, Shop Pay is very secure.

Thanks to things like SMS text verification, PCI compliance, and encrypted financial data, customers and merchants get several layers of purchasing security. That’s important in a world where your customers are trusting companies online less than ever.

The added layer of security means that shoppers and merchants can enjoy more peace of mind when they interact.

The processor even handles all the payment security elements on behalf of merchants. There’s no technical expertise necessary.

This makes Shop Pay an excellent choice for companies that don’t want to hire their own developer to make their website suitable for customers.

How Does Shop Pay Work?

The Basics

Shop Pay has two primary functions: it’s a wallet for online consumers to save payment details and speed up transactions in the future, but it’s also a payment method that merchants can add to their stores, giving customers this option and providing additional benefits.

To use is as a wallet, a customer would download the app, fill in their payment information, then save that on their device to make online checkouts faster.

This way, they don’t have to take out their credit card, or even type in personal information, every time they want to make a purchase.

Shop Pay stores the following payment information:

  • Mobile phone number
  • Credit card details like the number, expiration date, and CVV code (all encrypted and PCI compliant for security)
  • Billing details like the customer’s address
  • Shipping details like the customer address

Overall, Shop Pay is a convenient payment method and checkout solution for online consumers. As long as the merchant allows for Shop Pay payments, customers can take advantage of its benefits.

In fact, Shop Pay is available for any online seller, not just those that use the Shopify ecommerce platform; merchants can also accept payments through the payment solution when selling on websites like Facebook and Google.

The accelerated checkout system from Shop Pay ensures that customers can process payments faster. For merchants, it provides the opportunity for more conversions, particularly repeat purchases.

It comes with a bundle of exceptional features to explore. Aside from saving customers heaps of time when they check out, Shop Pay also comes with features like local pickup and delivery options. And all information is safe and private; billing and shipping data stays on Shopify’s PCI ready servers and merchants don’t save any information on their servers, so they’re at less risk of issues with compliance regulations.

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How Shop Pay Truly Works

The basic Shop Pay features make for a rather intuitive shopping experience, but there’s much more to it. To answer the question of “how does Shop Pay work?” it’s best to go over all of its features.

Here are the primary features (for online shoppers) to give you an idea of how it all works:

A Cart Filler

The whole point of Shop Pay is to speed up the checkout process for all online customers.

Therefore, users only have to type in payment information once; after that, the tool automatically recognizes your profile when visiting a participating online store.

All previously entered billing information is encrypted and saved so that customers only have to click one Buy Now button to fill in a checkout form, eliminating the need to pull out a credit card or even type in your name.

Paying in Full or with Shop Pay Installments

Perhaps one of the most exciting features from Shop Pay is how the customer can choose to either pay in full at the moment of purchase or spread it into multiple payments.

Here’s how it works:

  • The customer picks Shop Pay Installments.
  • They get to choose to make four equal installments instead of one full payment.
  • The customer selects a debit or credit card to pay the first payment and future installment payments.
  • The account walks customers through a brief identity verification process to pay later. Eligibility is more about preventing fraud. They don’t check credit scores.
  • The customer agrees to terms, authorizes the payment through Shop Pay (Affirm handles their installment processing).
  • For security, the app texts the customer a 6-digit verification code to complete the process.

What About Late Fees?

Shop Pay installments don’t work like a credit card. There are no fees, penalties, or additional charges to break a payment into installments.

It’s possible to make early payments through the same checkout page but, unlike credit card payments, they don’t charge a fee if you miss a payment.

However, you may get restricted or banned from Shop Pay installments if you make a partial or late payment.

Customized Shopping Recommendations

Online shopping recommendations tend to come with a lot of baggage (like how Google tracks everything you do online then sells stuff to you).

That doesn’t seem to be the case with Shop Pay. Instead, the tool works with a combination of data, some of which is found by asking you directly (where do you like to shop?) and some of which is pulled from your shopping habits.

So it’s kind of a hybrid, and Shopify states that they never send spam or maliciously track you in order to push more advertisement.

With this information, the app presents a simple, customized feed made just for you. You’ll see recommendations from your favorite shops, deals from related shops, and trending items that you may like as well.

Local Shop Searching with In-Store Pickup and Delivery

Another way to personalize your feed is to use the Shop Local functionality. This essentially allows you to search for local businesses or specify the local businesses you like to shop from.

Customers can either buy from the retailer’s online store (with delivery) or opt for in-store pickup.

Performance Tracking

Tracking in Shop Pay (for merchants) looks into the efficiency of your sales, taking into account the speed at which people make purchases, how much your conversions increase, and how well you’re able to get products to customers in a reasonable time.

This all builds trust and makes your business far more transparent.

Tracking features are sent to both the merchant and customer, with tracking messages for when order are:

  • are processed
  • are sent
  • receive a tracking code
  • arrive
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As a Shopify product, you’d think merchants would need a Shopify store to use Shop Pay. That’s not the case.

Although it was in the past, Shopify eventually expanded its support beyond Shopify merchants, meaning that even non-Shopify customers can add a Shop Pay button for selling on Facebook, Instagram, and Google.

When it comes to using the payment option on a different ecommerce platform, you’re still limited to Shopify.

For Shopify merchants, you can install the quick Shop Pay button as an alternative payment method, allowing you to use Shop Pay on your ecommerce store, and whatever social shopping tools you sell through (like Facebook, Instagram, or Google).

How Do I Get my Money from Shop Pay?

After you’ve captured the payment for an order placed using Shop Pay Installments, you’ll receive full payment for your order within 1 to 3 business days, excluding the fee incurred for using Shop Pay Installments.

You don’t have to collect payments from your customers.

Conclusion

Shop Pay is just another payment option offered by Shopify to give sellers and customers a better experience online.

Now that customers are demanding more choice and better experiences than ever before, it pays to have a system in place that offers a straightforward and streamlined checkout. At the very least, offering multiple checkout processes will make it easier for customers to buy.

The biggest benefit for merchants is that it encourages regular future sales from your most dedicated clients.

The easier it is for these people to make payments, the more likely they are to continue buying from your store. Because of that, and the incredible security that’s built into the service, there’s really no downside to using Shop Pay.

FAQs

Is Shop Pay Different from Shopify Payments? (Yes, Completely Different)

If you’re familiar with Shopify as an ecommerce platform, then you’ll know that Shop Pay isn’t the only checkout option the company offers. Shopify allows you to connect with a variety of payment providers for taking credit and debit card payments.

What is a Shop Pay Code?

A Shop Pay code is the 6-digit code texted to a user’s phone to verify their identity for a purchase. This code is essentially the piece that allows the app to make transactions for users take only a few seconds. Customer data is already stored and encrypted within the app; all that’s required is to verify the user’s identity, so each transaction sends a 6-digit code to that shopper.

How long do shop pay refunds take?

They can let you know whether a return is possible and how much the refund would be, according to their own return policy. After they process the refund, the refunded amount will return to your original payment method within 3-10 business days, and your balance will be updated.

How do I file a claim with shop Pay?

Navigate to the Pay tab. Click on the loan you’d like to dispute and navigate to the Details tab of the loan. If your loan is eligible, you will see a Dispute this purchase link below the purchase details. Click this link

Can you cancel a shop Pay order?

Click the order that you want to cancel. Click More actions > Cancel order. If payment was captured, then the details about the refund are displayed. If you don’t want the refunded items to be restocked in your inventory, then uncheck Restock items

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