Contactless payment via Square terminal

A transaction fee is the service fee charged by the payment processor for each electronic transaction to maintain payment infrastructure, prevent fraud, and guarantee a successful transfer.

FYI, a payment processor is a system that enables merchants to accept customer payments via credit cards, debit cards, and bank accounts.

How much is a transaction fee?

The specific fee amount depends on your selected payment processor. Most processors charge a percentage of the transaction’s value, which typically ranges from 0.5–5%. Other times, they can impose a fixed additional charge. Here are some examples:

Sources: Square and PayPal pricing pages

Who pays credit card transaction fees?

Usually, merchants are responsible for covering processing fees, but in some cases, they might pass on the cost to their customers, for example, if the customers use credit card surcharge programs. However, most customers don’t like surcharges. According to a Lending Tree survey, 57% of American cardholders think charging consumers transaction fees should be illegal.

Because of transaction fees, some small merchants require a minimum purchase amount (e.g. $5 or $10) for customers to use cards or electronic payments, as they can’t bear the fees for low-value transactions.

Thus, to minimize the impact of transaction fees, you should select a payment processor with more favorable rates for your business.

Flat fee

A flat fee is a fixed amount the payment processor charges you per transaction, regardless of its value.

If the transaction amount is small, the total fees may increase your costs. On the other hand, if you process large transactions, the fixed fees will impact your business less.

For instance, if the imposed flat fee is $0.20, then for 10 transactions, you’ll have to pay a total fee of $2, no matter the type of card your customers use, how the transactions are processed, and how much money is transferred.

Here are some payment gateways that impose flat fees:

• PayPal: $0.49
• Square: $0.10 for card present, $0.15 for keyed transactions, and $0.30 for online payments
• Stripe: $0.30
• Braintree: $0.49
• Adyen: $0.13
• Paysafe: $0.10

Percentage fee

A percentage fee is a variable amount set as a percentage of the total transferred amount. The percentage can vary from 0.5–5% depending on the payment processor, but typically around 2–3%.

When transactions are too small, a flat fee might also be added to the percentage fee, or serve as a minimum charge instead. Generally, percentage fees impact your business more significantly than flat fees for larger transactions.

For example, your business receives $100 from a customer, the percentage fee is 2% and the flat fee is $0.20. In this case, you would have to pay 2% of $100 plus $0.20, making a total fee of $2.20.

Some payment gateways that charge percentage fees include:

• PayPal: 3.49% for most online payments
• Square: 2.6% for card present, 2.9% for online payments, and 3.5% for keyed transactions
• Stripe: 2.9%
• Braintree: 2.59%
• Paysafe: 0.30%

There are 5 main components of transaction fees, including interchange fees, card scheme fees, acquirer fees, gateway fees, and international transaction fees.

Interchange fees

An interchange fee is a payment that a customer bank (an issuing bank) receives from a merchant bank (an acquiring bank) for processing a card-based transaction.

Each card scheme sets its own interchange fee which is non-negotiable and varies depending on the following elements:

• Card types: Debit or credit
• Card schemes: MasterCard, Visa, American Express, Discover, etc.
• Merchant type and size
• Where the sale happens: Domestic, cross-border, etc.
• How the transaction is processed: Card-present, card-not-present, online, in-store, etc.

Card scheme fees

A card scheme fee or card network fee is like a membership fee that an acquiring bank pays to join a payment network. The acquiring bank then passes this fee on to the merchant through the transaction fee.

Factors like card type, payment method, and the geographic location, may impact the card scheme fee.

Acquirer fees

An acquirer fee, also called acquirer markup, is the fee that goes to the acquiring bank (or acquirer) or the payment service provider (PSP) to cover the acquiring services.

If a merchant works directly with an acquirer, the entire acquirer fee will go to that bank.

If your business works with a PSP, which partners with multiple acquirers, you’ll have to pay the acquirer fee plus an additional fee for their services, like offering connections with many acquirers and payment methods.

Unlike the interchange fee, the acquiring fee is negotiable and may fluctuate based on the bank, card type, business type, transaction volume, and other factors that may affect the business’s risk profile.

Gateway fees

When accepting an online payment through a payment gateway, the merchant incurs a gateway fee, which is subject to the online transaction value and the chosen payment method.

International transaction fees

Credit card issuing banks charge customers a foreign transaction fee for electronic transactions abroad or with foreign vendors.

Terms and conditions of the credit cards will determine the international transaction fees. Some banks don’t collect this fee, while others may charge from 1–3% of each transaction in U.S. dollars.

The cost of electronic transactions relies on card type, card scheme, transaction type, transaction volume, geographic factors, and merchant type.

Card types

Transaction fees might differ due to the type of card used. Generally, debit cards have lower fees than credit cards because they are less risky.

For example, Helcim’s average rate for an in-person credit card transaction is 1.93% + $0.08, while the average PIN-Debit rate is 1.01% + $0.08.

Card scheme

Card schemes or card networks set the interchange rates, which are usually the largest element of the transaction costs.

Some card networks like Visa and MasterCard publish their interchange rates, while Discover, American Express, and JCB don’t.
You can see the interchange fee rates of Visa and MasterCard below:

• Visa: 1.4–2.5% for credit cards and 0.05% for debit cards
• MasterCard: 1.5–2.6% for credit cards and 0.05% for debit cards

Transaction volumes

Transaction volumes refer to the number of electronic transactions that a merchant processes each day. A merchant with high transaction volumes can negotiate lower per-transaction fees.

Geographic factors

Geographic factors such as local compliance requirements and currency exchange rates might influence the transaction fees.

For example, PayPal charges a lower fee of 3.5% when converting to U.S. or Canadian dollars and a 4% fee for other currencies.

Business type

Higher-risk industries, for instance, telemarketing, travel, online gambling, and adult entertainment, may have to pay higher transaction fees because they pose more risks of chargebacks and fraud.

On the other hand, lower-risk industries, such as supermarkets and nonprofits, often pay lower fees.

Transaction type

Each type of transaction poses a different level of risk, thus affecting the transaction fee differently.

For example, card-present transactions usually involve lower fees than card-not-present ones. The physical presence of the card makes transaction verification easier, thereby lowering the risk of fraud.

You can figure out transaction fees based on the flat fee and percentage rates based on the fee structures and policies of each payment service provider.

Here’s the formula:

Transaction fee = Transaction amount x Percentage fee rate + Flat fee

Let’s look at an example.

Your business has to pay a percentage fee of 5% and a flat fee of $0.30 for each transaction. When a customer makes a $500 purchase from your business, the transaction fee will be:

Transaction fee = $500 x 5% + $0.30 = $25.30.

Typically, the service provider will charge transaction fees during the payment processing stage. Nevertheless, they can gather these fees in different ways.

Direct deduction from the payment

Payment processors often deduct the transaction fee directly from the payment before depositing the remaining amount in your merchant account.

Invoicing

On some occasions, such as high-volume or business-to-business transactions, you might receive a separate invoice for your transaction fees. And you’ll have to pay them within a specific time limit.

Buyer-borne fees

In some cases, especially international transactions and specific payment methods, buyers may have to bear currency conversion fees or convenience fees. You’ll see these fees during the checkout process.

Transaction fees can affect both your business and customers in 4 main ways.

Lower profitability

First, they eat into your overall profitability, which could prevent your business from growing and maintaining competitive prices. Typically, small businesses and entrepreneurs are the most vulnerable to this impact.

Increase pricing

When trying to relieve the influence of transaction costs, businesses might pass some fees to customers by raising the prices of goods and services. However, the higher the price, the less the quantity demanded will be. This ends up impacting your sales volume and profit margins.

Hinder customer satisfaction

Another effect of high transaction fees is on the checkout experience of customers. Unwanted fees imposed on consumers can detract from their experience, sometimes leading to shopping cart abandonment.

Limit payment choices

Transaction fees can also limit the payment methods that businesses offer to customers. On the one hand, merchants may encourage their buyers to use certain payment methods to lower the fees. On the other hand, customers may prefer other options which they find more convenient and beneficial for them. If the customers don’t find their preferred payment options, they may opt for your competitors.

You can resort to some strategies below to lower transaction fees for your businesses.

1. Evaluate payment processor options

Different payment processors have varying fee structures and terms, so you should research and evaluate which is right for your business transaction patterns.

Here are specific criteria you should compare:

• Non-qualified surcharges
• Per transaction fees
• Monthly or annual fees
• Batch fees
• Setup fees
• Termination fees
• Chargeback fees

2. Negotiate fee rates

If your business has a high transaction volume or an established sales history, you can negotiate with the payment processors to secure more favorable rates.

3. Encourage debit card usage

For merchants, debit cards are cheaper to process than credit cards. You can apply incentives and discounts to encourage debit card payments and reduce total fees.

4. Integrate Address Verification Service

Address Verification Service (AVS) is a security measure that helps prevent fraud in online transactions to reduce transaction fee chargebacks.

5. Establish minimum transaction amounts

This strategy helps merchants protect their margins by addressing high fees for small transactions.

6. Process transactions in one batch

Batch card processing can be more cost-effective for merchants than real-time processing because it reduces the number of separate transaction fees.

7. Review merchant account statements regularly

Merchants should review account statements regularly to notice any changes in transaction fee regulations.

8. Utilize off-peak hours

Businesses can leverage certain payment processors that offer lower fees for transactions during off-peak hours to cut costs on batch processing.

9. Resort to modern technology

Take advantage of modern point of sale (POS) technology. POS systems for specific eCommerce platforms like Magento POS and Shopify POS not only offer faster transactions and enhance accuracy but also help collect customer feedback and insights to improve your operations.

10. Provide alternative payment options

Accepting bank transfers, digital wallets, and alternative payment methods can help you reach a wider consumer base and avoid high credit card transaction fees.

In a nutshell, a transaction fee is an expense paid to the payment service provider when processing each electronic transaction.

Transaction fees can vary based on the fee structures of providers, but payment processors usually charge them as a percentage of the transaction amount or a fixed fee per transaction.

Understanding how transaction fees work and strategies to reduce them helps boost your businesses’ profitability and long-term success.

1. Which bank does not charge foreign transaction fees?

• Capital One’s online bank charges no currency conversion fees or foreign ATM network fees.
• Charles Schwab Bank doesn’t charge currency conversion fees for debit card transactions or using debit cards at ATMs overseas.
• Discover® Bank doesn’t charge foreign transaction fees or foreign ATM networks.
• Some HSBC credit cards including HSBC Premier Credit Card and HSBC Elite Credit Card are cards with no foreign transaction fee.
• Varo Bank also doesn’t charge any foreign transaction fees.

2. What is the main difference between a transaction fee and a credit card annual fee?

3. Why do we have to pay transaction fees?

We pay transaction fees to the payment processors because they need to cover the costs of maintaining payment infrastructure, preventing fraud, and ensuring smooth money transfers.

4. Transaction fee vs processing fee: What are the differences?

Generally, transaction fee is the broader term referring to any charge relating to the financial transaction. It involves multiple parties: the bank, the payment processor, and the payment service provider.

A processing fee is a specific type of transaction fee paid to the payment processor for executing the technical side of the transaction.

5. What is an excessive transaction fee?

An excess transaction fee, also known as a savings withdrawal fee, withdrawal limit fee, excess debit fee, or excessive withdrawal fee happens when you transfer or withdraw money from a savings account over the federal limit, typically from 3–6 free withdrawals or transfers per month. These fees can run $3–$25 per transaction.

EMV payment is a payment type that lets customers use EMV chip cards to pay for their in-store purchases. These cards are central to EMV technology, which uses multiple security methods to protect cardholders’ information.

In particular, EMV utilizes a computer chip embedded in credit and debit cards to store and transmit transaction data. The chip generates a unique code for each purchase and sends this code to a specific card reader to process a transaction. This mechanism impedes fraudsters from obtaining credit card information to commit fraud like counterfeiting cards. Therefore, EMV payment processing is more secure than traditional magstripe payments. Card issuers, retailers, and shoppers all gain enormous protection from this payment type.

In addition, EMV payment is best at securing in-store transactions. Retailers must have EMV payment terminals in place to accept EMV cards at brick-and-mortar stores. While customers swipe magstripe cards to start paying, they insert their chip cards into the POS terminals to make payments. Subsequently, customers enter their personal identification number (PIN) or give their signatures to verify and authorize the purchase.

Even though EMV ensures high security for card-present transactions, the protection for card-not-present (CNP) transactions is somewhat restricted. Consequently, EMVCo has developed other methods to improve security for CNP payments. The most noticeable technologies are EMV Payment Tokenization and EMV 3-D Secure.

An EMV chip card refers to a credit or debit card equipped with a powerful computer chip that transfers payment data to card terminals for transaction processing.

EMV chip cards store customer data on a chip, not on the magnetic stripes printed on the back of the cards, and only work with specific terminals. Consequently, these cards are less vulnerable to financial attacks and fraud such as counterfeit fraud than magstripe cards.

EMV chip cards come in 2 types, indicating different ways cardholders authorize their purchases. Look at the distinction between the 2 EMV chip types as follows.

• Chip and PIN: This type requires customers to enter a PIN to verify identity and authenticate a transaction at the point of sale. Since only the legitimate owner knows this secret number associated with the card, EMV chip and PIN cards ensure high transaction safety.
• Chip and signature: Transactions using chip and signature need cardholders to sign their names to complete the purchase. As it’s easy to copy or fake a signature, chip and signature have higher risks of counterfeit fraud than chip and PIN EMV.

Many new chip cards now come with NFC technology that enables EMV contactless payments. Customers can tap their cards or EMV payment devices with mobile wallets over the card readers to process payments swiftly and securely.

Besides creating dynamic codes to defend transaction data, EMV chip cards also come with different authentication methods to minimize the chances of unauthorized card use, especially when the card is lost or stolen.

While magnetic strips on cards transmit real card numbers to card readers, EMV chips produce one-time codes for each purchase and send them to the retailers’ card terminals. In this way, EMV technology helps safeguard customers’ sensitive payment data during the transaction, thereby lowering the risks of card fraud.

To process payments, the EMV chips communicate with a dedicated card terminal to transfer payment data. Below, we demonstrate how EMV chip payments work.

• After customers present an EMV card to pay for an in-store purchase, merchants insert the card into an EMV chip card reader with the chip end first instead of swiping. Another way is to tap an NFC-enabled chip card or mobile device over the terminal to make contactless payments.
• Then, the EMV payment card transmits an encrypted code that contains the card information, not the real card numbers as in the case of magnetic strips, to the payment terminal. The EMV chips generate a unique code for each purchase, which means these codes are one-time and can’t be replicated, thus preventing fraudsters from stealing the card data to create a counterfeit card or use the card illegally. This is what makes an EMV payment solution more secure than a magstripe payment.
• After that, customers enter their PIN or provide their signature to validate the transaction depending on the card types they’re using: chip and PIN or chip and signature.
• The payment terminal communicates the received payment data to the merchant’s POS, which sends the information to the EMV payment system. The payment processor then reaches the card issuer and asks for authorization.
• The card issuer approves or rejects the request for payments, then the merchant can complete the transaction on the POS and remove the cards.

Although EMV helps secure customers’ payments, it comes with certain disadvantages that can hold retailers back from deploying the technology in credit card processing. Let’s learn more about the benefits and drawbacks of EMV in handling credit card transactions.
Benefits:

• Enhanced security and fraud prevention: EMV chip technology uses multiple layers of security to protect cardholders’ information from exposure. The unique transaction codes EMV chips generate for each purchase deter customers’ card information from falling into fraudsters’ hands and make duplicating EMV cards almost impossible. Even in the event of data breaches, fraudsters can’t replicate or use the one-time codes for ill purposes like counterfeit cards or unauthorized transactions. Besides, authentication methods including PIN and signature also increase the security level of the customers’ payments.
• Customer trust: Using EMV payment solutions removes customers’ worries about the potential risks of revealing their credit card data. Once knowing that their financial information receives protection, customers tend to use credit and debit cards for payments more frequently. Besides, they also have more trust in retailers and make repeat purchases.
• Growing popularity: EMV has gained widespread acceptance across the globe; therefore, customers can confidently pay with EMV chip cards in plenty of countries. Retailers can also attract more customers who prefer EMV payment, contactless payments, or mobile wallets.

Drawbacks:

• Limited protection for card-not-present purchases: The level of security that EMV provides largely relies on the chip at the back of the cards, so these EMV chips can’t maximize their protective strength for card-not-present transactions like online or phone-based purchases. In these cases, retailers have to use additional security methods to keep the transactions safe.
• Expenses for POS system upgrade: To employ EMV technology, retailers need to incur the costs of investing in EMV card readers and upgrading the POS system to assist EMV payments. These costs can be high for small retailers and hinder them from using EMV for credit card processing.

EMV chip cards are highly beneficial to both customers and retailers. Not only do they provide customers with more secure payment options, but they also render retailers exempt from the financial loss and liability resulting from fraudulent transactions. Therefore, accepting EMV chip cards at your stores is necessary to ensure a safe and secure checkout experience for your customers.

Enabling your retail store to accept an EMV payment is no hard work but needs some consideration.

• First, you need to ensure that your existing POS and payment systems can integrate seamlessly with EMV chip technology.
• Additionally, your POS should connect well with various 3rd-party EMV payment systems such as Stripe and Square.
• It’s also ideal if your POS system and payment processing services facilitate other types of chip card payments like EMV contactless payments or mobile wallets.

In some cases, you have to upgrade or replace your current card reader with an EMV payment terminal. As chipped debit cards or credit cards still come with magnetic stripes, retailers without EMV-compatible equipment still can process chip transactions. However, they’ll have to take responsibility for any fraudulent transactions that happen.

Magestore’s Magento POS and Shopify POS are feature-rich POS software that can connect well with unlimited payment providers and POS terminals to accept EMV payments. Magestore POS also supports a wide array of payment types like credit, debit cards, contactless payments, and digital wallets, which help you cater to the diverse payment preferences of your customers.

You also need to educate your employees and customers so they can be aware of the benefits EMV payment solutions bring back and how to handle them correctly.

EMV chip technology uses data encryption, tokenization, and authentication to ensure highly secure payments and protect customers and businesses from credit card fraud. As a result, it has become a necessity for retailers of different sizes at a global scale.

Customers, business owners, and card issuing banks can all benefit from using EMV for credit card processing. However, some retailers might be reluctant to deploy EMV technology as the investment costs for new EMV card readers can be high. Considering the long-term advantages and savings that EMV offers, adopting EMV technology is a must if businesses don’t want to be left behind.

What is EMV in retail?

In retail, EMV indicates a payment standard for credit and debit cards developed and popularized by 3 major credit card processing companies, which are Europay, Mastercard, and Visa.

What is the difference between an EMV and a chip?

A computer chip, or chip, is a small piece of semiconducting material that consists of many transistors to transmit data. On the other hand, EMV refers to EMV technology that uses a computer chip on a credit or debit card to transfer encrypted data to an EMV reader securely.

What does EMV stand for in POS?

In POS, EMV means EMV payments, which means customers can use a credit or debit card embedded with an EMV chip to make purchases in-store.

Is EMV the same as contactless?

No, EMV is different from contactless. EMV is a payment technology that uses encryption, tokenization, and authentication methods to transfer payment data securely between a credit card and an EMV chip reader. Otherwise, contactless payments use NFC technology that allows different devices to communicate and transmit data wirelessly over a short range.

Is an EMV chip the same as an RFID chip?

No, EMV chips are not the same as RFID chips. EMV chips encode and transfer data from an EMV chip card to a specific card reader to process a transaction. Meanwhile, an RFID chip stores and transfers data between devices at a short distance with no touch.

Overwork due to repeated work is the most common cause of burnout for business owners and their employees. A good choice of retail POS system can perform many retail processes and workflows on autopilot. From there, POS data analytics solve many business problems by saving valuable resources and time, such as:

• Inventory management: Keep your inventory up to date by tracking sales and returns and forecast to calculate restocking to avoid deadstock and out-of-stock situations. Also, it can show what products are selling well and what aren’t for you to leverage the quantity.
• Competitive analysis: Provide solid data and reports like business heatmaps, graphs, and charts so you can understand your company’s performance metrics relative to industry standards and compare them with competitors.
• Customer experience enhancement: Optimize your customer’s omnichannel journey by integrating mobile, desktop, and in-person experiences. For example, when customers come to your store, the POS counter staff can quickly view their purchase history for suitable suggestions and cross-selling. Such small touches keep customers coming back because they love attention and recognition.
• Loyalty program: Based on POS data, you can design personalized marketing strategies by tracking customer contact information and their purchases. POS systems can integrate with loyalty programs and customer databases to leverage customer engagement and help you gain more profit.
• Staff performance: Create staff working schedules and track the sales of each staff to calculate wages and commissions.

In short, modern POS software retail helps you focus on more profitable areas such as consulting, customer care, and achieve new levels of success.

So far we’ve covered the basis details of retail POS. Now let’s look at the 5 essential steps you’ll need to take to get the right POS system for your retail.

1. List your business requirements for your POS system
2. Define your budget and prioritize
3. Compare retail POS solutions based on your requirements
4. Get a trial or demo of the retail POS
5. Optimize your POS system for maximum business growth

Step 1: List your business requirements for your POS system — near and long term

Timeframe

No business owner wants to go through the retail POS system transition multiple times over a while. Therefore, you should outline the requirements for the POS solution you want before you start looking.

First, you can start with a simple question: How long do I need this solution to work for my business?

You should not stop at asking for today, but think about your expectations in the future as well. 2–3 years might be a reasonable time frame for a technology investment.

Features

After deciding on a timeframe, you should consider the following questions:

• How many stores will use the POS solution to operate?
• Do I need to handle multiple growing stores at the same time?
• Do I just need a simple POS system to handle in-store transactions?
• What sales promotion do I want to run?
• Do I want to integrate the POS with any other system such as Quickbook, MYOB, or Xero?
• Which business operations are doing well and which are not
• How important is it to synchronize data between the physical stores and online stores?
• What types of data do I need to sync?

Customers use gift cards at POS checkout.

Your customer experience may not be seamless because your eCommerce and in-store POS systems lack the connection. No matter how much manual effort you put in keeping everything in sync, you may still find an order for an item that’s actually out of stock.

So you can try mapping out your value chain, from supply chain to post-purchase customer care, and then look at each stage to find bottlenecks that could improve the customer experience metrics and profit margin. From there, you can check specifically how the future POS system can improve those stages.

• Cost: Retailers can rely on accurate real-world data to identify and handle slow-moving or low-margin inventory flows.
• Revenue: You can minimize the number of employees and optimize sales. You’ll also ensure accurate stocking of high-margin and best-selling products. In addition, you can implement promotions and loyalty programs to increase the average cart size.

Considering these 2 aspects will help you shape the most important features you need in a POS system for retail. Think about the strategy and methods you want to adopt. Then, gather all the challenges in as much detail as possible into a checklist of requirements for potential POS vendors.

Although no solution fits all businesses, below are the most common and recommended features for your reference.

POS must-have features

• Invoicing and billing
• Sales management
• Inventory management
• Customer management
• Loyalty programs and offers
• Reporting and data analytics
• eCommerce integration
• Marketing integrations
• Employee management

POS nice-to-have features

• Employee scheduling
• Click and collect
• Refunds and returns

Remember that choosing the type of POS system for retail depends on the nature of your business.

• A mobile food truck that works differently from a traditional coffee shop
• A construction contractor has different needs than a clothing store

In case you’d like to know the necessary features for POS system by business lines, you can refer here:

• Fashion boutique POS
• Vape and cannabis POS
• Furniture and homeware POS
• Sports and outdoor POS

There are still some aspects to consider.

Option to accept the most common payment methods

• Cash
• Credit and debit cards
• PayPal
• Authorize.net
• Stripe

Ease of use

Your retail POS needs to be user-friendly and easy for your employees to use without calling technical support or referencing the manual frequently.

Integration

Many POS systems have built-in POS and inventory system integration. However, you should also consider a POS developed in an open-source platform like Magento. They provide maximum integration capabilities via APIs to connect with other cooperating systems such as CRM and ERP.

PCI Compliance

You should choose a POS system that’s compliant with PCI data security standards to safeguard customer payment data and minimize fraudulent payments.

Step 2: Define your budget and prioritize

In this step, you’ll need to determine how much investment you are willing to spend to achieve your goals and requirements within the defined timeframe, including:

Budget
Potential revenue
Costs you expect to save

You should break down each requirement of step 1 to determine investment costs and opportunity costs to prioritize the components.

The cost of a POS system includes 3 parts:

POS software: Your POS license will be one-time payment or subscription depending on different POS providers.
POS hardware: The average cost of a card processor is between $20–100. Other peripherals like a receipt printer, cash drawer, and tablet stand will cost you from $600 to $1,000.
Payment processing: Payment processing depends on the pricing scheme of your payment processor, accounting for 1.5–3.5% per transaction. You can visit our guide to know more about the average credit card processing fee.

Step 3: Compare retail POS solutions based on your requirements

Even the best retail POS solution sometimes has problems, or you simply want to customize to meet changing business needs. Therefore, a POS system isn’t only about purchase and installation, but also needs the support of a long-term partner to accompany your business growth.

• What are my expectations for POS deployment and launching?
• Do I want a dedicated project manager or will I oversee most of the system implementation on my own?
• How do I want to receive support? How long do I expect to wait for the POS providers to respond? And through which communication channel?

We recommend working with a leading POS system to perform your daily tasks efficiently and achieve your business goals.

Check out our articles on POS system examples and the top POS software of 2024. They not only possess leading-edge technology but also have a team of Magento experts with a customer-centric mindset.

And keep reading our in-depth POS comparison of the best Magento POS providers for retailers:

Side-by-side comparison of POS for Magento:

• Webkul POS vs. Magestore POS
• Magefan POS vs. Magestore POS
• Acid POS vs. Magento POS
• ConnectPOS vs. Magestore POS
• Ebizmarts POS vs. Magestore POS
• BoostMyShop POS vs. Magestore POS
• Revel POS vs. Magestore POS
• Magestore POS vs. Microsoft Dynamics POS
• Magestore POS vs. QuickBooks POS
• Magestore POS vs. Lightspeed POS
• Epos Now vs. Magestore POS
• Clover POS vs. Magestore POS

Step 4: Get a trial or demo of the retail POS

Most POS providers let customers test the software with a free trial. This step ensures you find the right POS for your business. You can play and see how the overall system works, explore benefits, and check out features. If you encounter any problems or points for improvement, you can make a note and share it with the POS provider. It’s an opportunity for you and them to discuss and solve your problem together.

Step 5: Optimize your POS system for maximum business growth

After choosing the POS system, the game isn’t over yet. As you test and use it, you can still figure out where to optimize to improve your business. You can start with enhancing the default features, then slowly explore all that the system has to offer or can integrate with.

Business insights

You should create detailed and complete sales reports with graphs and charts on your retail point of sale system. There should be a visualizer of valuable data such as sales, inventory, and cash in real-time to:

• Discover meaningful trends: POS data analysis can unlock the secret portion of future success.
• Gain a competitive edge: Know your sales performance, track against competitors, and analyze by industry.
• Expand your footprint: Get in-depth information to make sound decisions about where and when to open a new branch, as well as the necessary equipment and manpower

POS apps

Applications of POS systems can make running your business easier. You can check what apps and add-ons your vendor has developed like Magento eCommerce integration.

Continuous improvement and updates

It’s important to ask for employee feedback as they use the system for things that could improve the overall experience for your customers or for your own employees.

Do not terminate your relationship with the supplier at the time of purchase. You should stay in touch to get useful information about new features, suggestions, and inspirational articles in working with retail POS systems.

Starting from the simplest function of processing sales orders, the modern POS solution is now the central system of retail businesses and contributes to keeping customers coming back to the store. Thus, your choice of a POS system will be a make-or-break decision and one of the most important investments you can make.

We recommend that you consider all aspects of your retail before committing to any single retail POS solution. If you need expert advice, we are available to talk to clarify your business requirements and tailor a retail POS solution to meet your unique desire.

Buy now pay later, or BNPL, is a credit solution that enables customers to pay for products and services in several installments over a fixed schedule. In other words, customers can spread out the expenses rather than paying the full price at the time of purchase.

Besides, BNPL loans require no hard check on credit history and charge no or low interest, making them more attractive to customers who regularly buy on credit. For example, if you want to buy a new TV that costs $1,000, you can pay four installments of $250 over 6 weeks rather than the entire amount.

Compared to other financing methods, BNPL is more rapid and convenient. It allows customers to access funding and receive items instantly. Given its wide adoption among customers, plenty of eCommerce retailers have incorporated buy now pay later into their checkout process to give shoppers multiple payment options, thereby boosting conversion rates and sales.

Many retail giants such as Adidas, MAC Cosmetics, Bloomingdale’s, Walmart, Target, and Nordstrom adopt buy now pay later. The list keeps adding up, indicating the growing popularity of this financing solution.

Buy now pay later divides purchases into manageable amounts that consumers can pay off over time. We explain how it works below.

• Customers shop online, add items to the cart, and reach the checkout, where retailers display BNPL and other payment methods. Shoppers can also access the service provider’s apps to look for credit shopping websites and make purchases.
• After customers choose a BNPL service provider to pay for their items, they’re redirected to the provider’s app to register for an account or sign in.
• Customers provide personal information, including name, address, and social security number. With this data, the BNPL lender might conduct a soft credit check to evaluate customers’ creditworthiness, which normally doesn’t impact their credit scores.
• Customers accept or decline the terms of repayment plans for their purchases, which are often bi-weekly or monthly payment options. Subsequently, customers make down payments if required and complete the purchase.
• The BNPL provider pays the total transaction value to businesses after deducting some fees. After that, customers will pay off the remaining installments directly to the provider over an agreed schedule using credit cards, debit cards, or bank accounts. Some lenders charge late fees if customers don’t make payments on time.

BNPL is advantageous to both retailers and customers; however, it also comes with certain downsides. The information below clarifies the advantages and disadvantages of BNPL.

BNPL plans of PayPal

The buy now pay later options are diverse, so customers can choose the best plan for their installment payment shopping. In general, there are some key choices as follows.

Buy now pay later no credit check

Some BNPL providers don’t check your credit reports before approving the installment plans. These services give buy now pay later instant approval based on other factors like income, employment status, or current loans rather than credit scores. Customers only need to provide personal information like name and bank details, and the lenders will quickly assess their loan eligibility. For example, Splitit and Fingerhut are the two platforms that offer shoppers buy now pay later no credit check instant approval.

Buy now pay later no upfront payment (Buy now pay later no down payment)

There are BNPL programs that don’t demand an upfront payment. With these plans, customers don’t need to pay part of the purchase or total amount at the point of sale to get their products. For instance, AppToPay lets customers pay for their purchases in 3 installments with no upfront payment required.

Buy now pay later interest free

Many BNPL services are interest-free if customers pay in 3 or 4 installments over a short term, typically from 6 weeks to 3 months. Afterpay is one of many BNPL providers that enable customers to pay 4 zero-interest installments over 6 weeks.

Buy now pay later monthly

Customers can buy items and pay monthly for big-ticket purchases or large orders. Monthly repayment plans often come with high interest rates and longer terms. For example, PayPal allows customers to make monthly payments if they purchase from $199 to $10,000. Customers can pay back the entire cost over 6, 12, or 24 months with the annual percentage rate (APR) ranging from 9.99 to 35.99%.

Buy now pay later cash advance

A cash advance is a type of short-term loan that customers often use for emergencies. Customers can borrow from $50 to $1,000 from cash advance apps and pay off within hours or days. There are usually no credit checks and interest charges. For example, customers can ask for $500 from MoneyLion and repay the amount within 1 to 5 business days.

Buy now pay later in-store

Many businesses facilitate BNPL in-store to improve customers’ checkout experience and increase sales. Most BNPL lenders like Zip and Afterpay enable shoppers to create QR codes or offer them one-time buy now pay later virtual cards to add to their digital wallets for in-store purchases.

Buy now pay later online store

The majority of BNPL transactions occur at online stores. After adding favorite items to the cart, online shoppers can opt for their preferred services at the checkout page. PayPal, Afterpay, and Affirm are the BNPL platforms that assist online shopping on credit.

Buy now pay later with debit cards

Depending on the service provider, customers can make BNPL payments using debit cards, credit cards, or bank accounts. Apple Pay Later, Affirm, and many other buy now pay later apps accept repayments with debit cards.

Buy now pay later catalogs with instant approval and no money down

With this option, customers don’t have to go through a hard credit check and make a down payment for their purchases. Many BNPL lenders like AppToPay and PayPal perform buy now pay later catalogs with no down payment no credit checks to attract more customers.

BNPL is not an ideal option in all circumstances. Therefore, retailers can consider other options for BNPL as below.

• Credit cards: The major difference between buy now pay later vs credit cards is that credit card issuers often run a hard credit check to assess customers’ eligibility. Credit card companies also report payments to credit agencies, which can primarily affect customers’ credit scores. However, customers can receive rewards, cash back, or annual membership.
• Personal loans: Customers can flexibly utilize personal loans for different purposes, from paying bills to starting a business. Personal loans offer quick funding with fixed or variable interest and repayment terms ranging from a few months to several years.
• Layaway: Layaway plans also allow shoppers to spread out the payments over time. Nevertheless, customers can only get the items they purchase once they pay the total price.
• Split payments: This BNPL alternative permits customers to pay for a single purchase using a combination of payment methods like cash, credit cards, and gift cards. Split payments can help businesses foster sales, but they also generate higher transaction fees.

First, you should thoroughly analyze your business, including products, typical customers, average order values, and abandonment cart rates. These analyses help determine the most relevant and potential payment plans for your customers. On that basis, you can choose an appropriate BNPL partner that suits your customers’ needs and register for an account.

Then, you need to add BNPL to your stores. The popular way to activate BNPL options for online and offline stores is through payment processors like Stripe or PayPal. As a result, BNPL services should integrate with your existing POS and payment system to let customers buy with installments. Your POS should also connect smoothly with multiple 3rd-party payment service providers to process payment types like digital wallets or split payments to enable buy now pay later methods.

For example, Magestore POS with POS for Magento and POS for Shopify works seamlessly with multiple payment terminals to offer your customers various payment methods, including split payments.

You should also clearly communicate the availability and benefits of BNPL to your customers both online and offline. To promote BNPLs, you can place banners on your site, put signage in your stores, or execute marketing campaigns.

Magestore point of sale supports both BNPL no down payment and with down payment. In the case of BNPL with down payment, customers can choose different payment methods such as cash, credit cards, or debit cards. Follow these steps to provide a smooth BNPL experience for your customers.

Enable the BNPL option on Magestore POS

If your Magestore POS doesn’t have the Pay Later option:

Step 1: Create Pay Later on Magestore POS:

Go to POS > Settings > Payment for POS > Add more payment

Step 2: Complete the following settings:

• Set Enabled to Yes
• Name the Title as Pay Later
• Set Pay Later to Yes so that the system will not create an invoice after checkout

Now, you can start providing the BNPL option for your customers.

If your Magestore POS already has the Pay Later option, proceed from Step 2.

Check out orders with BNPL on Magestore POS

When a customer adds products to the cart and requests BNPL, they can choose either to buy now and pay later with no down payment or to pay a part now and the rest later, depending on your buying policies.

Option 1: Customer buys now and pays later with no initial payment.

• The cashier selects Pay Later > Mark as Partial > Complete Order.
• The invoice will show the due amount the customer needs to pay later.
• In Order History, the order status will be Processing, Unpaid.

When the customer returns to the store to complete the payment, they can choose their preferred payment method. The order status will then change to Complete, Paid.

Option 2: Customer pays a portion of the order in advance with different payment methods and completes payment later.

• The cashier selects Pay Later and adds one or more payment options > Mark as Partial > Complete Order.
• The invoice will show both the unpaid and paid amounts with the payment method.
• In Order History, the order status will be Processing, Partially Paid.

When the customer comes back to pay the remaining balance, the payment will be completed, and the order status will change to Complete, Paid.

To choose the most suitable buy now, pay later services for your business, you should evaluate the following critical criteria.

• Integration capability: If you want to add buy now pay later to your checkout flow, choose an app that seamlessly integrates with your existing eCommerce and POS systems.
• Payment terms: BNPL repayment terms can span several weeks or years. While customers use short-term loans for small purchases, they need a longer payment plan for higher-value items. Therefore, your chosen BNPL lenders should offer different payment plans so your customers can opt for the one that suits their financial situations.
• Credit limits: Credit limits vary from provider to provider. If your customers’ purchases are lower or higher than the set limits, they might not qualify for the payment plans. Consequently, you’d better assess your business’ average order values and ensure that the provider lends your customers enough funds to cover their purchases.
• Geographic coverage: Before selecting a service provider, you should define where your target customers concentrate and what BNPL services are easily accessible or popular there. You can also partner with multiple providers simultaneously to serve more customers across locations.

Is buy now pay later similar to taking a loan?

Yes, BNPL is similar to taking a loan. BNPL lends customers money to fund their purchases and allows them to pay back installments over time. Unlike traditional loans, BNPL often charges no interest and lasts short terms.

Is it safe for customers to buy now pay later?

Yes, BNPL is safe to use. BNPL providers employ security technologies, including data encryption and multifactor identification, to protect your information.

How does BNPL affect my credit?

As BNPL services don’t report payments to the credit bureaus, whether you pay on time or miss the scheduled payment doesn’t impact your credit. However, if you repeatedly fail to pay back money when it’s due, debt collectors might report your account to credit agencies, which can lower your credit score.

How does a BNPL provider make money?

BNPL makes money from both businesses and shoppers. On one hand, financing companies charge businesses with initial setup and processing fees for each transaction. On the other hand, customers have to pay interest for longer repayment terms and late fees if they miss the payments.

Are there any fees associated with BNPL services?

Yes, there are. While businesses have to pay processing fees for each transaction, shoppers might incur late fees for missed payments.

Can I buy now pay later if I have bad credit?

Yes, you can apply for buy now pay later even if you don’t have good credit. As BNPL lenders only run soft credit checks, bad credit doesn’t affect the service provider’s approval.

Contactless payment is a convenient and safe payment method that doesn’t require cash or swiping and inserting cards.

Thanks to contactless payment technology with near-field communication (NFC) or radio frequency identification (RFID), customers can simply tap or hold their cards, phones, or wearable devices near a contactless reader to complete the transaction. That’s why we call the technology “tap to pay” or “tap and go”.

Currently, almost all credit cards and debit cards feature contactless technology. Tech giants also offer contactless payment solutions, such as Apple Pay, Google Pay, or Samsung Pay. These digital wallets allow consumers to securely store credit and debit card information to make purchases by tapping their smartphone or smartwatch at the POS terminal.

There are two main types of contactless payment including contactless cards and digital wallets.

Tap-to-pay debit cards and credit cards are the most popular contactless payment options. They look like regular cards but have an antenna that enables wireless communication with a reader. Contactless payment cards also have a magnetic strip and chip for traditional uses such as inserting or swiping. 

Some contactless payment examples of this type include Visa contactless payment, American Express, and Mastercard contactless payment.

Digital wallets are mobile apps that allow smartphones or wearables to make payments like physical cards. The two most popular digital wallets are Google Wallet (previously Android Pay) for Android users and Apple Pay for iOS users. With Apple Pay, for example, you can make iPhone contactless payments or pay via your wearables, such as Apple Watch.

To use digital wallets as a contactless payment method, you simply activate the mobile payment capability on your phone. Then, download the contactless payment app, link your credit cards and credit card accounts, and you’re good to go. You only need to bring it within two to four inches of a contactless payment reader to pay by phone. 

As of 2024, the number of smartphone users worldwide has reached an estimated 4.88 billion, reflecting a growth of 635 million new users from 2023 to 2024, marking a 2x increase since 2020. With increasing mobile phone penetration, mobile contactless payment is also on the rise.

Contactless payments use NFC and RFID technology to enable wireless communication between the contactless payment device and the card reader when held near the reader. 

Stores accepting this payment have a distinctive contactless payment symbol resembling the Wi-Fi logo on their POS terminals.

To initiate the payment, customers tap or hold their contactless card or mobile device near a POS terminal with the tap and pay symbol. Depending on the contactless payment terminal, you might need to tap cards on, above, or below the screen.

The POS terminal encrypts the transaction data, including account number, expiration date, and a one-time code that replaces the static code on the magnetic strip for each in-person transaction.

Then, the card reader transmits the data to a card network (such as Visa and Mastercard) for verification.

The issuing bank checks for available balances, flags unusual locations and transaction amounts, verifies the payment method’s legitimacy, and authenticates the customer identity to prevent fraud. 

FYI, the issuing bank or customer bank is the bank that issues credit and debit cards to customers.

Once the issuing bank approves the transaction, the POS terminal receives the approval message and signals successful payment with a beep, green light, or checkmark. 

This entire exchange takes less than a second, making it faster than chip cards and miles ahead of cash. The transaction flow works the same for contactless payments using cards and digital wallets.

Wireless payments are revolutionizing the way we pay. The benefits of contactless payment are ample, making it the preferred payment method of modern customers. That said, it’s important to weigh the benefits against the potential drawbacks.

Because the POS terminal is the primary interface for transactions, choosing a contactless payment machine that provides a seamless payment experience for both customers and staff is essential. Some factors to consider when selecting a contactless-enabled POS terminal include:

• Contactless payment methods: Make sure that terminals fully support your contactless payment methods, such as NFC payment using cards or contactless phone payment. Confirming these contactless technologies allows your customers to effortlessly tap debit cards, credit cards, or phone wallets, thereby enhancing convenience and speeding up transactions.
• POS terminal hardware: Evaluate hardware factors like screen size, processing power, and durability carefully to ensure the terminal can effectively handle the demands of contactless transactions. For high volumes, opting for a contactless payment system with a larger screen and robust processing capabilities can help accommodate these transactions efficiently.
• POS terminal compatibility: Select terminals compatible with your existing POS software, such as POS for Magento or POS for Shopify, and inventory management system to ensure seamless integration and efficient operations. To enhance flexibility and boost sales, you can choose a POS that integrates with different payment terminals to provide split payments, buy now pay later, etc. 

You should confirm compatibility and address any potential integration challenges with your POS provider before implementing contactless payment systems.

Your customers can scan a QR code displayed at the POS to initiate a contactless payment on the phone. 

To successfully implement this contactless mobile payment solution, retailers should:

• Select a suitable QR code payment provider that aligns with your business needs and preferences
• Ensure that the POS system is compatible with QR code payments and can seamlessly integrate with the chosen payment provider
• Generate unique QR codes for each transaction using the provider’s platform
• Display these codes at the POS, such as on product labels or checkout counters 
• Train your staff on how to process QR code payments 
• Educate customers on how to scan the codes using their mobile devices 

Implementing self-checkout with contactless payment in retail involves installing self-service kiosks equipped with NFC-enabled POS systems. These kiosks should be user-friendly, guiding customers through the scanning and payment process. 

In a world preferring speed and efficiency, contactless payment methods offer a winning formula. A simple and fast tap or hold of your card or phone near the reader to complete a transaction eliminates physical contact and streamlines checkouts. Thanks to its advanced security, more and more merchants now accept contactless payments in-store. If you want to further discuss how to offer this payment in your physical stores, let’s talk with our experts.

Yes. Contactless payment is one of the safest forms of payment for the following reasons:

• One-time codes: Each transaction uses a one-time encrypted code, making it nearly impossible for hackers to duplicate.
• Chip security: Contactless cards inherit the same security as chip cards, a significant upgrade from magnetic stripes.
• Accidental tap protection: As transactions only occur within a short range (around 2 inches), you don’t need to worry about double billing.

Please note that because contactless payments don’t require a PIN, if you lose your card, fraudsters can use it for unauthorized transactions.

No. While EMV cards can be contactless, EMV does not mean contactless.
Contactless payment is a payment method, enabled by RFID technology or NFC payment.

On the other hand, EMV, short for Europay, Mastercard, and Visa, is a payment technology that uses a tiny yet powerful chip embedded in credit and debit cards to encrypt and tokenize data for secure transactions. EMV cards include both contact and contactless types.

No. While some EMV transactions use RFID technology, EMV isn’t the same as RFID.

EMV serves as a globally recognized standard for credit and debit card transactions, employing chip technology to enhance security and decrease fraud in face-to-face transactions. EMV technology specifically refers to chip-based credit and debit cards that authenticate payments dynamically.

In contrast, RFID, or radio frequency identification, utilizes electromagnetic fields to transfer data and uniquely identify objects. Unlike EMV, RFID operates wirelessly, using radio waves to conduct transactions. These technologies are distinct.

Sometimes, contactless payment cards may combine both EMV and RFID technologies, with the EMV chip storing account information while the RFID transfers it to a payment terminal.

However, they serve different purposes in overall transaction security and are not interchangeable.

Yes. While contactless cards allow you to get cash back the same way as traditional cards, some stores might require customers to insert the card for cash-back requests, even if the terminal has contactless capabilities.

Radio frequency identification (RFID) technology and near-field communication (NFC) technologies empower contactless payment transactions.

The table below draws a distinction between POS vs terminals in terms of definition, components, key functions, pros, cons, and other important information.

Unlike traditional POS which mainly processes payments, modern POS nowadays has more advanced functions to help merchants better manage their businesses like inventory management or customer loyalty programs. However, many retailers are unaware of this huge progress and still think that POS is used to take payments only, which sometimes makes it hard for them to distinguish between POS vs terminals when choosing a suitable solution for their businesses.

To reduce confusion, we compare the key features, pros, cons, and prices of the most popular POS systems vs payment terminals available on the market for your reference, including Stripe Terminal, Square Terminal, Magestore POS, and Lightspeed Retail. Let’s take a look!

The answer depends on how well you understand the differences between POS vs terminals and your business situation. Before reaching the final decision, you should analyze your business types, scales, and objectives thoroughly to see what you need. Besides, a comprehensive POS system has higher prices than a payment terminal. Therefore, you’d better balance your requirements and financial resources to ensure you make suitable investments in what works best for your business.

For example, small merchants with tight budgets use payment terminals independently to accept card payments. Nevertheless, retailers with more complex workflows or expansion plans prefer a POS system as it offers more features to aid business management.

Using a POS system with card readers is also an ideal choice if you want to facilitate card payments from customers while still running your business effectively. Besides, you should also check whether POS and terminals can work smoothly with each other. The compatibility of the two solutions removes unnecessary conflicts and errors, thus producing enormous benefits for your business.

• POS systems consist of both POS hardware and POS software.

POS hardware includes card readers, barcode scanners, receipt printers, cash drawers, tablets, laptops, or desktops.
POS software integrates with payment processors to handle card and mobile payments.

• Popular types of payment terminals comprise card readers, countertop terminals, EMV payment terminals. Thus payment terminals are a component of POS hardware.
• At checkout, customers swipe, tap, or dip their cards or mobile wallets at the payment terminals. The integrated POS software then encrypts and transmits the payment details to the payment processors for authorization.
• Using payment terminals independently is suitable for small businesses that simply need to handle in-store payments.
• A more established business will need a complete POS system with POS hardware and POS software to process payments and manage other operations such as inventory, customer, order fulfillment, and reporting.

What is the difference between a POS and a card reader machine?

A POS includes POS software and hardware. It helps process payments and streamline business operations. Otherwise, a card reader is an electronic device that can work as a standalone payment solution or as part of a complete POS system. It collects and transmits customer card data to and receives responses from specific payment processors.

What makes a POS system different from a payment gateway?

A POS system supports inventory management, employee tracking, and more. On the contrary, a payment gateway is an intermediary platform that primarily facilitates online payments. Its main function is to securely transfer transaction data between businesses and payment service providers.

What is the difference between a POS terminal and an EDC terminal?

A point of sale terminal accepts payments from different card types, including magnetic stripe, EMV chip, and contactless cards while EDC or electronic data capture terminals support magnetic stripe cards only.

What is the difference between a POS and a virtual terminal?

POS systems handle payments and execute other business management activities. Unlike POS, a virtual point of sale terminal is a web-based app that allows merchants to take payments from customers via phone, email, or fax. Merchants only need to use Internet-connected laptops, tablets, or smartphones to process payments.

Is POS the same as a payment processor?

No, they’re not the same. POS solutions have plenty of functions to help simplify business operations, whereas payment processors coordinate the payment processing flow between customers, businesses, and relevant financial institutions. Payment processors transmit transaction data to customers’ issuing banks for verification and authorization. They also ensure the transfer of funds between the customers’ issuing banks and the merchant’s acquiring banks.

A Shopify payment gateway is a payment gateway designated for Shopify merchants.

During eCommerce transactions, the payment gateway in Shopify acts as an online payment portal, securely transferring transaction data between your customers and the Shopify payment processors for authorization and settlement. It enables your eCommerce store to accept various payment methods, such as credit cards, debit cards, and digital wallets.

Shopify payment gateways are essential because they allow merchants to:

• Accept card-not-present (CNP) transactions and handle sensitive payment data online
• Reduce the risks of fraudulent transactions thanks to various payment gateway security measures such as data encryption, tokenization, secure socket layer (SSL), and secure electronic transactions (SET)
• Enhance customer trust and confidence to enter their payment details online as payment gateways for Shopify add an extra layer of security for online transactions
• Automate tasks such as verifying the credibility of the payment information
• Expand globally because payment gateways support multiple payment methods and currencies

Shopify merchants should opt for Shopify-supported payment gateways to eliminate technical complexities from the business end and ensure frictionless payment experiences from the customer end. The payment gateway must also integrate with your existing business software, such as your POS terminals or POS for Shopify to minimize operational silos.

Different Shopify payment gateway options offer distinct functionalities, processing fees, and price structures. Therefore, some payment gateways are suitable for small businesses, while others shine for global or high-volume merchants.

Payment gateways typically charge a percentage of the purchase plus a small amount for each transaction. Some Shopify payment providers also require a monthly fee and other payment fees. 

Besides, Shopify charges a transaction fee of 0.6%–2% (depending on your Shopify plan) when using a third-party gateway.

Thus, eCommerce retailers should understand Shopify payment gateway pricing structures thoroughly to ensure their bottom line.

Some payment gateways are available in certain countries only, so it’s important to make sure your chosen payment gateway can cater to your target market. 

If your Shopify store targets a global market, your best payment gateway for Shopify should support multi-currency, various languages, and diverse payment methods.

A payment gateway is particularly crucial for eCommerce businesses, which are inherently more sensitive to fraud because it helps add an extra layer of security. Thus, you should scrutinize fraud detection features to secure Shopify payment processing, reduce chargebacks, and minimize fraud-related losses.

The best payment gateways for Shopify should have features that enhance the online customer experience, such as:

• Provide a user-friendly and consistent payment interface that matches your brand to increase trust
• Handle multi-currency, multiple languages, and payment methods, because 59% of consumers abandon their carts when their preferred payment method is unavailable
• Offer reporting and analytics tools or integrate with third-party analytics services, such as Google Analytics, to help you track your payments, refunds, chargebacks, etc.

eCommerce businesses can undergo rapid growth, so make sure that your payment solutions can scale with your operations. Specifically, it should be able to handle increased transaction volumes, support multi-currency, provide integration options, and offer robust customer support.

This list includes both Shopify’s built-in payment gateway and third-party payment gateways. While the native streamlines the setup process, integrating seamlessly with your store for a smooth experience, third-party payment gateways provide greater flexibility and access to advanced features.

Important note: When using a third-party gateway, you have to pay an additional 2% transaction fee on top of the Shopify Payments fees. For instance, if you use Stripe, the total fee is 2.9% + 30¢ per transaction (Stripe’s fee) + 2% per transaction (Shopify’s fee).

At the top of the Shopify payment gateway list is Shopify Payments, Shopify’s built-in payment gateway. For businesses, it eliminates the need for third-party payment gateways and streamlines the payment process. For Shopify shoppers, it enables a seamless and secure payment experience. This translates into lower cart abandonment rates and increased profitability for Shopify stores. 

Note that if you’re a subscription-based business on Shopify, you should use Shopify Payments as your primary payment gateway.

• Accept all the best payment methods for Shopify, including major credit cards, debit cards, popular digital wallets like Apple Pay, Google Pay, PayPal, and cryptocurrency
• Allow customers to save shipping and payment information to speed up the checkout processes
• Offer built-in fraud prevention features such as fraud analysis, Shopify Protect, Shopify Flow, and Dynamic 3DS
• Function well with other Shopify features like inventory management and order fulfillment

Shopify Payments charges tiered processing fees, depending on your Shopify subscription.

Stripe is a top-of-mind Shopify custom payment gateway for both online and in-person small businesses because it allows users to accept and process payments without a minimum monthly revenue requirement. Moreover, Stripe stands out for its customizability and scalability.

It’s also one of the best payment processors for Shopify, making it ideal for merchants looking for an all-in-one payment solution.

• Accept credit cards, debit cards, BNPL, ACH direct debits from bank accounts, and all major digital wallets
• Allow merchants to customize the checkout page and choose either embedded or Stripe-hosted checkout page
• Simplify the validation process with advanced KYC policies and AI-powered information scanning algorithms
• Allow businesses to build a fully API-based integration or only use their JavaScript library to tokenize your customers’ payment details

Stripe charges a flat rate of 2.9% + 30¢ per domestic transaction. Large eCommerce businesses can request a custom quote.

Additional fees include: 

• 0.5% for manually entered cards
• 1.5% for international cards
• 1% if currency conversion is necessary.
• 1% for instant payouts and an extra 1% for instant payouts of international payments

Skrill is the most popular payment provider in Europe and is also available in 40 other countries. The Shopify payment processing option is well-known for its affordable pricing, low international payment fees, and instant deposit and payout options.

• Accept over 40 currencies and 100 local payment methods
• Provide you with chargeback protection on all payments, excluding credit and debit cards
• Allow your customers to make repeat payments in one tap
• Integrate easily with one account, one contract, and one single Shopify payment gateway API

Skill doesn’t charge any setup fees or service fees unless your account is inactive for longer than 6 months.

Partnered with startups and giants worldwide, Adyen helps businesses accept and process payments locally and globally in 30+ currencies via diverse payment methods. The payment gateway shines for its seamless mobile payment option, dynamic card validation, and advanced security technology. 

• Facilitate a smooth omnichannel payment experience, including eCommerce, mobile apps, and physical stores
• Allow customers to checkout in your branded checkout environment without any redirections to other websites
• Utilize 3DS 2.x technology to provide secure and reliable 3DS challenges and authentication

Merchants can enjoy zero setup, integration, monthly, or closure fees if using the Adyen payment gateway. 

The gateway charges a Shopify payment processing fee of €0.11 per transaction plus a payment method fee which varies depending on payment methods and locations. For example:

• JCB (Global): €0.11 + 3.75%
• ACH Direct Debit (U.S.): €0.11 + $ 0.27
• WeChat Pay (China): €0.11 + 3%

Verifone, established in 1981, is a long-standing leader in the payment gateway industry, operating in more than 165 countries.  

Verifone offers great flexibility for merchants to choose and pay for only the features they need. Moreover, the payment gateway has various value-added features, such as advanced risk management and compliance, tax calculation, etc.

• Accept card payments and emerging payment methods such as digital wallets including PayPal, Apple Pay, Google Pay, Alipay, buy now pay letter, and crypto coins
• Provide real-time fraud scoring and automated risk assessments
• Combine in-house and third-party payment fraud detection services
• Generate fraud management, transaction, authentication, and settlement reports

For Verifone’s users, there’s no monthly payment gateway fee. The transaction processing fees vary depending on the seller’s country, industry, business model, and subscription plan, ranging from 2.4% + 30¢ to 3.9% + 45¢. 

The payment gateway also charges an additional cross-border fee of 2%.

If your business processes more than $50,000 per month, you can opt for volume-based pricing.

Established in 1996, Authorize.net has become a worldwide recognizable payment gateway provider. This Shopify payment gateway integration prioritizes safety with a reliable customer management system, automatic fraud detection, and card tokenization features.

Other features contributing to their competitive position include Account Updater and Recurring Payments.

• Accept payment methods that modern customers prefer, such as digital wallets, credit cards, debit cards
• Offer the Account Updater feature, which allows merchants to keep customer card information up to date
• Offer customer information management features to ease the payment process of returning customers
• Provide advanced fraud protection with tools and filters tailored to your business
• Handle recurring or installment payments

For all plans, there’s a $25 monthly gateway fee but no setup fees. However, the processing fees vary for different plans.

Worldpay is a trusted payment gateway with a highly global presence in more than 120 countries. This gateway allows merchants to receive payments in multiple languages, currencies, and payment methods. Their international adaptability makes it one of the best payment gateways for eCommerce businesses with international operations. 

Besides, it’s also a reliable, secure, and efficient platform for businesses of all sizes, with advanced security measures and customizable options.

• Offer advanced fraud protection features tailored for merchants with or without an in-house fraud operations team, such as Fraud Management Essentials and FraudSight
• Accept various payment methods, such as credit cards, debit cards, digital wallets, and cryptocurrency
• Allow you to customize your payment page: Choose your logo and stylesheet, add your branded fonts, and whitelist a custom URL
• Provide pre-built plugins, extensions, and direct partner integration