Shopify Payments vs PayPal: Key Differences, Fees & Best Choice for 2025

If you have your very own storefront, then choosing how to accept payments is a big deal, and two of the most popular options are Shopify Payments and PayPal. Both are reliable, widely used and offer features that make checkout easy for customers. But they work a little differently behind the scenes, and those differences can impact your fees, cash flow and overall experience as a business owner.

If you’re trying to decide between the two, or wondering if you can (or should) use both, this article will break it down so you can make the best choice for your store.

Shopify Payments vs. PayPal: Which One Should You Use for Your Business?

Choosing between Shopify Payments and PayPal really comes down to your business needs and how you want to manage transactions. Shopify Payments is built right into your store and provides a smooth, fully integrated experience. You won’t pay extra transaction fees if you use it, which is a big plus.¹

PayPal is familiar to many customers and can boost trust at checkout, but it may come with additional fees.² Some store owners even use both Shopify Payments as the default and PayPal as a backup.³ If most of your shoppers use PayPal, it makes sense to offer it. But if you want to keep things convenient and save on fees, Shopify Payments could be the smarter choice.

Does Shopify Take PayPal?

Yes, Shopify does take PayPal, and in fact, it’s one of the default payment options when you set up your Shopify store.¹ That means you don’t have to choose between Shopify Payments vs PayPal; you can actually use both at the same time.

PayPal acts as an external payment gateway, so your customers can check out using their PayPal accounts, while Shopify Payments handles credit card transactions directly.² This combo gives your buyers more flexibility and can help reduce abandoned carts.³ Keep in mind that using PayPal and Shopify Payments together may mean separate transaction fees, depending on your setup.⁴ You’ll also need to link your PayPal Business account to Shopify to start receiving payments.⁵ So yes, they definitely work together, and even provide you with a smoother experience.

Shopify vs. PayPal Fees

When comparing Shopify vs PayPal fees, it’s important to look beyond just the surface numbers. Shopify Payments typically charges 2.9% + 30¢ per online transaction, but if you use an external gateway like PayPal, Shopify adds an extra fee, usually 1%, on top of PayPal’s standard rate.¹ That means you could end up paying both Shopify and PayPal for every sale.²

PayPal’s fees are about the same (2.9% + 30¢), but the extra Shopify surcharge can make a difference over time.³ If you’re using Shopify Payments, you avoid that extra fee, which can save you money.⁴ Let’s break down the fees in more detail below:

So, keep in mind that both options are secure and popular, but Shopify Payments is often the cheaper route if you’re processing a high volume of sales directly through your store.⁵

Wise Business Could Help Your Company Save on Global Payments

How Do Fixed Fees Compare Between Shopify vs. PayPal?

When it comes to fixed fees, both Shopify Payments and PayPal start with a similar base: 2.9% plus 30¢ per online transaction within the U.S.¹ But the differences appear when you look at additional costs.

Shopify Payments doesn’t charge an extra fixed fee unless you’re dealing with international payments, where a small markup may apply.² However, when you use PayPal through your Shopify store, Shopify adds a 1% fee for using an external gateway.³ That can really add up if you're processing a lot of orders. Plus, PayPal charges currency conversion fees of around 3% to 4%, depending on the region.⁴

So, while both offer similar flat-rate structures upfront, Shopify Payments tends to be more cost-effective overall if you want to avoid those layered fees.⁵ For many sellers, sticking with Shopify Payments means keeping more of each sale in your pocket.

Is Shopify or PayPal Better for Your Business?

If you’re running an online store, Shopify can be an excellent all-in-one solution, especially when it comes to payments. With Shopify Payments built right in, you avoid third-party gateway fees and manage everything from one dashboard.¹ That means fewer moving parts and lower transaction costs, which is great for your bottom line.² On top of that, Shopify gives you access to detailed analytics, flexible checkout customization and integrations with other tools, so it could appeal to growing businesses.³

Of course, PayPal is still a trusted name with millions of users worldwide, and many customers feel more comfortable using it for purchases.⁴ But relying solely on PayPal can lead to higher fees and added complexity on the backend.⁵

So, is Shopify better for your business? If you want a quick, easy, cost-effective platform that’s designed for ecommerce from the ground up, then it may be a good option for you. However it comes down to your businesses’ specific needs.

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

Use Wise Business >>

Final Thoughts

In conclusion, choosing between Shopify Payments vs. PayPal comes down to what works best for your business model. Shopify Payments provides a smoother integration, no extra transaction fees, and a quicker backend experience if you’re already using Shopify.¹

However, PayPal gives you brand recognition, instant access to funds and is preferred by many international shoppers.² So with that being said, there’s no one-size-fits-all answer, but understanding the fee structures, payout times, and gateway policies can help you decide what’s right for your business.⁵

Frequently Asked Questions (FAQs)

Are there differences in chargeback policies between Shopify Payments and PayPal?

Yes. PayPal charges a $20 fee per chargeback, while Shopify Payments typically charges $15. Policies also vary on how disputes are handled and whether fees are refunded if you win the case.⁴

Which payment gateway is faster for accessing funds, Shopify or PayPal?

PayPal usually provides instant access to your funds via your PayPal balance. Shopify Payments takes two to three business days for bank transfers, though this can vary by country and account status.²

How do international transaction fees compare between Shopify and PayPal?

For cross-border sales, Shopify Payments typically charges 3.9% plus a fixed fee per transaction, while PayPal charges 4.4% plus a fixed fee. Both may add currency conversion charges on top.⁵

Sources:

1. GemPages – Shopify Payments vs PayPal
2. BSS Commerce – PayPal vs Shopify Payment Comparison
3. PageFly – Shopify Payments vs PayPal
4. Shopify Blog – PayPal Fees
5. LinkedIn – Shopify Payments vs PayPal, Stripe, Authorize.net