Choosing a 3rd Party Payment Gateway on Shopify

Introduction

Shopify merchants often require more flexibility than a single payment provider can offer. While Shopify Payments is the default for many, specific business needs—such as selling in unsupported regions, managing high-risk products, or offering local payment methods—frequently necessitate a 3rd party payment gateway on Shopify. Using an external provider allows you to tailor the checkout experience to your specific audience and operational requirements. HidePay helps merchants navigate these complexities by providing granular control over how and when payment options appear — see HidePay on the Shopify App Store to install the app and start customizing your checkout.

Managing multiple providers can introduce complexity to your checkout flow and impact your transaction costs. We built HidePay to help merchants navigate these complexities by providing granular control over how and when these payment options appear. This article explains how third-party gateways work, the costs involved, and how to optimize them for higher conversion rates and lower fees.

By the end of this guide, you will understand how to select the right providers for your store and how to use logic-based rules to manage them effectively.

Understanding 3rd Party Payment Gateways on Shopify

A third-party payment gateway is any payment service provider other than Shopify Payments. These providers handle the technical process of capturing payment information, verifying funds, and transferring money to your merchant account. Shopify integrates with over 100 of these providers globally, ranging from massive platforms like PayPal and Stripe to regional specialists.

Shopify classifies these integrations into two distinct categories: direct providers and external providers.

Direct Providers

Direct providers allow the customer to complete their entire purchase without leaving your online store. The credit card fields appear directly on your checkout page. This creates a cohesive experience and typically leads to higher conversion rates because there are fewer steps and no redirects.

External Providers

External providers require customers to complete their payment on a page hosted outside of your Shopify store. When a customer selects an external provider, they are redirected to the provider's website to enter their details and then sent back to your store for the order confirmation. While this can sometimes add friction, many global customers trust these redirected checkouts for specific services like PayPal or regional banking portals.

Why Merchants Use Third-Party Gateways

Most merchants start with Shopify Payments because it is easy to set up. However, several scenarios make a 3rd party payment gateway on Shopify a necessity for growth.

Geographic Availability

Shopify Payments is currently available in a limited number of countries. If your business is based in a region where it isn't supported, you must use a third-party provider to accept credit card payments. Additionally, international customers often prefer local payment methods that Shopify Payments might not support, such as iDEAL in the Netherlands or Przelewy24 in Poland.

Industry and Risk Profile

Certain industries are classified as "high-risk" by primary payment processors. This includes sectors like supplements, gaming, or high-end electronics. If your business falls into these categories, Shopify Payments might decline your application or hold funds. Third-party gateways often specialize in high-risk industries, providing more stable processing for specialized merchants.

Specialized Features

Some gateways offer features that go beyond simple credit card processing. This includes "Buy Now, Pay Later" (BNPL) services like Klarna or Affirm, or digital wallets like PayPal. Merchants often layer these third-party options alongside their primary gateway to give customers more ways to pay.

Redundancy and Backup

Relying on a single payment provider creates a single point of failure. If your primary gateway experiences downtime or an account issue, your store stops generating revenue. Many established merchants set up a secondary 3rd party payment gateway on Shopify as a backup to ensure they can always process transactions.

The Financial Reality of Third-Party Gateways

Using a third-party provider changes your fee structure. When you move away from Shopify Payments, you encounter two distinct types of costs: processing fees and transaction fees.

Processing Fees

These are the fees charged directly by the gateway provider (e.g., Stripe, PayPal, or Authorize.net). They usually consist of a percentage of the transaction plus a flat per-order fee. These fees vary widely based on the provider, your location, and your sales volume.

Shopify Transaction Fees

If you do not use Shopify Payments as your primary gateway, Shopify charges an additional transaction fee on every order. This fee covers the cost of maintaining the secure checkout infrastructure and the integration with external providers. The rate depends on your Shopify plan:

• Basic Shopify: 2.0%
• Shopify: 1.0%
• Advanced Shopify: 0.5%
• Shopify Plus: Fees are typically lower or waived if Shopify Payments is the primary gateway, though specific terms apply.

It is important to note that these fees are calculated on the total order value, including shipping and taxes, after discounts are applied.

Key Takeaway: Calculating Your Total Cost

To find the true cost of a third-party gateway, use this formula: (Gateway Processing Fee % + Shopify Transaction Fee %) + Gateway Flat Fee = Total Cost Per Order.

Popular 3rd Party Payment Gateways for Shopify

Choosing the right provider depends on your business model and target market. Based on current industry standards and Shopify's supported integrations, these are some of the most common choices.

PayPal

PayPal is one of the most recognized payment brands globally. It offers PayPal Express Checkout, which allows customers to skip part of the checkout process by using their saved PayPal information. Because it is highly trusted, adding it as a third-party option often increases conversion rates, especially for international shoppers.

Stripe

Stripe is a powerful direct provider known for its developer-friendly tools and extensive global reach. It supports credit cards, digital wallets like Apple Pay and Google Pay, and localized payment methods. Many merchants choose Stripe for its robust fraud prevention and ability to handle subscription billing easily.

Authorize.net

A veteran in the industry, Authorize.net is a reliable choice for North American merchants. It provides a secure direct checkout experience and is well-suited for businesses that need a dedicated merchant account and highly customizable fraud filters.

Klarna and BNPL Providers

Klarna allows customers to pay in installments or after a set period. This third-party gateway is particularly effective for stores with high average order values. By allowing customers to spread the cost, merchants often see an increase in the number of items per cart.

How to Configure a Third-Party Gateway

Setting up a 3rd party payment gateway on Shopify is handled within your admin settings. While the specific credentials vary by provider, the general process remains consistent across the platform.

1. Obtain Credentials: Create an account with your chosen provider. You will typically need an API Key, Merchant ID, or a Secret Key.
2. Navigate to Payments: In your Shopify admin, go to Settings and then select Payments.
3. Choose a Provider: If you are not using Shopify Payments, click on "Choose a provider" in the third-party providers section.
4. Enter Credentials: Select your provider from the list and enter the credentials obtained in step one.
5. Test the Integration: Most gateways offer a "test mode." Use this to ensure the connection is active before you go live with real customer transactions.

For step-by-step instructions on creating payment customizations and the specific “Cart Total” condition, see the HidePay help guide on how to create a payment customization.

Action Summary for New Setups:

• Confirm your business location is supported by the gateway.
• Check if the provider is a "Direct" or "External" provider to understand the customer journey.
• Verify the specific Shopify transaction fee that will apply to your plan.
• Run a test transaction to ensure the redirect or direct fields are functioning correctly.

Optimizing the Checkout with Logic-Based Rules

Simply adding a 3rd party payment gateway on Shopify is only the first step. To maximize profitability and improve the customer experience, you must control when and how these options appear. Showing too many options can cause decision paralysis, while showing the wrong options can lead to high fees or chargebacks.

This is where the "Smart Checkout" approach becomes essential. Instead of a static list of payment methods, you should use conditional logic to present the most relevant choices to each customer.

Hiding Gateways by Geography

Not every gateway is relevant to every customer. If you use a regional provider for customers in Germany, there is no reason to show that option to a customer in Australia. Hiding irrelevant options reduces clutter and helps the customer find their preferred method faster. See the HidePay help article about organizing payment methods by country or Shopify Market for a step-by-step guide.

Managing High-Fee Methods

Some payment methods carry significantly higher costs for the merchant. Cash on Delivery (COD) or certain international gateways might have high processing fees that eat into your margins on low-value orders. You can set rules to hide these expensive methods if the cart total is below a certain threshold. This ensures that you only accept high-fee payments when the order value justifies the cost—refer to the HidePay guide on hiding payment methods by cart currency and cart total for exact setup options.

Sorting for Conversion

The order in which payment methods appear matters. Most customers will choose one of the first two options they see. You should sort your payment methods so that your preferred gateway—usually the one with the lowest fees and highest reliability—appears at the top. If you want to push customers toward credit card payments rather than PayPal, ensure the credit card fields are positioned first. See the HidePay documentation on how to sort and rename payment methods for instructions.

Renaming for Clarity

Sometimes the default name of a payment gateway isn't clear to the customer. For example, a customer might not know that "Authorize.net" means they can pay with their credit card. Renaming these gateways to something more intuitive, like "Secure Credit Card Payment," can reduce confusion and abandonment. The HidePay quick guide on sorting and renaming payment methods explains the rename workflow.

Leveraging Shopify Functions for Payment Control

In the past, controlling the checkout required complex workarounds or the use of Shopify Scripts, which were only available to Shopify Plus merchants and are now being deprecated. Today, Shopify Functions provide a more modern, stable way to customize the checkout.

HidePay is built on native Shopify Functions. This means the app runs within Shopify's own infrastructure. Because there are no external scripts or theme code edits required, the checkout remains fast and secure. This native integration ensures that your payment rules—whether you are hiding, sorting, or renaming—work reliably every time a customer reaches the final step of their purchase.

Using tools built on Shopify Functions allows merchants on any plan (not just Plus) to access advanced checkout logic. For context on why Shopify Functions replace scripts, read Nextools’ blog post on why Shopify Functions are the future and scripts are the past.

Use Cases for Advanced Payment Management

To understand how these rules work in practice, consider these common merchant scenarios.

Scenario 1: B2B and Wholesale Orders

Merchants who sell to both retail and B2B customers often have different payment requirements for each. You might want to offer "Net 30" or "Bank Transfer" options to your wholesale customers but hide them from retail shoppers. By using customer tags, you can create a rule that only shows specific third-party gateways to logged-in B2B customers. See the HidePay help article on targeting payment methods by customer tag for implementation details.

Scenario 2: High-Ticket Items and Fraud Protection

If you sell expensive products, you may want to limit payment options that carry a high risk of chargebacks for those specific items. For orders over a certain dollar amount, you could hide "Express" buttons and only show a direct credit card provider that has robust 3D Secure verification. This protects your margins and reduces the risk of fraudulent claims.

Scenario 3: Heavy or Bulky Goods

If you sell products that require specialized shipping, you might want to disable certain payment methods like Cash on Delivery. Because COD often has a higher refusal rate at the door, the cost of shipping a bulky item back to your warehouse can be devastating. Setting a rule to hide COD when specific "heavy" products are in the cart protects your bottom line. See the HidePay help article on hiding payment methods when specific shipping options or local pickup are selected.

Scenario 4: Weekend Promotions

Some merchants prefer to steer customers toward specific payment methods during certain times of the week to align with their accounting or fulfillment schedules. You can use weekday-based rules to sort or hide gateways, ensuring your checkout always reflects your current operational needs.

Quick Summary of Rule Benefits:

• Customer Tags: Show specific gateways to VIP or B2B customers.
• Cart Total: Hide high-fee gateways for small orders.
• Product Type: Disable specific methods for high-risk or bulky items.
• Geography: Show only relevant local payment methods to international buyers.

Protecting Your Bottom Line

The ultimate goal of using a 3rd party payment gateway on Shopify is to balance customer convenience with business profitability. Every payment method you offer should serve a purpose. If a gateway isn't contributing to higher conversions or is causing too many administrative headaches (like high chargeback rates), it needs to be managed or removed.

We suggest reviewing your payment analytics once a month. Look for gateways with high abandonment rates or those that are costing you more in fees than they are worth in revenue. By using a tool to sort and hide these options, you can continuously refine your checkout without having to constantly uninstall and reinstall providers.

Optimization is not a one-time task. As you expand into new markets or add new product lines, your payment strategy must evolve. The ability to quickly adjust which gateways appear—and how they are labeled—gives you a competitive edge in a global market.

Conclusion

Successfully implementing a 3rd party payment gateway on Shopify involves more than just entering API keys. It requires a strategic approach to costs, customer experience, and risk management. By selecting the right providers and using logic-based rules to control their visibility, you can create a checkout process that feels tailored to every customer.

• Choose gateways based on your specific geographic and industry needs.
• Account for both processing fees and Shopify's transaction fees in your pricing.
• Use sorting and renaming to guide customers toward your preferred payment methods.
• Apply conditional rules to hide irrelevant or high-risk options based on the cart contents.

If you want a no-code way to hide, sort, and rename payment methods using native Shopify Functions, install HidePay for Shopify to start customizing your checkout today.

FAQ

Does Shopify charge extra for using a 3rd party payment gateway?

Yes, if you do not use Shopify Payments, Shopify charges a third-party transaction fee on every order. This fee ranges from 0.5% to 2.0% depending on your specific Shopify subscription plan. These fees are in addition to the processing fees charged by the gateway provider itself.

Can I use multiple third-party payment gateways at once?

You can use one primary credit card provider (like Stripe or Authorize.net) alongside multiple alternative payment methods like PayPal, Klarna, or BitPay. This allows you to offer a variety of ways to pay, though it is important to manage these options so the checkout does not become cluttered for the customer.

What is the difference between a direct and an external provider?

A direct provider allows customers to enter their credit card information directly on your Shopify checkout page, keeping the experience on your domain. An external provider redirects the customer to their own secure website to complete the payment before sending them back to your store for the order confirmation.

How can I hide a payment method for specific products?

You can use an app like HidePay to create rules based on the contents of the cart. By identifying specific product handles or types, you can set a rule that automatically hides a 3rd party payment gateway on Shopify whenever those items are present. See the HidePay help doc on hiding payment methods by product for a walkthrough.

---

Links referenced in this article:

• HidePay on the Shopify App Store
• How to create a payment customization (HidePay help doc)
• Sort and Rename payment methods in the Checkout (HidePay help doc)
• How to hide payment methods by cart currency (HidePay help doc)
• How to organize payment methods by country or by Shopify Market (HidePay help doc)
• How to hide payment methods for Local Pickup (HidePay help doc)
• How to target payment methods by customer tag (HidePay help doc)
• Nextools blog: Why Shopify Functions are the future and scripts are the past
• Nextools blog: Introducing Nextools’ HideSuite: the bundle for smart Shopify merchants
• Nextools blog: Nextools Blog index

(Each of the above links points to the relevant HidePay help docs, Nextools blog posts, or the Shopify App Store listing cited in the article.)