Optimising Third Party Payment Gateways on Shopify

Introduction

Managing how your store accepts money is a fundamental part of e-commerce strategy. While Shopify Payments is the default choice for many, it is not available in every country, nor does it cover every specific business need. Thousands of merchants rely on third party payment gateways on Shopify to reach international customers, support high-risk industries, or offer specialised local payment methods.

At Nextools, we developed HidePay to help merchants take back control of this experience by allowing them to hide, sort, and rename these methods based on specific rules. Learn more about the app and its goals in our Introducing HidePay for Shopify blog post.

If you’re ready to try it now, you can also find HidePay on the Shopify App Store.

This article examines the landscape of third-party providers, how to select the best one for your region, and how to manage multiple options to prevent checkout friction. You will learn how to balance gateway variety with a clean, high-converting checkout experience.

The Difference Between Direct and External Providers

Shopify categorises third-party gateways into two distinct types: direct providers and external providers. Understanding the difference is vital because it directly impacts your conversion rate and the customer’s perception of your brand security.

Direct Providers

A direct provider allows the customer to complete their transaction without leaving your online store. The credit card fields appear natively within the Shopify checkout. This is generally preferred because it maintains a consistent brand experience and reduces the number of steps a customer must take to finish their purchase. Major providers like Stripe or Authorize.net often function as direct providers in supported regions.

External Providers

External providers redirect the customer away from your store to a hosted payment page owned by the gateway. Once the payment is completed, the customer is sent back to your order confirmation page. While this can sometimes feel like a disruption, it is a common practice for certain regional methods or high-security alternative payments. For example, some versions of PayPal or certain European bank transfer methods operate this way.

The primary trade-off is friction. Every time a customer is redirected to a new URL, there is a statistical risk of abandonment. However, if that external gateway is a highly trusted local brand, that trust may outweigh the friction of the redirect.

Why Merchants Choose Third Party Payment Gateways

Even in regions where Shopify’s native payment solution is available, many merchants opt for third-party alternatives. The reasons usually fall into three categories: geographical necessity, industry requirements, or financial optimisation.

1. Geographical Limitations

Shopify Payments is currently available in roughly 23 countries. If your business is registered in a country outside this list—such as Brazil, South Africa, or much of Southeast Asia—you must use a third-party gateway to accept credit card payments. Local gateways are often better equipped to handle local currency regulations and regional payment habits, such as PIX in Brazil or iDEAL in the Netherlands.

2. High-Risk Industry Support

Certain industries, such as supplements, glassware, or some high-ticket electronics, are often flagged as "high-risk" by standard processors. Shopify Payments has strict Terms of Service regarding what products can be sold through their system. If your business falls into a restricted category, a third-party gateway specialised in high-risk processing is a necessity to avoid sudden account freezes or fund holds.

3. Fee Optimisation and Payout Speed

While Shopify Payments is convenient, high-volume merchants may negotiate better rates with independent providers like Adyen or Worldpay. Furthermore, some gateways offer faster payout schedules. If your business relies on tight cash flow to restock inventory, getting paid in 24 hours via a third-party gateway might be more valuable than waiting for the standard Shopify payout cycle.

Evaluating Popular Third Party Payment Providers

With over 100 providers available, selecting one can be overwhelming. Here is a breakdown of the most common options and the scenarios where they perform best.

PayPal

PayPal is often the first "alternative" method merchants add. It is globally recognised and provides a sense of security for customers who are hesitant to enter card details on a new site. It functions as an "Additional Payment Method" rather than a primary credit card processor, meaning you can use it alongside another gateway.

Stripe

Stripe is widely considered the gold standard for developer-friendly payment processing. It supports a massive range of currencies and local payment methods. Many merchants choose Stripe for its robust fraud prevention tools and its ability to handle complex subscription billing models through various Shopify integrations.

Authorize.net

As one of the oldest players in the space, Authorize.net is a reliable choice for North American merchants. It is particularly popular for businesses that require a dedicated merchant account and those that need to process payments for industries that other gateways might shy away from.

Klarna and Buy Now, Pay Later (BNPL)

While not a primary credit card gateway, Klarna and similar services (like Affirm or Afterpay) act as third-party providers at checkout. They are essential for stores with a high Average Order Value (AOV), as they allow customers to split payments. Offering these can significantly increase conversion rates for fashion and home goods.

The Cost of Using Third Party Gateways

It is important to be transparent about the financial implications of moving away from Shopify’s native system. When you use a third-party provider, you are subject to two different sets of fees:

1. Gateway Fees: This is what the provider (e.g., Stripe or PayPal) charges you to process the transaction. This is usually a percentage plus a flat fee per order.
2. Shopify Third-Party Transaction Fees: If you do not use Shopify Payments, Shopify charges an additional fee on every transaction. This fee varies based on your Shopify plan level (usually 2%, 1%, or 0.5%).

The only way to have these third-party transaction fees waived is to be on a Shopify Plus plan or to use Shopify Payments as your primary gateway. If you are on a Basic or Shopify plan, you must calculate whether the benefits of the third-party gateway outweigh this extra cost.

Managing the Checkout Experience

Adding multiple gateways can lead to a cluttered checkout. If a customer sees ten different buttons for PayPal, Credit Cards, Klarna, and various local wallets, they may become overwhelmed. This is known as "choice paralysis," and it frequently leads to cart abandonment.

This is where the strategy of hiding and sorting becomes critical. You do not need to show every payment option to every customer. Instead, you should show the most relevant, high-converting options based on the customer’s context.

Sorting for Conversion

By default, Shopify lists payment methods in the order they were activated. This is rarely optimal. You generally want your most reliable, lowest-fee method at the top. For example, if you prefer credit card payments over PayPal because of lower fees, the credit card option should be the first thing the customer sees.

Renaming for Clarity

Sometimes the default name provided by a gateway is confusing. For instance, a local bank transfer method might have a technical name that customers don't recognise. Renaming these options to something like "Secure Instant Bank Transfer" can improve trust and clarity.

Precision Control with HidePay

To manage these complexities effectively, merchants need a way to set logic-based rules for their checkout. We built our app to provide exactly this level of control without requiring any coding or complex workarounds.

HidePay allows you to create specific conditions for when a payment method should be shown or hidden. For a quick walkthrough on hiding, sorting, or renaming payment options, see our help guide: Hide Sort or Rename Payment Methods on your Shopify Store with HidePay.

Because the app is built on Native Shopify Functions, it runs directly within the Shopify infrastructure. This means it is fast, secure, and does not rely on outdated theme scripts that can break during updates. If you’re exploring other native-function approaches or creators, consider SupaEasy: AI Functions creator on the Shopify App Store for building or migrating Shopify Functions.

Common ways to use the app include:

• Geography-based rules: Show local payment methods only to customers in specific countries (e.g., hiding a US-only BNPL service from European customers). See the guide on How to organize payment methods by country or by Shopify Market.
• Cart total rules: Hide high-fee payment methods for low-value orders where the transaction cost would eat your entire margin. Learn how to create such customizations in How to create a payment customization.
• Product-based rules: If you sell certain products that are prohibited by a specific gateway, you can hide that gateway only when those items are in the cart. Follow the tutorial How to allow only specific payment methods for certain products in Hidepay.
• Customer tags: Show "Net 30" or "Bank Transfer" options only to customers tagged as "B2B" or "Wholesale."

Strategic Use Cases for Third-Party Management

Effective gateway management is about more than just aesthetics; it is about protecting your bottom line. Here are three practical scenarios where rule-based payment control is essential.

1. Reducing High-Fee Transactions

Some payment methods, like Cash on Delivery (COD), are notoriously expensive to manage due to high return rates and administrative overhead. A merchant might want to offer COD to build trust with new customers but hide it once a cart exceeds a certain value to limit financial risk.

2. Preventing Chargebacks

Certain payment methods are more prone to chargeback fraud than others. If you notice a high rate of fraudulent disputes coming from a specific region through a particular gateway, you can create a rule to hide that gateway for customers in that zip code or province. This allows you to keep the gateway active for safer regions while mitigating risk in others.

3. Localising the International Experience

When selling globally, showing a "global" gateway to a local customer can feel impersonal. If you are selling to a customer in the Netherlands, surfacing "iDEAL" at the top of the list is far more effective than showing a generic credit card logo. By sorting and renaming these methods, you make the store feel like a local business, which is a significant driver of international conversion.

Next steps for checkout optimisation:

• Audit your current payment methods and identify which have the highest fees.
• Check your analytics to see which gateways have the highest abandonment rates.
• Determine if specific products or regions are causing payment-related support tickets.
• Install a tool to handle the logic of showing/hiding these methods automatically — see our Install HidePay Shopify App help article for step-by-step instructions.

Technical Foundation: Why Native Functions Matter

In the past, modifying the Shopify checkout was difficult. Merchants had to use "Shopify Scripts" (which required a Plus plan and Ruby coding) or "checkout.liquid" (which is being deprecated). These methods were often slow and could cause the checkout page to lag.

The modern approach uses Shopify Functions. Our tool is built on this native framework, which means the logic for hiding or sorting payment methods happens on Shopify’s servers, not in the customer's browser. This ensures that the checkout remains extremely fast. For the merchant, it means the app is "Built for Shopify" certified, meeting the highest standards for performance and security. Read more about HidePay’s goals and technical approach in our Introducing HidePay for Shopify post.

Implementing Third-Party Gateways: A Step-by-Step Approach

If you are ready to add or change a provider, the process is handled within your Shopify admin. While the exact steps can vary slightly as Shopify updates its interface, the general flow remains consistent.

1. Navigate to Payments: Go to your Shopify admin settings and locate the "Payments" section.
2. Choose a Provider: If you are not using Shopify Payments, you will see an option to "See all other providers" or "Choose a provider."
3. Search and Select: You can filter by the name of the gateway or by the payment methods they support.
4. Enter Credentials: You will need your Account ID, API keys, or Secret keys from your third-party provider's dashboard.
5. Activate and Test: Once activated, it is vital to perform a test transaction to ensure the gateway is communicating correctly with Shopify.

If you are switching from one provider to another, Shopify allows you to keep your old credentials saved. This is helpful if you need to process refunds for orders that were placed under the previous gateway.

For a hands-on install walkthrough, follow the official Install HidePay Shopify App guide.

Conclusion

Third party payment gateways on Shopify are a powerful tool for global expansion and niche market success. By choosing the right provider, you can support local currencies, offer flexible payment terms like BNPL, and operate in industries that standard processors might avoid. However, simply adding gateways isn't enough; you must manage them to avoid checkout clutter and high transaction fees.

To ensure your checkout remains a high-converting asset:

• Prioritise direct providers to keep customers on your site.
• Monitor the combined cost of gateway fees and Shopify's third-party transaction fees.
• Use conditional logic to show the right payment method to the right customer at the right time.
• Regularly review your payment analytics to identify high-friction options.

Managing these rules doesn't have to be a manual burden. Using HidePay, you can automate your checkout logic, protect your margins, and provide a tailored experience for every shopper. Learn more or get HidePay for your store on the Shopify App Store.

FAQ

Does Shopify charge extra for using third-party payment gateways?

Yes, if you do not use Shopify Payments, Shopify charges an additional transaction fee ranging from 0.5% to 2%, depending on your subscription plan. This is in addition to the processing fees charged by the third-party gateway itself.

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

You can have one primary credit card provider active at a time, but you can also offer multiple "Additional Payment Methods" like PayPal, Amazon Pay, and Buy Now, Pay Later services (like Klarna or Affirm) simultaneously.

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

A direct provider allows customers to enter their credit card information directly on your Shopify checkout page. An external provider redirects the customer to their own secure hosted page to complete the payment before sending them back to your store.

How can I hide a specific payment method for certain products?

Since Shopify does not offer this feature natively, you must use an app like HidePay. It allows you to create rules that automatically hide specific payment gateways based on the items currently in the customer's cart, their location, or their order total. For a step-by-step product-based example, see How to allow only specific payment methods for certain products in Hidepay.

How do I hide express checkout buttons like PayPal?

HidePay supports blocking express checkout buttons via customization rules. Follow our guide Hide the Express Checkout with HidePay for detailed steps and Shopify Plus notes.