Shopify Payments vs PayPal
Last updated: September 4, 2026
Shopify Payments
A-
Shopify Payments is Shopify’s own branded payments service — processed by Stripe, per Shopify’s published processor list — giving merchants one-click access to accepting cards and wallets inside Shopify, simplifying setup and eliminating third-party gateway fees for supported merchants.
PayPal
A-
PayPal is a global, feature-rich digital payments platform (consumer wallet + merchant services) with extensive integrations and brand reach. It is trusted by many businesses but criticized in public reviews for dispute handling and account-hold practices.
VS
Overview
For a Shopify store this is rarely an either/or, and the most repeated reason for treating it as one is wrong. Shopify's own documentation states that when Shopify Payments is activated, PayPal is excluded from third-party transaction fees, so accepting PayPal alongside Shopify Payments costs you nothing extra on the Shopify side. The real comparison is narrower: Shopify Payments has the better online rate once you are on a higher plan and is bundled into a subscription you already pay, while PayPal costs nothing to hold, is cheaper in person, and works everywhere Shopify Payments does not.
Key Takeaways
- ✓Shopify does not add a fee when you accept PayPal: its help documentation states that with Shopify Payments activated, PayPal and manual payments are excluded from third-party transaction fees.
- ✓Shopify Payments wins at volume: 2.5% + 30c online on the Advanced plan against PayPal's flat 2.89% + $0.29, which does not tier by volume.
- ✓PayPal wins in person: 2.29% + $0.09 card-present against Shopify Payments' 2.6% + 10c on Basic and 2.4% + 10c on Advanced.
- ✓PayPal wins on reach and standing cost: $0 a month pay-as-you-go, on any site or invoice, against Shopify Payments which requires a Shopify plan from $29 a month and only works on Shopify.
- ✓PayPal wins on speed to cash: a free standard transfer in 1-3 business days or Instant Transfer at 1.50%, against a fixed 3-business-day Shopify Payments payout in the US.
Shopify Payments
Shopify Payments is the right primary gateway for a Shopify store: the rate falls as your plan rises, there is no third-party transaction fee, and payouts and disputes are handled inside the admin you already use.
PayPal
PayPal is the right addition rather than the right replacement for most Shopify stores, and the right primary processor for anyone selling off Shopify, invoicing directly, or trading where Shopify Payments is not offered.
The Verdict
It Depends on Your Needs
Why?
For a Shopify store the honest answer is both, and Shopify's own pricing makes that the cheap option rather than an indulgence: with Shopify Payments activated, PayPal orders are excluded from third-party transaction fees, so adding PayPal costs you only PayPal's own rate. Run Shopify Payments as the primary gateway, where the online rate falls to 2.5% + 30c on Advanced and disputes cost $15 rather than $20, and keep PayPal switched on for the buyers who want it. Off Shopify the question does not arise: PayPal works on any site, invoice or counter, charges nothing to hold, and beats Shopify Payments in person at 2.29% + $0.09. The only configuration that is clearly a mistake is running PayPal as your sole gateway on a Shopify store without Shopify Payments, because that is exactly when the third-party fee of up to 2% applies.
Feature by feature
Detailed Comparison
Filter Options
Online card rates
| Feature | Shopify Payments | PayPal |
|---|---|---|
| Standard online rate, entry plan | 2.9% + 30c on Basic | 2.89% + $0.29 with Advanced Credit and Debit Card Payments |
| Effectively a tie at the bottom of the range. The two diverge only because Shopify's rate improves with the subscription tier and PayPal's does not. | ||
| Standard online rate, higher plans | 2.7% + 30c on Grow; 2.5% + 30c on Advanced Winner | 2.89% + $0.29, no published volume tiering |
| Premium and rewards cards online | 3.5% + 30c on Basic; 3.3% on Grow; 3.1% on Advanced | Not published as a separate tier |
| Buyer pays with the PayPal or Venmo wallet | Not applicable | 3.49% + $0.49 |
| This is the rate that surprises merchants. PayPal's cheaper 2.89% + $0.29 applies to card payments through Advanced Credit and Debit Card Payments; a buyer checking out with their PayPal balance or Venmo lands on the standard commercial transaction rate instead. | ||
| Manually keyed card | Not published as a separate tier | 3.49% + $0.09 |
Standard online rate, entry plan
Shopify Payments
2.9% + 30c on Basic
PayPal
2.89% + $0.29 with Advanced Credit and Debit Card Payments
Effectively a tie at the bottom of the range. The two diverge only because Shopify's rate improves with the subscription tier and PayPal's does not.
Standard online rate, higher plans
Shopify Payments
2.7% + 30c on Grow; 2.5% + 30c on Advanced
Winner
PayPal
2.89% + $0.29, no published volume tiering
Premium and rewards cards online
Shopify Payments
3.5% + 30c on Basic; 3.3% on Grow; 3.1% on Advanced
PayPal
Not published as a separate tier
Buyer pays with the PayPal or Venmo wallet
Shopify Payments
Not applicable
PayPal
3.49% + $0.49
This is the rate that surprises merchants. PayPal's cheaper 2.89% + $0.29 applies to card payments through Advanced Credit and Debit Card Payments; a buyer checking out with their PayPal balance or Venmo lands on the standard commercial transaction rate instead.
Manually keyed card
Shopify Payments
Not published as a separate tier
PayPal
3.49% + $0.09
Best For Your Business
Recommendations based on your business type
Shopify store selling online in the US
Both. Shopify Payments as the primary gateway gives the lowest card rate and a $15 dispute fee, and Shopify excludes PayPal from third-party transaction fees once Shopify Payments is on, so adding PayPal for the buyers who prefer it costs nothing beyond PayPal's own rate.
High-volume Shopify store on the Advanced or Plus plan
Recommended
Shopify Payments
2.5% + 30c online on Advanced, and negotiated rates on Plus, against PayPal's flat 2.89% + $0.29. At that volume the plan fee is already paid for by the rate difference alone.
Seller whose sales are mostly in person
Recommended
PayPal
PayPal's 2.29% + $0.09 card-present rate beats Shopify Payments on every plan, including Advanced at 2.4% + 10c, and carries no monthly subscription.
Business selling from its own site rather than Shopify
Recommended
PayPal
Shopify Payments only exists inside Shopify. PayPal works on any website, invoice or marketplace at $0 a month.
Merchant in a country where Shopify Payments is not offered
Recommended
PayPal
Shopify Payments covers roughly 40 countries. Outside them a Shopify store needs a third-party gateway anyway, and PayPal's global footprint is the straightforward choice, though the plan's third-party transaction fee will then apply.
Store selling heavily cross-border in multiple currencies
Recommended
Shopify Payments
Shopify Payments converts at 1.5% for US-based stores; PayPal takes a 4.00% conversion spread on payments plus a 1.50% cross-border fee. On international volume that difference compounds fast.
Shopify Payments: Best for 2 use cases
PayPal: Best for 3 use cases
Frequently Asked Questions
Common questions about this comparison
Not if Shopify Payments is activated. Shopify's help documentation states that with Shopify Payments on, PayPal and manual payments are excluded from third-party transaction fees, and that exclusion covers PayPal Express, Shop Pay and Shop Pay Installments. The commonly repeated claim that Shopify adds 1-2% to every PayPal order applies only to stores that are not running Shopify Payments, where the plan's third-party fee of 2% on Basic, 1% on Grow, 0.6% on Advanced or 0.2% on Plus does apply.
Yes, and for most established Shopify stores that is the sensible configuration. Shopify supports PayPal Express Checkout, PayPal Payflow Pro, the PayPal wallet in the US and France, and Venmo alongside Shopify Payments. Shopify Payments handles the bulk of card volume at the lower rate, and PayPal catches the buyers who want to pay that way, with no third-party fee on those orders.
It depends on your plan and your channel. Online, they are effectively tied on Shopify's Basic plan at 2.9% + 30c against 2.89% + $0.29, and Shopify Payments pulls ahead on Grow and Advanced, down to 2.5% + 30c. In person, PayPal is cheaper on every plan at 2.29% + $0.09. On cross-border sales Shopify Payments is cheaper again, converting at 1.5% for US stores against PayPal's 4.00% spread plus a 1.50% cross-border fee.
Yes. The Shopify subscription buys the store, not the gateway, so it is due regardless, from $29 a month on Basic billed annually. Worse, declining Shopify Payments means PayPal orders lose their exclusion and attract the plan's third-party transaction fee, up to 2% on Basic. Running PayPal alone on a Shopify store is the most expensive configuration available.
Shopify Payments pays out on a 3-business-day schedule in the US with no minimum, and Shopify notes your bank can add another 1-3 days on top. PayPal's standard transfer to a bank is free and typically lands in 1-3 business days, and Instant Transfer moves funds immediately for 1.50%, up to $25,000 per transaction to a bank account.
Shopify Payments is cheaper on the fee: $15 in the US, and refunded if you win the dispute, depending on your region. PayPal charges $20.00 for a chargeback and $15.00 as a standard dispute fee. On outcomes, account holds and dispute decisions are the dominant complaint theme against PayPal in our review, so if disputes are a regular part of your business that is worth weighing alongside the fee.
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