Shopify Payments vs PayPal Fees Compared
Using PayPal as a standalone gateway triggers Shopify's transaction fee on top — here's the real cost comparison.
By Marginory teamContent reviewed
The core difference
Shopify Payments is Shopify's own integrated processor — using it means no additional transaction fee, just the standard processing rate. PayPal (as a standalone gateway) is a third-party processor, which means Shopify's transaction fee applies on top of whatever PayPal itself charges.
Cost comparison on a $50 sale (Basic plan)
| Method | Processing fee | Shopify transaction fee | Total |
|---|---|---|---|
| Shopify Payments | $1.75 (2.9% + $0.30) | $0.00 | $1.75 |
| Standalone PayPal | ~$1.75 (varies) | $1.00 (2%) | ~$2.75 |
Illustrative example — verify current PayPal processing rates directly, as they vary by account type and region.
When PayPal as a secondary option makes sense
Some merchants offer PayPal alongside Shopify Payments to capture buyers who specifically prefer or trust PayPal checkout — accepting the added fee on those specific orders as a cost of maximizing conversion rate.
Monthly cost impact by store size
The transaction fee is small per order but compounds with volume. Here's the added monthly cost of routing all sales through standalone PayPal instead of Shopify Payments, on the Basic plan ($50 average order value):
| Orders/month | Revenue/month | Transaction fee (2%, Basic) | Annualized cost |
|---|---|---|---|
| 25 | $1,250 | $25.00 | $300 |
| 75 | $3,750 | $75.00 | $900 |
| 150 | $7,500 | $150.00 | $1,800 |
| 400 | $20,000 | $400.00 | $4,800 |
This is on top of PayPal's own processing fee — the table shows only the extra Shopify transaction fee that standalone PayPal triggers. On Grow (1%) or Advanced (0.6%) the annualized cost is proportionally lower.
How to switch to Shopify Payments
If you're currently on standalone PayPal and want to stop paying the added transaction fee, Shopify Payments is available in most countries and can typically run alongside PayPal as a secondary option rather than a full replacement:
- In Shopify admin, go to Settings → Payments
- Under Shopify Payments, click Activate (or complete setup if partially configured)
- Enter your business and banking details for payout
- Set Shopify Payments as your primary payment method
- Optionally keep PayPal Express Checkout enabled as a secondary option at checkout — orders paid via Shopify Payments won't trigger the transaction fee, only ones a buyer completes through PayPal specifically will
Availability of Shopify Payments varies by country and business type — check Settings → Payments in your admin to confirm eligibility before assuming it's available.