Shopify pays us and allows us to collect payments with payment processors such as paypal , stripes, molly, skrill or even shopify payment. Of course, these forms and means take commissions on each transaction. So how does money earned on Shopify get into our bank account and what is the right way to go about being legal and reporting Shopify income?
Currency processing performed by Shopify
The currency that your future customers use to pay for their orders on your online store may be different from the currency of your payments and prices displayed. As a result, the currency of your website can be totally different from that of your bank account.
If your shop is declared in Europe and the majority of your customers are in Australia, you sell to Australians, you set the currency of your shop in Australian dollars.
However, you have to pay your suppliers and your employees in euros because you have a European supplier and offices in Europe. As a result, you set your payment currency in euros. Another possibility is to open a separate bank account that accepts dollars and other foreign currencies, but then you have to manage both accounts and transfer your funds between them. Thus the exchange rate is made at the current rate during the transaction, or your account (paypal for example) accepts foreign currencies and you can change them whenever you wish.
Track money earned on Shopify
Of course, you can also track your sales in dollars, euros, etc. when you log in to PayPal (for example, or whatever payment gateway you use). But then you’ll have to load their website, log in, click through to the right screens to get the right information. We do this ourselves all the time, so we know it takes time.
With Shopify Payments, all the information about the money you want is displayed right in the Shopify dashboard. It’s very convenient, especially when you run your store on a daily basis. It’s nice to be able to see where your money is in real time, with just one click.
You can immediately see your payout schedule so you know when the money will be transferred to your bank. Just note that when your customers’ money is paid into Shopify Payments after you make a sale, it takes 3 days for the money to be automatically transferred to your bank account (7 days for Canadian merchants). This short delay is primarily to ensure that there are sufficient funds to cover any refunds or chargebacks.
So the money earned will go directly to:
- Shopify Payment.
- Stripe, molly ou skrill…
This sum is stored on the accounts of the payment processors and it will then be transferred automatically or manually by you to your bank account, for example the excellent qonto bank for dropshipping .
The impact of shopify payment commissions on transactions
If you use the “Shopify Basic”, “Shopify” or “Shopify Advanced” plans, there are small transaction fees ranging from 0.5% to 2% per sale (you can find more information about this in our full Shopify pricing review).
If you decide to use Shopify Payments, these transaction fees will be waived entirely, which will increase your profit margins (more money in your pocket).
I think the reason is that Shopify now earns payment gateway fees, instead of transaction fees. Payment gateway fees are fees you have to pay anyway for payment processors to help you collect money from your sales – there’s no getting around that as a merchant.
For example, if you use PayPal (which has its own advantages and disadvantages), it charges you between 1.9% and 2.9% plus $0.30 per transaction, depending on your monthly sales amount. Also, PayPal tends to charge hidden fees if you’re transacting with a foreign country, which adds to the transaction fees if you’re selling overseas.
With Shopify Payments, fees per payment gateway are very competitive across all payment gateways.
There are no other hidden fees (many other payment gateways have hidden fees), so Shopify is pretty transparent on this.
Basically, then, there is no significant difference between using Shopify Payments and using other payment gateways. But the non-monetary benefit of using Shopify Payments:
It’s the opportunity to learn from a professional what really works, with concrete examples and proven results.
- Is seamless integration.
- Greater savings (removal of transaction fees)
- Recovery of retrocessions.
Here are a few things to note:
- If you’re using Shopify Payments as your primary payment gateway, you can always use PayPal as a fallback in case your customers prefer to use PayPal. Giving your customers more payment options has been proven to increase sales.
- Shopify Payments is currently only available to US, Canadian, UK, and Australian Shopify users/merchants. Hopefully, the rest of the world will follow soon after.
- Using other payment gateways can be difficult. Not only do you have to provide them with a lot of information, but it can sometimes take a long time (weeks) for them to agree. With Shopify Payments, you’re approved instantly — so you can start selling right away.
How to change or add Shopify payment methods
How and when to report money earned on Shopify?
Legally, you must not hide any account from the tax authorities. Thus, you must consider that the money dormant on accounts (and even that of paypal) must be declared . Of course, there is a gap between the money present on paypal, stripe or shopify payment and what you actually receive . Simply because you may have refunds, commission fees, commercial gestures. Thus, you must declare the turnover of your company by informing your accountant of the exact sum which entered your bank account during your annual period.
There may still be money stored on paypal that was made during the last days of your accounting year. Except, you do not know if the customer will be satisfied or not, he has the right to a withdrawal period . You must therefore include the turnover taking into account deferring the money made to a date with a tolerance of your repayment period.