Introduction
Choosing the right Shopify payment method in the UK can impact your bottom line. From transaction fees to payout delays, every payment method—whether it’s Shopify Payments, PayPal, or a newer option like Pay by Bank—comes with trade-offs.
This guide breaks down the key differences between popular Shopify payment providers for UK merchants, with a spotlight on Pay by Bank—a secure, fast-growing alternative powered by open banking.
Why Payment Method Choice Matters in the UK
UK merchants using Shopify face unique challenges:
- High card fees for non-UK customers
- Slow payouts from major gateways
- Increasing fraud and chargebacks
That’s why many are exploring Pay by Bank—a direct-to-bank payment method built for the UK market.
What Is Pay by Bank on Shopify?
Pay by Bank allows customers to check out directly from their banking app, skipping cards entirely. It uses Open Banking APIs, making it a seamless, secure, and fee-efficient option for both merchants and buyers in the UK.
Benefits:
- Lower fees than traditional cards
- Instant settlement (vs 3–7 days for cards)
- No chargebacks
Wallid offers a Shopify Pay by Bank app that integrates in minutes and provides a frictionless checkout experience.
Shopify UK Payment Methods Compared
Security and Compliance in the UK
- Shopify Payments: PCI compliant, relies on Stripe infrastructure.
- PayPal: Secure but commonly targeted by fraud.
- Pay by Bank: Fully compliant with UK Open Banking regulations and eliminates card fraud risks by not storing or processing card data.
Payout Speed & Schedule
Shopify Payments processes payouts in 3–5 business days. This timeline may vary depending on your bank and account history. You can choose daily, weekly, or monthly payout schedules.
PayPal payouts are more variable. Established accounts may receive funds quickly, but new or flagged accounts could face holds of up to 21 days.
Pay by Bank offers instant settlement. Funds arrive directly in your account as soon as the customer approves the transaction—ideal for cash flow-focused businesses.
Chargebacks Explained
With Shopify Payments, if a customer disputes a charge, you’ll pay a £10 fee per chargeback. This applies even if you ultimately win the case.
PayPal chargebacks are common and cost around £14 per dispute, plus time spent resolving claims.
Pay by Bank has no chargebacks. Because transactions are authorized directly through the customer’s bank account, they can’t be reversed in the same way as card payments. This removes a major cost and risk for merchants.
When to Use Pay by Bank on Shopify UK
You want to reduce transaction fees
You need faster payouts than Shopify or PayPal
You serve a UK-based audience ready for open banking
You want to eliminate chargebacks
Ideal for high-volume stores, subscription box businesses, and those scaling across the UK and Europe.
Conclusion
For UK-based Shopify merchants, Pay by Bank is a compelling alternative to card-based systems. While Shopify Payments and PayPal are widely used, their high fees and slow payouts can limit growth.
Switching to Pay by Bank with Wallid helps you:
- Save on fees
- Get paid faster
- Improve customer checkout experience
FAQ: Shopify Payments UK
What is Shopify Payments?
Shopify Payments is Shopify’s built-in payment system. It lets UK merchants accept credit cards, Apple Pay, Google Pay, and more without using a third-party provider.
How much does Shopify Payments cost in the UK?
Fees depend on your plan. For example, Basic Shopify charges 1.7% + 25p per UK transaction. International cards and Amex can cost up to 2.9% + 25p.
When will I receive my payouts?
Payouts usually take 3–5 business days. You can choose to get paid daily, weekly, or monthly.
Are there chargebacks with Shopify Payments?
Yes. If a customer disputes a charge, Shopify charges a £10 fee per case. If you win the dispute, the fee is refunded.
Can I use PayPal or Pay by Bank with Shopify Payments?
Yes. You can offer other payment methods alongside Shopify Payments, including PayPal and Pay by Bank using an app like Wallid.
How is Pay by Bank different from Shopify Payments?
- Shopify Payments uses cards; Pay by Bank uses bank transfers
- Shopify payouts take days; Pay by Bank is instant
- Shopify has chargebacks; Pay by Bank does not
- Shopify fees are higher than Pay by Bank for UK merchants
Do I need to verify my identity to use Shopify Payments?
Yes. Shopify will ask for ID and business details before you can receive payouts.
Disclaimer: All pricing and fee information in this article is accurate as of May 2025 based on publicly available sources and estimates. Actual rates may vary depending on your Shopify plan, location, payment provider agreements, and transaction volume. Always verify the latest fees directly with Shopify or your payment provider.
