When do Shopify payments deposit into bank accounts?

If you are a new Shopify merchant, you’re probably curious about how you will get paid. When a customer buys something from your Shopify store, Shopify processes the payment.

Shopify then releases the funds to you on a set schedule. This is standard procedure for nearly all ecommerce platforms.

How long do Shopify payouts take?

On average, it can take two to three business days for Shopify payments to reach a merchant’s bank account. While this processing time is comparable to other popular platforms, it’s worth noting that some platforms might offer faster access to your funds. One example is PayPal.

One thing that often surprises merchants is that Shopify payouts aren’t immediate. While we often live in a world of instant gratification, this slight delay is in place for a few reasons. Shopify needs time to verify the transaction, ensuring everything is legitimate.

This step protects both you and your customers from fraudulent activity. This processing time allows Shopify to carry out necessary security checks. It also minimizes the risks of fraudulent transactions, chargebacks, and other issues that can disrupt the flow of funds.

Other platforms and how they measure up

Waiting a couple of days might not seem like a big deal. However, this can be a big deal if you’re relying on those funds for immediate business needs. PayPal is often touted for its speedy access to funds. Merchants can often receive payments more quickly making it an attractive option for businesses that need to maintain healthy cash flow.

There are some important factors to remember. Each platform comes with its own set of fees and transaction costs. For example, while PayPal often boasts quicker access to funds, those transactions often come at a higher cost compared to Shopify Payments. When choosing a payment processor, it’s crucial to weigh speed, cost, and other factors.

Why Are Pending Payouts a Risk for Website Owners? 

Pending payouts can disrupt cash flow significantly for Shopify store owners, as they don’t have immediate access to the funds needed to fulfill orders, pay for inventory, or cover other operational expenses. For businesses with tight profit margins or limited resources, these delays can put a major strain on day-to-day operations and lead to financial instability.

These delays also heighten the risk of customer dissatisfaction. Without access to funds to fulfill orders promptly, store owners may face shipping delays, leading to increased customer complaints or even chargebacks. Each chargeback not only reduces cash flow further but can also trigger additional payout holds or, in severe cases, account suspension.

Additionally, delayed payouts can hinder business growth and affect supplier relationships. Without timely funds, store owners may struggle to reinvest in marketing or purchase new inventory, limiting expansion opportunities. Late payments to suppliers or manufacturers can damage these essential partnerships, potentially leading to supplier relationship issues that can disrupt long-term business operations.

For higher-volume stores, the payouts might not pose that big of an issue. However, if Shopify payments is your only payment gateway, this can pose a problem if you wait for your funds to clear before placing an order. Also, a chargeback can pull from the available funds that you have access to.

Other Risks With Shopify Payments for Merchants

Shopify Payments enforces strict guidelines and may restrict or suspend accounts selling high-risk products, such as certain electronics, supplements, or items with fluctuating inventory levels. Since drop shipping often involves multiple suppliers, the business model can inherently carry these risks, leading to potential compliance issues. Additionally, Shopify Payments is sensitive to chargeback rates, which are more likely in drop shipping due to possible delays or quality inconsistencies from suppliers. Higher chargeback rates can result in account holds or even increased processing fees.

Account suspensions are another risk for drop shippers using Shopify Payments, especially when experiencing inconsistent supplier performance or shipping delays. Shopify may place temporary or permanent holds on accounts that don’t align with their policies, which can impact cash flow. For these reasons, high-risk payment processors might be a better fit for drop shipping businesses, as they are more accustomed to handling these unique challenges.

Why diversifying payment processors is key

Relying solely on Shopify Payments, or any single processor for that matter, might seem convenient, but putting all your eggs in one basket can be risky. Imagine this; what if there’s an unexpected outage or technical glitch with your primary payment processor?

Such a scenario could lead to delays in receiving your payouts. Now, envision if you relied on multiple payment gateways, which could have prevented this. Using multiple gateways, such as Checkout Champ, is one way to reduce payout delays.

Checkout Champ as a Solution

Checkout Champ allows you to diversify the payment methods you accept, expanding your customer reach. It allows your customers to use their preferred payment method. This creates a more convenient checkout process, which in turn can increase conversions.