Payment gateway choice is one of the few Shopify decisions that directly touches both conversion rate and your bottom-line costs at the same time, get it wrong and you’re either paying more in fees than you need to, or losing sales at checkout because a customer’s preferred way to pay isn’t there. This is genuinely worth getting right rather than just accepting whatever’s pre-selected when you set up your store.
This post walks through the realistic options for Australian merchants, what actually differs between them, and how to think about the decision properly rather than just picking the default.
Shopify Payments: The Default Starting Point
Shopify Payments is Shopify’s own built-in payment processor, and for the large majority of Australian merchants it’s the sensible starting point, it’s natively integrated (no separate account setup with an external processor required), supports the standard range of cards, and integrates seamlessly with Shop Pay, Shopify’s accelerated checkout option that can meaningfully reduce checkout friction for returning customers across the Shop network.
Using Shopify Payments also avoids Shopify’s additional transaction fees that apply when you use a third-party gateway instead (Shopify charges an extra percentage on transactions processed through non-Shopify Payments gateways, on top of whatever that gateway charges you directly), so unless you have a specific reason to use an alternative, Shopify Payments is usually both the simplest and the most cost-effective default.
Reasons a merchant might still need an alternative or additional gateway: a business structure or industry category not supported by Shopify Payments, a need for a specific alternative processor for other operational reasons, or wanting to offer a payment method Shopify Payments doesn’t directly support.
PayPal
Still a meaningful presence in Australian ecommerce, particularly for customers who prefer not to enter card details directly on a merchant’s site, or who have existing PayPal balances or saved payment methods they use habitually. It’s straightforward to add alongside Shopify Payments rather than instead of it, most Australian stores run both, since PayPal serves a genuinely different segment of shopper preference rather than directly competing with card checkout.
Buy Now, Pay Later: Afterpay, Zip, and Others
BNPL is close to expected functionality in several Australian retail categories now, fashion, beauty, homewares in particular. Afterpay has strong brand recognition and is widely offered; Zip is another established Australian option with its own merchant base and brand recognition, particularly strong in some categories; other providers like Klarna also operate in the Australian market.
The genuine trade-off with any BNPL provider is the merchant fee, which runs higher as a percentage than standard card processing, get your exact current rate from your provider’s merchant agreement before assuming a figure, since rates are set commercially and vary. The upside, where relevant to your category, is a documented tendency for BNPL to lift average order value and reduce cart abandonment for higher-consideration purchases, but this varies meaningfully by product category and customer base, so it’s worth validating against your own store’s data rather than assuming a generic benefit applies. For a deeper look at getting this right, see our guide on setting up Afterpay without hurting margins.
For merchants weighing up more than one BNPL provider, Zip is also available as a Shopify integration, and running both isn’t uncommon for stores wanting to cover the broadest possible customer preference, though it does add checkout complexity and more than one fee structure to manage.
Bank Transfer / Manual Payment Methods
For B2B and wholesale-focused Shopify stores in particular, offering direct bank transfer (sometimes alongside standard card payment) remains relevant, trade customers placing larger orders sometimes prefer invoicing and bank transfer over card payment, both for their own cash flow reasons and to avoid card surcharges on large transactions. If you’re running a Shopify B2B channel, payment method mix often needs to be configured differently from your consumer storefront.
Security and Compliance Considerations
Whichever gateways you choose, a few underlying compliance points are worth being aware of, even though Shopify handles most of the heavy lifting:
- PCI DSS compliance, Shopify’s checkout is PCI DSS compliant at the platform level for merchants using Shopify’s standard checkout, which significantly reduces the compliance burden compared to handling card data directly yourself. This is one of the genuine advantages of staying within Shopify’s native checkout flow rather than building custom card-capture forms.
- Fraud filtering, Shopify Payments includes built-in fraud analysis flags on orders (visible in the order detail as a risk level), which is worth actually reviewing rather than ignoring, particularly for higher-value orders or unfamiliar shipping destinations. Third-party gateways vary in what fraud tooling they provide natively, which is worth checking if you’re considering an alternative to Shopify Payments.
- 3D Secure and card verification, additional verification steps can reduce fraud-related chargebacks but can also add a small amount of friction at checkout for legitimate customers. Where this is configurable, it’s worth understanding the trade-off rather than assuming more verification is always better.
None of this requires deep technical involvement from most merchants, it’s more a case of knowing these protections exist and are generally active by default within Shopify Payments, and checking rather than assuming the same level of protection applies automatically if you introduce a third-party gateway alongside it.
It’s worth periodically reviewing declined and flagged orders in your Shopify admin rather than only looking at successful transactions, a pattern of legitimate customers being incorrectly flagged as high-risk can quietly cost you sales, just as a pattern of genuinely fraudulent orders slipping through unflagged is worth catching before it becomes a chargeback problem.
How to Actually Decide What to Offer
Rather than trying to offer every possible payment method (which adds checkout complexity without proportional benefit), work through this:
Start with Shopify Payments as your core. It covers the majority of transactions for most stores, is the most cost-effective default, and requires the least ongoing management.
Add PayPal if your audience data supports it. If you have visibility into cart abandonment reasons, or general audience research suggesting a meaningful share of customers prefer PayPal, it’s a low-friction addition.
Add BNPL deliberately, not by default. If your category (fashion, beauty, homewares, furniture) is one where BNPL genuinely drives incremental purchases rather than just shifting how existing customers pay, it’s worth the fee. If your average order value is very low, or your margins are already tight, model the fee impact carefully before adding it, see the margin considerations in the Afterpay section above, which apply similarly to other BNPL providers.
Check total cost, not just the headline fee. Compare the effective cost across your actual transaction mix (some methods charge differently depending on card type, transaction size, or whether it’s a domestic or international card) rather than comparing a single quoted percentage in isolation.
Test checkout completion, not just checkout options. More payment options at checkout doesn’t automatically mean higher conversion, a checkout cluttered with too many options can create decision friction. Track completion rate before and after adding a new method to confirm it’s actually helping, not just adding cost and clutter.
What’s Changed Heading Into 2026
The core landscape, Shopify Payments as the default, PayPal as a common secondary option, Afterpay and Zip as the dominant BNPL providers in Australia, has been broadly stable for several years, with the main shifts being incremental: BNPL providers continuing to embed more deeply into on-site product page messaging (showing instalment pricing directly under the product price, not just at checkout), and Shop Pay’s accelerated checkout continuing to expand its footprint for returning Shop app users. Rather than chasing a “new” gateway trend, the more reliable approach for most Australian merchants remains getting the core setup (Shopify Payments plus the right secondary options for your specific category) configured and tested properly.
A Practical Payment Gateway Checklist
- Confirm Shopify Payments is correctly set up and active as your core processor
- Add PayPal if your audience data or general research supports it
- Evaluate BNPL (Afterpay, Zip, or both) against your specific product category and margin, not by default
- Add bank transfer/manual payment if you run a B2B or wholesale channel with trade customers
- Compare total effective cost across your actual transaction mix, not just headline rates
- Test checkout completion rate before and after any change to payment options
- Review your payment method mix annually as your product mix, margins, or customer base shift
Frequently Asked Questions
Is Shopify Payments always the cheapest option for Australian merchants?
For most standard consumer transactions, yes, using Shopify Payments avoids the extra transaction fee Shopify applies to non-Shopify Payments gateways, making it generally the most cost-effective default. Specific alternative processors could still make sense for particular business structures or needs, so check your own situation rather than assuming.
How many payment options should I offer at checkout?
There’s no fixed right number, but more isn’t automatically better, a small, well-chosen set (Shopify Payments plus PayPal and/or a relevant BNPL option) usually outperforms an overcrowded checkout. Track completion rate to see whether an added option is actually helping.
Do I need to offer BNPL to compete in the Australian market?
It depends heavily on your category. In fashion, beauty, and homewares it’s close to an expectation for a meaningful share of shoppers; in other categories (consumables, low-price items, B2B) it’s far less critical and the fee may not be justified by the benefit.
Can I offer both Afterpay and Zip at the same time?
Yes, this is technically straightforward on Shopify, though it means managing two separate merchant agreements, fee structures, and reconciliation processes, so weigh the incremental benefit of covering both customer bases against that added operational complexity.
Does adding more payment gateways slow down my checkout?
Not meaningfully from a technical performance standpoint in most cases, but it can add cognitive load and decision friction for the customer if there are too many options presented without clear hierarchy, this is more of a checkout design consideration than a technical speed issue.
Next Step
If you’re setting up a new store or reviewing whether your current payment mix is right for your category and margins, book a call to talk it through, or start with a Shopify audit to see how your current checkout setup is performing.
