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Accounting for Payment Gateways: Shopify Payments vs Alternative Shopify Payment Methods

Accounting for Payment Gateways: Shopify Payments vs Alternative Shopify Payment Methods

What makes Shopify accounting special for thousands of e-commerce businesses? Firstly, it’s the option to connect several payment gateways to your online store. Secondly, the ability to accept Shopify POS and manual payments in addition to online orders. For customers, these features make paying for goods extremely convenient. But for merchants, using multiple Shopify payment methods at once becomes challenging in terms of bookkeeping. 

The good news is that this problem has a simple solution. Whether you’re using Shopify Payments or connect a variety of third-party payment gateways, like PayPal, you can account for all your Shopify orders correctly. Want to know how? This article will tell you.

Contents:

1. Best Shopify accounting software: how to keep your bank account organized

2. Shopify QuickBooks integration

3. Shopify payment gateway options: Shopify Payments vs. other payment processing options

4. Accounting for Shopify Payments

5. Accounting for Shopify POS and Shopify manual payments

6. Shopify PayPal integration

7. Best payment gateway for Shopify

8. Tips on how to choose the right Shopify payment processing method

How to survive the downturn

Best Shopify accounting software: how to keep your bank account organized

When you’re choosing an accounting software for Shopify, keep in mind that it should have certain useful features.

It should be able to do the following:

  1. Process Shopify POS and Manual Payments. If you want to export Shopify orders from the POS terminal or enter them manually, the accounting software should have additional settings to process these types of data.
  1. Gather data from all payment providers that you connect to your Shopify store. There are several ways for customers to pay online without using a credit card or Shopify Payments, like PayPal and AmazonPay. Your software has to import transaction data from all payment gateways accurately and without duplicates.  
  1. Account for Shopify fees. You can be charged several transaction fees for online transactions, depending on your country, Shopify subscription plan, and other third-party payment provider fees if you use them. Other expenses should be taken into account too, like Shopify sales tax and shipping.

Synder performs all these functions without errors. It’s a smart accounting product that integrates e-commerce, payment, and accounting platforms seamlessly. The software streamlines the flow of financial data and provides easy accounting without discrepancies. 

Let’s see what it can do for your Shopify store.

Shopify QuickBooks integration

Understanding Shopify payment gateways processing is an important step towards selecting the right accounting solution for your business. For example, if you’re using Shopify Payments, you won’t see transactions in QuickBooks right away. Shopify provides financial data only after you’ve received payouts (transfer of funds to your bank). It can take a few days for the funds to appear in your bank account. That’s why the integration software that knows how to gather data in the right way is essential for healthy e-commerce bookkeeping.

Synder is a flawless solution for Shopify QuickBooks integration. Once you connect Shopify to QuickBooks via Synder, the software imports all your sales details into your accounting software in the correct way. 

Here’s how it works:

Benefits of using Synder

  1. Synder automatically creates a Clearing Account in your Chart of Accounts in QuickBooks where it stores all the details from your Shopify orders. 
  1. Once money payout happens, Synder makes a transfer to your checking account for easy reconciliation. From now on, your Shopify orders will be synchronized to the Shopify Bank Account.
  1. Thus, all your most important information — Shopify orders, Shopify inventory, Shopify customers, and Shopify shipping — receive an automatic update. 
  1. Shopify fees and sales taxes become easy to account for, too. Synder allows using the Apply taxes setting to recognize tax details in each Shopify sale and record them in QuickBooks.
  1. In addition, Synder can import historical data from your Shopify account, (if you need it) and supports a multi-currency function, which automatically converts the money you receive to your home currency. 

How to connect Shopify to Synder Books

One of the options is to connect your Shopify account directly to Synder Books so you’ll have all the information from all your sources in one place without any additional software. The details about your sales will go to Synder and stay there, ready to be accounted for.

Synder Books also provides its users with detailed reports about your business performance through P&L reports and balance sheets. 

Learn how you can connect your Shopify account to Synder Books with the guidelines from this Synder integration tutorial:

How to connect Shopify to QuickBooks via Synder Sync

The other option is to use Synder Sync as a provider between the sales channel and an accounting software solution.

In this video, our expert explains how to connect your Shopify store to QuickBooks accounting using Synder in a few quick and simple steps. 

Shopify payment gateway options: Shopify Payments vs. other payment processing options

When it comes to payment options, each e-commerce business owner will have different needs based on their business and the type of customers they attract. Let’s look through the payment methods Shopify provides its sellers with.

To choose the payment gateway, you need to go from the Home page of your Shopify account to Settings → Payments. Here you’ll see three options for payment. 

  1. Shopify Payments
  2. Other payment methods 
  3. Shopify manual payments

Option #1. Pay with Shopify Payments

Shopify Payments is the simplest way to accept payments online. It eliminates the hassle of setting up a third-party payment provider or merchant account and having to enter the credentials into Shopify. Your customers can pay directly through your online store – Shopify Payments – without having to pay at a third-party checkout.

You’re charged transaction fees each time a customer makes a purchase using a third-party provider. To avoid transaction fees, you can activate a Shopify Payments account instead.

Option #2. Pay with other Shopify payment methods (payment providers that are approved by Shopify)

If you’re using an external provider, your customers must pay through a checkout page that’s hosted outside of your online store.

You can activate or change a payment provider from the Payments page of your Shopify admin.

Once you set up a payment provider to accept credit card payments, each payment must be processed, so there’s usually a delay between when the customer pays for their order and when you receive the payment. After the payment is processed, the purchase amount will be transferred to your merchant account.

If your Shopify store accepts payments via different channels (e.g. PayPal, Stripe, etc.) you need to connect these payment platforms to Synder as well so that the solution can recognize all transactions and successfully sync them. Just click the Plus icon in the top-right corner and follow the steps. This will allow Synder to record Shopify fees amounts into your accounting.

Option #3. Pay with Shopify manual payments

Some customers don’t want to pay for their orders using a credit card. In such cases, Shopify allows merchants to set up a manual payment method. Common types of manual payments include cash on delivery (COD), bank transfers, or, for example, you can send an invoice to your customer. 

Accounting for Shopify Payments

Shopify gives online sellers an option to accept payments from different payment providers. You can use Shopify Payments, a native Shopify payment gateway. There are also several ways for customers to pay online without using a credit card, like PayPal and Amazon Pay, for example. 

The variety of Shopify payment processing options can become both a great growth opportunity and a challenge to e-commerce business owners

The automation software will need to gather data from each payment provider separately but account for them in one place. And of course, it has to provide accurate reconciliation at the end of each month and keep your books in order.

Is it possible?

With Synder, it is.

Organizations feature in Synder allows you to connect each payment gateway, no matter how many of them you use, separately to your Shopify company in Synder. Then the software will accurately extract financial information from each source and record it in QuickBooks with precision. 

With Synder, the data about Shopify Payments transactions plus other payment processing companies will supplement each other without duplicates and errors. Even if you’re using a payment processor that’s not on our integration list, it’s not a problem. You can migrate any data to Synder through Excel at any time. You can be free to use as many payment gateways as your Shopify store needs. 

Accounting for Shopify POS and Shopify manual payments

Synder can easily account for both Shopify POS transactions and orders entered manually. All you need to do is select them in the settings of your Shopify company in Synder. As simple as that!

What is Shopify POS?

Shopify POS is a point-of-sale app that allows you to sell products in person. It’s a great addition to online sales for many merchants. You can use Shopify POS to sell almost anywhere, including brick-and-mortar stores, markets, and pop-up shops. That’s why you might want to use it for your business too.

Synder works with Shopify POS orders without a hitch:

  • Once you adjust the settings and allow Synder to “see” your POS orders, the software synchronizes them right into your QuickBooks. Synder automatically synchronizes newly created POS orders by default settings, and historical data import is also available for your POS transactions.

If you want to learn more details, check this guide on Shopify POS synchronization by Synder

Specifics of Shopify manual payments

Orders that accept manual payments are marked as unpaid on the Orders page. After you receive the payment, you must manually approve the order.

This process can make gaps in bookkeeping. But Synder will help:

  • When you select Manual Orders in your Shopify company in Synder, all transactions entered by you manually in Shopify will be accounted for just like any other ones, without errors or discrepancies.
  • What’s more, if you synchronize manual orders in Shopify and they get refunded, you can easily update these transactions in Synder to keep your accounting in order. Visit our guide on refunds for Shopify Manual Payments to learn more.

Shopify PayPal integration

When it comes to third-party payment providers, PayPal is one of the most popular options Shopify sellers and buyers use. If you’re running a Shopify business, you might want to consider PayPal integration too.

Why do people choose PayPal for their Shopify stores?

First and foremost, PayPal is one of Shopify’s default payment providers. That’s why you can set up Shop Pay with PayPal in less than a day. As soon as you open a store, you get a PayPal Express Checkout account activated with any of your Shopify packages. Using PayPal with Shopify also offers functionalities like easy cart integration, multiple customization options, online invoicing, and facilitates credit card payments over the phone. In March 2022, PayPal had 429 million active accounts and the number is continuing to grow. Over 220 million active PayPal users globally come as a great bonus of this payment provider as well.

No wonder that PayPal opens the top of alternative Shopify payment processing options.

How to account for transactions if you choose PayPal as your Shopify payment provider

Usually, to account for PayPal transactions, you have to create a bank type account for them in your QuickBooks and then enter your PayPal sales and expenses transactions manually. 

Another popular option would be to export all PayPal transactions to Excel sheets and use importing apps to get them to QuickBooks faster.

However, both of those options require a lot of manual work to do. ThereŃŤs a better solution that can save you hours of work. Moreover, the whole process will be totally automated!

You can easily connect PayPal to your Shopify store using Synder software. It helps data flow smoothly into your QuickBooks system. With just a click, you can achieve error-free reconciliation for all your Shopify sales that were paid via PayPal. 

All the PayPal transaction details, including processing fees, get recorded and accounted for correctly. Start saving time now! Synder is free to test.

Best payment gateway for Shopify

Shopify PaymentsThird-party payment gateways
ProsPros
Simple set-upMore flexibility in payments
Quick check-out for customersAttract more customers
No extra transaction feesIncrease trustworthiness in your Shopify store
ConsCons
Chargeback feesCustomers redirected to complete checkout
Funds can be frozen for suspicious activityExtra transactions fees
Not available in every countryCan have other additional restrictions

Tips on how to choose the right Shopify payment processing method

There are many factors to consider when browsing through the list of payment gateways. Every business has different needs, which is why there are so many options out there. The right payment gateway will make your life easier and help you streamline your checkout process while staying secure.

There’s no right or wrong option, but here are some tips to consider when choosing a payment gateway for your Shopify business. 

Provide payment options

If your business accepts orders from a large number of customers or merchants, it’s in your best interest to set up as many payment gateways as possible. This will make things easier both for customers who will be able to choose how to pay, and the growth of your business in the long run. 

Consider your location

Consider the geographic scope of the customers and vendors when deciding which payment gateway is best for your business needs. You may have different partners or suppliers based on your location that would require a specific type of payment gateway for their transactions.

Check out the full list of payment gateways available per country provided by Shopify here

Research the target audience

Have a clear understanding of the shopping preferences of your target audience. After you do the research, you’ll find out not only which strategy is right for your business, but also which payment provider is most likely to be used for payments. 

Take into account the fees

Fees are just as important as other components like the type of audience you’re targeting or what products you’re selling. If you aren’t careful, the expenses can get out of hand fast. 

Every payment gateway provider will have different costs and the way they charge you will vary as well. In order to avoid nasty surprises, it’s essential that you do some research and understand exactly how much each provider will end up costing you.

Here’s a full video with the recommendations from Shopify to learn more:

Key takeaways from Shopify payment processing options

E-commerce businesses have special needs when it comes to bookkeeping. Multiple payment processing options and different platform fees make calculating the net income amount in your bank difficult. 

The Shopify QuickBooks integration provided by Synder allows importing payments into your accounting software, synchronization, and categorization of data in your books with incredible accuracy for a perfect reconciliation process.

You can enjoy the benefits of using multiple Shopify payment options without the fear of discrepancies in your accounting:

  • Shopify POS
  • Shopify Manual Orders
  • Shopify Payments
  • Third-party payment gateways
  • Shopify PayPal integration

All these options can easily become a source of increased cash flow for your e-commerce business. With the seamless Shopify QuickBooks integration that Synder provides, your bookkeeping process will always be effortless and trouble-free.

Anastasia Su

Anastasia Su

Anastasia is a FinTech writer with experience working as a freelance writer for small business owners. She has participated in numerous events dedicated to business management and marketing. Anastasia is inspired by the fact that each successful business is a result of proper structuring so she tries to analyze every step and wants to share her observations with others.

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